Government to boost rights for home buyers and sellers

Kay McLellan

June 16, 2006

On the day the government unveiled the detailed contents of Home Information Packs (HIPs), housing minister Yvette Cooper and consumer affairs minister Ian McCartney set out a three-way strategy, involving HIPs, local searches, e-conveyancing and stronger redress against estate agents and others when things go wrong.

£350m is wasted by buyers and sellers each year when sales fall through. Under the current system home sales in England and Wales take longer than in almost every other European country and consumers are often left feeling baffled, misled and even ripped off in the process.

Measures outlined today will:

  • give reliable information on the condition and energy efficiency of homes up front, to cut waste and duplication
  • speed up sales by making conveyancing and local searches cheaper and faster
  • provide simplified redress for consumer complaints against estate agents and other marketproviders and a single point of access for all complaints about the buying and selling process.

The aim is to encourage greater competition and transparency in home buying and selling, so that people know exactly what they are paying for.

Yvette Cooper said: “For too many people, buying or selling their home is still a real nightmare, with long delays and duplication. People should be entitled to proper information at the beginning of the process. We know there are still vested interests who make money out of the current system and who are opposed to reform, but this is about getting a better deal for the consumer.”

Consumer affairs minister Ian McCartney said:“Estate agents play a key role in the housing market. It is vital that people buying and selling property are adequately protected against rogue agents and unfair practices.

“We are committed to put in place approved redress schemes for consumers. Those who refuse will be prohibited from acting as estate agents. The legislation is already in place to tackle complaints involving HIPs and we want to extend that right of redress to cover all complaints against estate agents as soon as possible. These changes will be introduced at the very first legislative opportunity.”

The Home Information Pack regulations published today make clear that:

  • HIPs will include a Home Condition Report which sets out detailed information on the condition of the property. At present, 30 per cent of sales collapse under the current system, often at a late stage when terms have already been agreed
  • An Energy Performance Certificate will be included as part of the Home Condition Report which, just like a fridge rating, will show how energy efficient a property is and indicate its likely running costs as well as offer advice on how further savings can be made
  • Most of the information contained in Home Information Packs, such as searches and title deeds, is already provided and paid for under the current system, but the HIP transfers costs from buyers to sellers, so first time buyers will be much better off

Home Information Packs have long been called for by consumer association Which?

Alongside the regulations the housing minister also published the certification scheme standards establishing the strict requirements to be met by home inspectors who will complete the Home Condition Reports.

This will require high standards and proper indemnity insurance for home inspectors so that buyers, sellers and lenders can all rely on the report.

The certification schemes will also include independent redress against Home Inspectors when things go wrong. Estate agents will also have to join an approved redress scheme for their work on HIPs and the government intends to go further and legislate in respect of all their work.

Ms Cooper also welcomed the news of a proposed new awarding body for the Home Inspector qualification so that more home inspectors can be trained.

The government is also planning new legislation to extend independent redress against all aspects of estate agents’ work, as well as simplifying the system for customer complaints.

On costs the latest estimates, based on the current market, show an average cost of HIPs of £600-700 plus VAT. However, those costs are mostly paid for in the current system anyway. And competition is already affecting prices with some providers saying the would offer reduced price HIPs and one provider proposing to offer them for free.

Ms Cooper also announced that the government will ensure there is full monitoring and assessment of this Autumn’s dry run for HIPs in order to ensure lessons are learnt in time for the full implementation next year. The dry run will look in particular at the speed and costs of producing HIPs, consumer attitudes to HIPs, and the impact on the wider homebuying process.

Energy Performance Certificates (EPCs) will be included in the Home Information Packs. The certificates will give home buyers and sellers A to G ratings for their home’s energy efficiency and carbon emissions. They will tell them current average costs for heating, hot water and lighting in their home as well as how to cut costs with energy efficiency measures. The announcement of the Government’s new EPC has been welcomed by environmental groups such as Friends of the Earth and the WWF.

The Government also set out today plans to extend Energy Performance Certificates to public buildings.

Energy Performance Certificates will be issued when buildings are constructed, sold or rented out and energy consumption certificates will be issued for buildings obliged to display them.

Initially, energy consumption certificates will be limited to large public buildings, but a public consultation will look at how this can be widened to smaller buildings and some of the private sector.

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