Progress, of sorts
The DCLG* is striving to make compulsory Home Information
Packs more workable. In doing so, it may be creating an
unwieldy sledgehammer to crack a very small nut.
In a surprise u-turn, the government has abandoned the
mainstay Home Condition Report element of the Home Information
Pack (HIP), a move welcomed by JSS and others who have
campaigned against the concept as adding unnecessary cost
and time to the marketing process.
We are left with the remnants of the HIP which will still
be compulsory with effect from 1st June 2007. In essence
these are the legal information pack and the Energy Efficiency
Report. The legal pack will deal with such matters as
title and local searches, which are already covered by
the present system but tend to be addressed at the end
of the sales process, rather than the beginning. We support
this element of the pack but it will require the swift
and efficient cooperation of the legal profession if delays
in bringing a property to the market are to be avoided.
Described by Yvette Cooper as “the most important
element” of the HIP, the Energy Efficiency Report
has broad political attractions and fulfils a 2001 EEC
directive. We have no problem with the Energy Report in
principle but, based on a recent trial, we have doubts
as to its real value as presently structured.
Energy issues have certainly come to the fore of late.
Global warming is of widespread public concern. The recently
passed Climate Change and Sustainable Energy Bill has
introduced grants for microgeneration that will enable
some landowners to see a profit on small wind turbines
in as little as three years and, whilst David Cameron
will have to wait ten times longer for the one on his
roof to justify itself commercially, its political pay-back
has doubtless been achieved before it has even been put
up. Meanwhile, higher fuel costs have made the least ‘green’
amongst us grumble – if not yet do much – about
them. In such circumstances, of course buyers will welcome
accurate, useful information on, say, how efficient the
boiler is, or how much money could be saved through better
insulation. But how accurate will it be?
When we asked two leading HIPs providers to assess the
same six bedroom thatched, Hampshire house, one gave its
current energy rating as 38 (out of a potential 100),
the other, only 23. Indeed, the second assessor stated
that, even with improvements, the best the house could
achieve was 35 – less than the first thought it rated
as it stood.
Assessing old, large properties is, it must be admitted,
difficult – perhaps too difficult to do within a
highly standardised process. But if it can be done, then,
bundled up with the planning consents, rights of way documents,
etc (which sensible owners prepare now anyway), a HIP
that adds some value to buyers might emerge in summer
2007. It will, however, have been a long and tortuous
route to arrive at such a modest document.
Top: Anglesey, 160 acre coastal farm
£895,000 guide. Below: West Sussex farmstead with
22.5 acres, £1.75 milion guide Having sizeable areas
of open land, such properties are well-placed to take
advantage of new grants that make the 'microgeneration'
of electricity, using wind turbines, economically attractive.
* Department for Communities & Local Government
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JSS PRIVATE FINANCE
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Offset
mortgages and the ‘regular’ JSS client
First widely marketed by Virgin Direct
in 1997, the Offset Mortgage was that rare thing
– a genuine innovation. It attracted a great
deal of attention but, being unsuited to the mainstream
market, has not proved revolutionary. Despite
this, because interest saved cannot, unlike interest
earned, be taxed, it is an attractive product
for some higher rate taxpayers, especially those
who experience large swings in cash flow. This
is because an offset mortgage is rather like a
giant overdraft. Thus, for example a bonus might
be used to pay off a slice of the mortgage in
January then, should an opportunity or unexpected
expense arise later in the year, funds can be
drawn on demand.
Those who take offset mortgages often fall into
one of three very broad groups that might be considered
regular’ Jackson-Stops clients: City workers
and company owners who take large loans –
perhaps £700,000 on house costing twice
as much – which they expect to reduce substantially
over just a few years. On a national scale, they
represent a tiny niche. More numerous – though
still an exclusive group – are those making
up another profile’: professional couples
buying the family house. With a combined income
of perhaps £75,000 pa, they will be borrowing
around £200,000 and, using equity from one
or two existing properties, will be buying at
400,000, sometimes £500,000. This occasionally
brings them into competition with buyers moving
in the other direction, who make up another distinct
group: retired owners of large houses, perhaps
£1M to £2M, who want a more manageable
home and to release capital. For them, a mortgage
is essentially a short-term luxury. The house
they want can be bought when it comes up. The
sale of what has sometimes been the family home
for decades can then be planned and a gradual
transition to the new home made over the course
of a year or more. For those in such a fortunate
position, it is a wonderfully genteel way to move
house.
JSS Private Finance brokers can be contacted
via any of our offices or on 0800 600 1650.
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