The draft Housing Bill represents a big change in the way houses are bought and sold in England and Wales and most of its proposals should be welcomed.
However, as with any type of legislation, the success will be in its implementation and the interpretation of the small print. In areas of low housing demand, especially, it is essential that the Home Information Packs (HIPs) are pitched at a realistic price compared with the selling price of the property.
Also, the ongoing debate about whether Home Condition reports will be included in the packs depends on the availability of enough surveyors to carry out the task. A concerted industry-wide effort to recruit the necessary talent needs to begin now.
Julie Westby, NAEA
This ill conceived draft Bill will lead to more bureaucracy and extra costs to both sellers and local authorities. But will it improve the home conveyancing process? The National Association of Estate Agents (NAEA) supports improvements to the process, but sincerely believes this Bill is deeply flawed for many reasons.
Agents will not be allowed to market a house for a client in the certain knowledge they have a ready buyer for it without first going through the lengthy process of assembling an HIP. That ready buyer will have to bide their time. Even showing them the house could be constituted an offence and lay open the agent to a £5,000 fine.
The proposal will remove all spontaneity from the market and jeopardise its growth. The NAEA believes it could put many people off from moving and so decrease supply.
And what about the Home Condition Report? Semi-qualified and potentially uninsurable home inspectors ‘ 7,500 of whom are needed between now and implementation will carry out these ‘surveys.’ The big question is: will these reports be accepted by purchasers of their mortgage lenders? The NAEA thinks not.
Hamptons International Mortgages
The new Bill is much more specific about what is needed in the Pack. These now include replies to searches made of the local authority and other problem issues, such as copies of planning consents. Land registration has been modernised.
It also seeks to address buyer preparation and encourages buyers to obtain ‘decisions in principle’ before they make an offer. It rightly advocates far faster mortgage offers from lenders. The Government may not need to address this last issue as over the past year the time taken for lenders to receive an offer letter has gone down from 11 to 10 days, driven mainly by technology and a softening market. But the time taken for a purchase to complete has gone up, from 62 to 85 days over the same period, which is more significant.
I think the new Bill eases many concerns, but I am sure there is still scope for improvement in selected areas.
Mark Lofthouse, Mortgage Brain Limited
Efficiency, certainty and timing are common key features throughout the whole home buying process and the fact that the Government are recognising the antiquity of the current system is a step in the right direction.
However, the introduction of HIPs alone does not adequately reflect the developments in technology in the mortgage market nor fully involve them in the process.
As a mortgage sourcing and electronic trading platform, I feel it is vital the Government looks more seriously at the other measures it has on its list.
By embracing electronic capability and integrating with initiatives such as e-conveyancing, a seller can not only speed up the collation of the information they are required to have, but the technology can ensure a buyer has an agreement in principle or mortgage offer on the table before making an offer ‘ and this is surely the leap that would make the real difference.
Now the plans are entering a more final stage intermediaries and consumers are going to be more able to come to terms with their requirements, however, I still think the Packs will put people off placing their home on the market. At least the reduction of the penalty for non-compliance has been reduced to a civil offence rather than a criminal offence, which waters down the worry.
There is still a concern in areas of low demand and low price, although there is still ongoing consultation over this, but I think these Packs, however they are priced, will put people off in these areas and reduce supply to the market, ironically raising prices.
The Government is obviously determined on this. I actually thought there was a good chance it would be put on the back burner, and never see the light of day again. The bottom line is that this is going ahead and we are all going to have to get used to it.
Stephen Smith, Legal & General
There are some changes to this Bill from the last one, principally the change of name from ‘Sellers’ Packs’ to ‘Home Information Packs’ and a reduction from criminal to civil sanctions if packs are not produced. The latter will calm some of the concerns of estate agents.
The Government is still consulting on the contents of the Packs and on their use in low-price areas and the timetable for introduction is not yet finalised.
It seems likely to be 2006 at the earliest, however, this will depend on recruiting sufficient Home Condition Report inspectors to carry out the significantly increased number of reports that will be needed. Obtaining the appropriate professional indemnity insurance for them will also be a major task in the current market.
But has anything significant changed since we were last at this stage? The answer is probably not.
The industry is still likely to be polarised by the changes and there are some significant ‘rocks on the road’ between now and implementation, not least what the property market does.
It would be a brave minister who decided to force through the implementation of HIPs in the face of a housing market recession.