House of Commons - Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions

Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

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 solves—in particular a major reduction in the supply side of the market and subsequent upward pressure on prices.

I have extensive knowledge of the HIP proposal and shall be very pleased to answer any further questions that the Committee members may have.

Yours faithfully

Nick Salmon FNAEA.

Managing Director, Lurot Brand

Joint Co-Ordinator SPLINTA (Sellers' pack law is not the answer).

LEADING ESTATE AGENTS VOICE CONCERNS OVER HOME INFORMATION PACKS

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 Ford—Knight Frank

Christopher Lacy—Savills

Robert Bartlett—Cluttons

Peter Young—John D Wood

Andrew Scott—Lane Fox

Ivor Dickinson—Douglas and Gordon

Nick Salmon—Lurot Brand

Stuart Bailey—George Trollope

Brian D'Arcy Clark—Chesterfield

Lee Watts—Kinleigh Folkard Hayward

Keith Pankhurst—Ashdown Marks