HIPs draft law heightens market concerns
As the government published draft regulations for consultation of the contents of the HIP, housing minister Yvette Copper said the packs will cut costs and waste, and help prevent sales falling through after an offer has been accepted.
However, the market has not reacted favourably to the draft regulations amid reports that it could cost sellers up to £1,000 for the packs.
Stuart Jennings, head of European residential mortgage-backed securities (RMBS) at Fitch Ratings, said: “As the home condition report (HCR) does not cite a value, the buyer needing a mortgage may have to pay for a valuation report from a lender adding further cost to the house purchase process. As a result there will be pressure on lenders to reduce the cost of the valuation process.”
Jeremy Deacon, associate director, RMBS at Fitch Ratings, added: “Our fear is that the introduction of HCRs forces lenders towards using automated valuation models more extensively in their underwriting, potentially in cases where it may not be appropriate.”
Kevin Martin, Law Society president, said: “There are still many problems surrounding the issue of HCRs and the choice of home inspectors and their regulation. It is worrying that the government still has not set up appropriate certification arrangements to regulate and control not only the production of the reports but the people who produce them.”
Dominic Toller, director of marketing and new business at LMS, said it was disappointed with the negative response HIPs have received but admitted the impact on intermediaries was still unclear. “The broker concern is that estate agents will be the main instructor of HIPs so does this mean they’ll all get the mortgage as well? But we are talking to packagers and networks who want to provide HIPs which suggests that estate agents won’t dominate the market.”