Memorandum by Lurot Brand Ltd (AH 20)
In its enquiry into the affordability and supply
of housing the Committee may wish to consider the likely effects
of the proposed Home Information Pack. The following letter is
signed by property professionals who have a great deal of experience
of the market and are extremely concerned that the HIP will cause
more problems than it solvesin particular a major reduction
in the supply side of the market and subsequent upward pressure
I have extensive knowledge of the HIP proposal
and shall be very pleased to answer any further questions that
the Committee members may have.
Nick Salmon FNAEA.
Managing Director, Lurot Brand
Joint Co-Ordinator SPLINTA (Sellers' pack law
is not the answer).
The government has now made it clear that from
2007 it intends to force all home sellers to produce a Home Information
Pack (HIP) to be made available to prospective buyers. The average
cost of a pack is estimated at £635 and in metropolitan areas
the figure will be closer to £1,000.
We believe that the HIP is ultimately detrimental
to the consumer, could dislocate the property market, and will
fail to significantly improve the home buying process. The additional
costs will outweigh any possible benefits. By the government's
estimate consumers lose £350 million a year in the abortive
costs of failed transactions. The extra cost of the pack will
be well over £600 million a year.
The government identified 13 main reasons for
sales falling through after an offer has been accepted and argued
that many failures are due to adverse surveys. Analysis of their
research shows that such surveys account for less than 4% of all
failed transactions. The HIP will not deal with the other 12 reasons
for failure which include such factors as the buyer deciding the
chosen property is actually not big enough for their needs.
The property industry estimates that faced with
the cost of the HIP up to 30% of sellers will not come to the
market each year. This reduction of supply will lead to intense
upward pressure on prices.
Sellers will no longer be able to immediately
market their homes as there will be an enforced delay of up to
two weeks whilst the HIP is prepared. If the seller is anxious
to sell because they have found an alternative to purchase, this
delay will be unacceptable.
The HIP will have no shelf life so if a property
fails to sell in a short period of time the content will become
out of date requiring further expenditure to update the documents.
No prudent buyer will rely upon a survey report that is more than
three months old and they are unlikely to trust a survey commissioned
by the seller.
Lenders have so far failed to endorse the HIP
and there is no obligation on them to accept its content. Buyers
will still face the cost of valuation inspections.
Consumers will be disappointed and angry to
discover that the HIP will leave them facing many of the problems
inherent in the property buying system including gazumping, gazundering,
chains and, most importantly, the fact that many transactions
fail because people simply change their minds.
We welcome cost-effective change that would
improve the home buying process but the Home Information Pack
is not it. We call upon the government to shelve the implementation
of this potentially disastrous measure.
Signatories: (All partners or senior directors).
Dick FordKnight Frank
Peter YoungJohn D Wood
Andrew ScottLane Fox
Ivor DickinsonDouglas and Gordon
Nick SalmonLurot Brand
Stuart BaileyGeorge Trollope
Brian D'Arcy ClarkChesterfield
Lee WattsKinleigh Folkard Hayward
Keith PankhurstAshdown Marks
Peter RollingsMarsh and Parsons
Martin ElwesBoyle and Co
Simon AlbertiniFriend and Falcke
Graham CannonMarler and Marler
Graham Menzies-SmithDixon Porter
Peter RickenbergBective Leslie Marsh
Graeme Scott-DalgleishW.A. Ellis
Alan RussellRussell Simpson
Gary HershamBeauchamp Estates
Richard BernstoneAston Chase
Roger SlaterHobart Slater
Tim MacphersonCarter Jonas
Gregory BestermanSullivan Thomas