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ODPM News Release 2005/0233

17 November 2005

Home Information Packs, which are being introduced by Government to reform the home buying and selling process, will become mandatory from 1 June 2007.

Currently, one million pounds a day is wasted on failed transactions as buyers often spend hundreds of pounds on valuations, legal advice and searches on transactions that ultimately break down. By providing key information at the beginning of the process, Home Information Packs will prevent waste and significantly cut the number of sales that fall through. The Packs are expected to cost around £600 +VAT for the average home. Most of those costs are currently paid by the buyer.

Housing Minister, Yvette Cooper said,

“Too many sales fall through because of delays and late information, wasting money and causing great stress for buyers and sellers, that’s why we are introducing the Packs. We have been working with all parts of industry on the detail and this timetable will give them time to fully prepare”.

The Government expects that confirmation of an implementation date will act as a trigger to others who are waiting to begin their training as Home Inspectors as well as provide certainty to organisations who are already preparing to offer Home Information Packs to consumers on a voluntary basis.

To date, seven assessment centres have been established and 1700 people from the surveying and property industry and from other professions are undergoing training for the Home Inspector qualification, with hundreds in the pipeline, waiting for the implementation date to be announced. Research shortly to be published by ODPM will confirm the number of home inspectors expected to be required for June 2007 is between 5000 and 7400.

The next steps for the programme is to establish a certification scheme which is required to provide quality assurance and manage the Home Condition Report and Home Inspector registers. It is expected this scheme will be operating by the summer of 2006. A ‘dry run’ will follow later in the year designed to provide assurance to the industry and the public in advance of mandatory introduction on 1June 2007.

For background information please visit www.odpm.gov.uk/homeinformationpacks

Claims that house-sellers would be forced to spend up to £1,000 on Home Information Packs have been rejected by the Government.
The packs are being introduced in early 2007 as part of Government plans to change the way property is bought and sold.
Homeowners will have to compile one of the packs, which will include a new "home condition report" based on a professional survey of the property, evidence of ownership and local authority searches, before they can put their property up for sale.
But the Government rejected claims that the packs would cost up to £1,000, instead sticking by its original estimate that the bill was more likely to average £635.
The home condition report, which will contribute around £350 to the total, will go into greater depth than the current valuation carried out by a mortgage lender, but will not be as thorough as the homebuyer's survey and valuation or a full building survey.
The Government claims the packs will help reduce the £1 million that is wasted each day when property sales fall through after potential buyers have spent hundreds of pounds on valuations, legal fees and searches.
The plans aim to help first-time buyers, who would no longer have to find the money to pay for a survey.
Overall it said the total costs involved for people buying and selling a home were expected to be around the same or cheaper than they are now, with some of the costs switching from buyers to sellers.
Draft regulations have been published, setting out the detail of Home Information Packs, which remain the same as set out in the Housing Act in October 2004.
Housing Minister Yvette Cooper said: "Buying a home is stressful enough without losing hundreds of pounds on legal fees or valuations for properties that then fall through.
"It is crazy that over £1 million a day is wasted like this. Home Information Packs will actually save money and cut waste in buying and selling homes."
source: channel 4 news

The government has announced its intention to pursue its controversial house-sellers packs. What will this mean for the way we buy and sell houses?

What are they?

The government wants to introduce compulsory "home information packs" (HIPs) in England and Wales.

These would require people selling their houses to collect information about their properties ahead of the sale.

Similar schemes already operate in Denmark and New South Wales in Australia.

Why do we need them?

The aim is to make the house buying and selling process more transparent and consumer friendly.

People will have better information at their finger-tips when they view properties.

This should cut out timewasters, and save money for buyers.

Will it prevent gazumping?

No, the packs will not ban gazumping.

However, the packs should lessen the chance of gazumping taking place because it should cut the time taken between agreement and completion of the sale.

But the law will not be changed to make an initial offer for a house legally binding, as it is in Scotland.

What will the packs contain?

This has not yet been fully decided.

However, sellers or estate agents acting for vendors will be required to assemble lots of legal documents.

They could include a copy of the lease on leasehold properties, and evidence of ownership such as title deeds.

Sellers will also be obliged to have a "home condition" report, a type of structural survey.

New requirements such as an energy efficiency assessment may also be included.

What about cost?

The cost is to be borne by the seller, instead of the buyer as at present.

The government estimates the pack will cost between £500 and £600 to assemble, slightly higher in London.

Some fear the cost will be too expensive for people on low incomes.

However, others believe the cost will be driven down by market forces, and estate agents will offer the sellers' pack as part of the selling deal.


So why are they so controversial?

Supporters say the packs will empower both buyers and sellers - but not all agree.

The government has some vocal opposition - mainly from lawyers and estate agents who are sceptical of the proposals.

Surveyors, however, who will do well out of the plans, are more welcoming.

A survey of UK estate agents reveals that an unsightly car parked next door can knock thousands off your house price. It's likely to wipe an averge of 5.5% - equivalent to £10,170 - off the the average UK house price of £184,924.

The results, compiled by Network Q, also shows that a banger doesn't have to be parked next door to affect your house price - it can knock 4% off the value of nearby residential properties. Even worse, if you are the owner of the car in question, estate agents say it may prevent many buyers from even looking at your house, and knock off 8% of the true value.
Network Q also asked 1600 UK homeowners about their views on seeing an old banger when viewing a neighbouring house. 35% would refuse to even bid in the first place and another 37% would place a lower bid because of it.

The estate agents revealed that one client hid his car and borrowed a friend's newer car to help make a sale. Smart homes neighbouring a teenage repair fanatic couldn't be sold, while one house had five old cars parked in the driveway and had its value reduced by 25%. Caravans and mobile homes also contribute to lowering the value of surrounding houses.

'A person with a poorly maintained or shabby car can give off all the wrong signals to someone looking at their home or a neighbouring property," said Network Q's Richard Hughes. "It also goes to show that sometimes a quick and easy sale is sometimes out of your own hands.

"If your car is on its last legs, upgrade to a newer model and you'll not only improve your driving pleasure, but as these findings prove, have the peace of mind that you'll save yourself a fortune when it comes to selling your house."

House prices have risen over the past year despite a fall in the number of sales with the average London home costing over £300,000, according to the latest Land Registry figures.
The July to September figures suggest the average house price in England and Wales is £194,589, an average rise of 3.53% from £187,971 for the same period in 2004.

But the volume of sales in England and Wales decreased by 15.41% from 309,101 in 2004 to 261,481 in 2005.

The survey also shows 1,140 properties worth over £1m were sold in the 2005 quarter compared to 1,230 in 2004, and 78,559 properties under £120,000 were sold compared to 95,190 in 2004.

In Greater London, the average property price increased by 4.47% from £287,470 in 2004 to £300,329 in 2005, while the volume of sales decreased by 15.87% from 39,692 to 33,393. According to the Land Registry, 634 properties worth over £1m were sold in Greater London compared to 727 in 2004.

The area which shows the greatest rise in house prices is Wales, increasing by 7.42% from £135,162 in 2004 to £145,188 in 2005.

Milan Khatri, RICS chief economist, says: “The drop in inflation contrasts with figures released by mortgage lenders in the last few months which showed an upturn in price rises. This is unsurprising since the Land Registry figures are based on completion prices, which are recorded several months after sales have been agreed.”

He adds the recent upturn in agreed sale prices is unlikely to be fully evident in the Land Registry statistics until the fourth quarter.

The fall in completed sales is “consistent with recent evidence that housing market activity has shown a rebound following the August interest rate cut,” says Khatri.

More recent RICS statistics show buyers have become more confident as the predicted housing market crash has failed to transpire, he adds.

Khatri continues: “RICS expects the upturn in housing activity to be sustained, supported by steady growth in the number of jobs and incomes. However, with further significant interest rate cuts unlikely in the foreseeable future, a renewed housing market boom is quite unlikely.”

Demand for UK commercial property is holding up with the exception of a weak retail market which is suffering from a slowdown in consumer spending and plummeting confidence, says the RICS (Royal Institution of Chartered Surveyors) commercial property survey published today (26 October).

The slowdown in occupier take-up that has characterised the past year has stabilised, but the fortunes of property sub-sectors have diverged dramatically. Nationally, 14% more chartered surveyors saw a rise in demand for office space than a fall in the third quarter, while in retail, 14% more reported a fall than a rise.

The picture in central London is even more pronounced with a balance of 25% of chartered surveyors seeing a rise in office demand but a hefty 46% seeing a fall for retail premises. Confidence in the retail sector is also at its lowest since the beginning of the Iraq war with 38% of chartered surveyors expecting further downturns in demand.

Continued demand for office space is being sustained by growth in business and financial services activity. An improved manufacturing sector and buoyant investment in distribution services is bolstering industrial property demand. Further rent rises are expected by surveyors in both areas.

The August interest rate cut may offer relief to the retail industry and allow the industrial sector to continue prospering.

RICS economist, Milan Khatri, says:

‘The retail property sector has keenly felt the impact of the slowdown in house prices and weaker consumer spending. However, other parts of the service sector have continued to grow and this is supporting investment in both office and industrial floor space.’


Taken from the RICS website