BSA calls for voluntary HIPs
This follows a survey of building society chief executives which found that 84 per cent of them expect the introduction of HIPs to have a negative effect on the housing market.
New Government requirements mean that from June 2007 home sellers will be required to produce a HIP which will provide the prospective buyer with information about the property. The cost of a HIP is estimated to be as high as £1000, and failure to provide a HIP will be punishable by a fine.
Comments from society chief executives included:
– HIPs will add costs without any tangible benefits
– HIPs won’t reassure buyers
– HIPs won’t speed up housing transactions as lenders will still require valuations
– The number of properties for sale will reduce dramatically creating supply and demand shortfalls
Making HIPs voluntary would allow market forces to determine the demand for HIPs and how they will operate. It would also allow buyers and sellers to fully acquaint themselves with HIPs and the implications for the property sale. It would also minimise the impact of any unforeseen consequences that the introduction of HIPs may have.
The reduction of the number of properties coming onto the market was felt to be particularly worrying, as a consequence of the effects this could have on house prices not just over the summer of 2007 but into the longer term. Any increase in prices will further worsen the already acute affordability problems that buyers face in many parts of the country.
Speaking at the BSA’s Annual Conference in Manchester, Adrian Coles, the BSA’s director-general, said: “People’s homes represent their most important financial asset. As such, it is imperative that they can have confidence that there will not be any unexpected fluctuations in the market over 2007. And with so much uncertainty amongst consumers and the industry over how HIPs will work, Government would be ill advised to fine sellers who do not have a HIP. Making them voluntary will lessen any negative impact on the market and minimise the effect of any problems that may occur.
“It is ridiculous that someone selling their home without a HIP will be punished by a fine. If people feel that HIPs will be of benefit they will opt to have one without the need for compulsion”