Preparing amidst a field of
known unknowns
Home Information Packs approach
the crunch
At the time of writing, Home Information Packs remain
scheduled to be a legal requirement for any residential
property marketed from 1st June 2007. In our experience,
public awareness of this remains close to zero. Meanwhile,
much detail remains to be confirmed and the potential
for a problematical shortage of inspectors to provide
Energy Performance Certificates remains high. Unsurprisingly,
the Council of Mortgage Lenders has called for a postponement
of the launch, stressing that “This close to the
implementation date, there are still far too many unknowns”.
Against this shifting background, the industry must prepare.
What are the implications, so far as is possible to see
for sellers, buyers and the market as a whole?
Obligations on sellers
Sellers will have to secure a Home Information Pack, comprising
an Energy Performance Certificate, evidence of title and
terms of sale, any planning, listed building or building
regulation consents, copies of any guarantees for building
work and Local Searches. A Home Condition Report can be
included on a voluntary basis.
It is likely that properties coming on to market before
1st June will not require a HIP until April 2008. Also,
because of delays in securing local searches, we have
been given to understand that it may be acceptable to
begin marketing without them, provided they have demonstrably
been properly requested. It is conceivable that the same
approach might be taken with Energy Performance Certificates
(if a shortage of inspectors threatens significant delay)
but this would so reduce the credibility of the HIP, that
it seems unlikely. Depending upon property size and value,
the cost of each HIP will be £400 to £700.
Potential sellers will, therefore, have a real incentive
to go to the market before these packs become compulsory.
This would generate additional supply in May – traditionally
the busiest month for new properties coming onto the market
anyway.How will your
HIP be compiled?
Jackson-Stops & Staff has made a point of monitoring
HIPs legislation closely over the years, lobbying and
influencing wherever possible. We have ensured that all
offices are fully au fait with the rules and considered,
at length, how best to serve our clients. As a result,
we shall be offering two routes, throughout both of which
we shall assist. For clients who favour a ‘whole
package’, we have appointed a national specialist
HIP provider, LMS, with whom we shall liaise on behalf
of our clients. For those who prefer to instruct their
own solicitor to secure all documentation apart from the
Energy Performance Certificate, we shall be happy to arrange
for a qualified individual to make the inspection and
provide the certificate. This, when compiled with the
documents your solicitor obtains, plus any guarantees
you hold yourself, will complete the pack.
Market implications
In the short term, HIPs could bring more properties to
the market before 1st June and so address the current
shortfall in supply. After their launch though, the fear
is that the cost and inconvenience of a HIP will act as
another deterrent, on top of high stamp duty, to moving
house. Gordon Brown is reportedly concerned that HIPs
will affect the mobility of labour in this way.
No one, it must be said, is now seriously arguing that
HIPs will address the original purpose of the exercise,
which was to speed up house buying. That hope rested mainly
on the now voluntary Home Condition Report, which will
cost at least £1,000 for a country house but has
been available free of charge in area trials. Even then,
only 60% of those eligible have accepted the government’s
generous offer. Widespread take-up under real market conditions
thus appears unlikely. For the hundreds who trained to
provide Home Condition Reports, the value of that training,
once apparently certain, appears to be moving from ‘unknown’
into another, altogether less welcome, area of certainty.
Somerset: £1.75 million guide.
(Above)
Might we see a pre HIPs rush to market? |
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| JSS Private
Finance |
Equity Release
Using the value in
your home
By Andrea Rozario, Finance Business Development
Director for JSS Private Finance and current holder
of the British Mortgage Awards “Broker of the
Year – Equity Release.”
Equity Release is often seen as a tool for “asset
rich, cash poor” retired homeowners to fund
home improvements or supplement income. However,
as the market has grown, so have the innovative
financial products that are available.
People now use equity release to move up-market,
to help children get on to the property ladder,
to buy property abroad and even specifically to
reduce Inheritance Tax liability (rather than regarding
any reduction merely as a welcome by-product).
There are many schemes available now which will
allow customers to take out small regular amounts,
lump sums or even ad hoc amounts, as and when required.
You can even elect to protect a percentage of equity
thereby ensuring you leave some inheritance.
The Financial Services Authority now regulates Lifetime
Mortgages – one of the most popular equity
release products – and will also be regulating
Reversion Schemes later this year. Safe Home Income
Plans (SHIPs) have also been instrumental in adding
useful safeguards. The majority of plans also offer
a ‘No Negative Equity’ guarantee, thereby
giving customers peace of mind that there will never
be any debt left to the estate.
Historically low interest rates have played a significant
role in reducing the income of many retired people
whilst increasing the value of their homes. Equity
release offers a way to access that value and turn
low interest rates to your advantage, without moving
to a less valuable property. However it is important
to remember that there are pros and cons to equity
release and it is imperative that you get independent
financial advice before you commit. It is often
a good idea to talk over your plans with family
and there is a guide available from the Financial
Services Authority which is currently being updated.
JSS Private Finance can be contacted via any
of our offices or on 0800 600 1650. |
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