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What Impact Will The Introduction Of Home Information Packs Have?

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Most estate agents in my local area Northampton (UK), tell me that no date has been set for the introduction of Home Information Packs!

However, the Office of the Deputy Prime Minister provides a mandatory date of 1st June 2007. http://www.odpm.gov.uk/index.asp?id=100288...ssNoticeID=1996

So my question for the experts is: What impact will the introduction of of Home Information Packs have on the UK housing market?

Regards,

HD

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Guest Fiddlesticks

Most estate agents in my local area Northampton (UK), tell me that no date has been set for the introduction of Home Information Packs!

However, the Office of the Deputy Prime Minister provides a mandatory date of 1st June 2007. http://www.odpm.gov.uk/index.asp?id=100288...ssNoticeID=1996

So my question for the experts is: What impact will the introduction of of Home Information Packs have on the UK housing market?

Regards,

HD

By making more information available at an earlier stage they should make the process of evaluation of the property much easier for the buyer, and that should lubricate the wheels of the market and make transactions easier. But I guess that 'price-sensitive' information will just emerge at a different time, and therefore the price ultimately paid should be the same. (Whether vendor-commissioned surveys can be trusted remains to be seen.)

However, it seems to me that the current system encourages sellers (it's very easy to put your house on the market) and discourages buyers (before you can make a serious bid for a house you need to fork out for a survey). The new system turns this on its head.

In theory, by placing a hurdle in the way of sellers, HIPs will make sellers slightly less likely to put houses on the market and so could reduce supply slightly. In fact I presume this would only rule out those sellers who were not very serious about selling anyway.

But the new system removes a major hurdle for buyers, and encourages buyers to make offers. More buyers may bid on a property when they don't each have to cough up for a search and survey, so it's possible that bidding wars could become more likely, which would push prices up.

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Would you buy a house on the basis of the vendor's survey? I know I wouldn't. Anyone with any sense would commission their own survey, searches etc. So it won't speed anything up and will just cost the vendor more money = less money to spend on the next place = next tier of houses won't get bid up to quite as much.

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By making more information available at an earlier stage they should make the process of evaluation of the property much easier for the buyer, and that should lubricate the wheels of the market and make transactions easier. But I guess that 'price-sensitive' information will just emerge at a different time, and therefore the price ultimately paid should be the same. (Whether vendor-commissioned surveys can be trusted remains to be seen.)

However, it seems to me that the current system encourages sellers (it's very easy to put your house on the market) and discourages buyers (before you can make a serious bid for a house you need to fork out for a survey). The new system turns this on its head.

In theory, by placing a hurdle in the way of sellers, HIPs will make sellers slightly less likely to put houses on the market and so could reduce supply slightly. In fact I presume this would only rule out those sellers who were not very serious about selling anyway.

But the new system removes a major hurdle for buyers, and encourages buyers to make offers. More buyers may bid on a property when they don't each have to cough up for a search and survey, so it's possible that bidding wars could become more likely, which would push prices up.

Could this also induce a rush of vendors putting their property on the market before the HIPs are introduced?? :blink:

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Guest Fiddlesticks

Would you buy a house on the basis of the vendor's survey? I know I wouldn't. Anyone with any sense would commission their own survey, searches etc. So it won't speed anything up and will just cost the vendor more money = less money to spend on the next place = next tier of houses won't get bid up to quite as much.

I'd agree, but I'm not sure all buyers (especially FTBs) fall into the category of 'anyone with sense'. I seem to recall that a large proportion of them rely on either the basic valuation survey, or the homebuyer's report, neither of which is likely to turn up anything much. To be fair, a large contributory factor in this is the fact that cash is very scarce when you're an FTB. I can't see many going out and spending around £700 on their own full-structural survey when there's a nice free one that someone prepared earlier.

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In theory, by placing a hurdle in the way of sellers, HIPs will make sellers slightly less likely to put houses on the market and so could reduce supply slightly. In fact I presume this would only rule out those sellers who were not very serious about selling anyway.

I think it will weed out the people trying it on, if I had paid £100,000 for my house 5 years ago and the one round the corner just went for £150,000 currently I could try it on the market for £200,000 without any cost (save for a little time).

I'm sure there are people doing this but not in significant numbers to have a big impact on the market in my opinion.

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I think it will weed out the people trying it on, if I had paid £100,000 for my house 5 years ago and the one round the corner just went for £150,000 currently I could try it on the market for £200,000 without any cost (save for a little time).

I'm sure there are people doing this but not in significant numbers to have a big impact on the market in my opinion.

In my experience as an agent there are a surprising number of people who "know" what their house is "worth" and will not sell for a "loss" (a figure below what they "know" their house is "worth") under any circumstances, even if it means they are still in a one bed flat with the second kid on the way or are living alone in a massive run down house, rather than trading down to a nice little home to see them through their retirement.

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In my experience as an agent there are a surprising number of people who "know" what their house is "worth" and will not sell for a "loss" (a figure below what they "know" their house is "worth") under any circumstances, even if it means they are still in a one bed flat with the second kid on the way or are living alone in a massive run down house, rather than trading down to a nice little home to see them through their retirement.

Do you think that HIPS will reduce the amount of people 'kite flying'?

I'm quite surprised at the amount of stupidly priced properties that are marketed by estate agents, Is there any reason that Estate Agents don't just tell them where to go?

The same even applies to rental property. I am looking for a house to rent and someone has put a 2 bed flat up for rent at 1100 pcm. Similar properties can be had for half that and you can rent a 5 bed house with a big garden in a prime location for less. It seems like a quite a lot of work for their Estate Agent with no likelyhood of a return on their work.

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Do you think that HIPS will reduce the amount of people 'kite flying'?

I'm quite surprised at the amount of stupidly priced properties that are marketed by estate agents, Is there any reason that Estate Agents don't just tell them where to go?

The same even applies to rental property. I am looking for a house to rent and someone has put a 2 bed flat up for rent at 1100 pcm. Similar properties can be had for half that and you can rent a 5 bed house with a big garden in a prime location for less. It seems like a quite a lot of work for their Estate Agent with no likelyhood of a return on their work.

Thank you all for your thoughts:

I agree that the introduction of HIPs will remove some sellers from the market who currently put their house on at a high price with a 'if it sells it sells .. if it doesn't it doesn't' attitude. Very few sellers will pay £600 or £700 'just to see' if they can sell their house.

I also think that in the run-up to HIPs we may well see lots of last-minute sellers trying to sell or offload a house before the mandatory June 2007 deadline.

My view is that from June 07 the introduction of HIPs will initially stagnate the market as sellers will not understand the market and will try to holdout for a while, as they come to terms with the new selling cost. Additionally EA fees for sellers will rise, as I'm sure they will claim their doing more work, even if their not.

Conversely, from the buyers point of view, we can stop wasting our time looking at houses riddles with issues. I hate more than anything viewing a house at £ 160,000 plus which has more damp than my outside shed. In time buyers will also become more savvy towards whats in the pack and whats not and so prices based on the real condition of the house should prevail.

A last thought maybe that the number of cowboy property developers (you know the ones with the large supply of magnolia paint) may decrease as botched conversions and 'improvements', should be more identifiable in the report.

Overall I think HIPs are a positive for buyers.

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I agree with everyone above that mentions HIPs would deter time-waster sellers,

of which, the market is now saturated. It doesn’t cost them anything to put

their property on the market. And this new system will make them think harder

about whether the property is priced to sell?

The currant system has flaws too. The surveyor’s first priority is to cover his ass.

There are three levels of survey... hard , medium, easy.

Hard: (Structural survey.) £500 upwards.

Goes into the ins-and-outs of a cat’s ass and gives solicitors ‘cold sweats’

because they have to cover their ass as well!

It is easier for the solicitor (no skin off his nose) to talk you out of a purchase

rather than ‘face the flack’ if something goes wrong, that was mentioned on

the survey. A full building survey WILL find faults.

Medium: (Report on condition & valuation.) £250 upwards.

The minimum sensible survey to have although each element of

the property is inspected, the level of reporting is slightly less detailed

than the full building survey. If a fault is found and suggestions of a further

structural engineers report mentioned. get the vendor to pay half, or three quarters

towards the report.

Easy: (Valuation for Mortgage purposes.) £80+

Artistic licence to take the p!ss out of you.

A valuation report is commissioned by a mortgage lender.

(Paid for by you.) Get a proper survey, this one doesn’t warn you

of any potential problems. And you will not have any legal rights

to sue if things go wrong.

80% or so of purchasers do not commission an independent survey?

That is why the Government is introducing HIPs.

And that is why Estate agents (some~ not father fred) don't want it

because a lot of buyers get caught out with just the basic valuation.

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You can sue surveyors on vals by the way.

even if the bank pays for the survey, the surveyor knows (or should know) that the buyer will rely on it and therefore there is a legal relationship (case law has proven this). if the property then has a serious problem which significantly affects the value, you can sue the surveyor.

i would say that buyers should really have a full survey. but if they have done the research on the market that they should have, and they know a fair bit about DIY / building (or have a trusted friend who can identify many of the major problems that could crop up) then I can undestand why they'd take the risk.

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More information on HIPs than you can point a stick at;

http://www.hipfreehomes.com/

When you are ready to sell do you really want:

To risk a delay of weeks before you can put it on the market?

To be forced to pay out about £1000 of the proceeds on top of your Estate Agent’s commission?

The details of your home to be put on a new Government database?

To be tied to just one Estate Agent?

All to comply with a EU Directive while raising £87 million in VAT from homeowners.

I feel that HIPs will help 'see off' the small local agents (who, through extra competition, keep agents commissions down) - The 'big boys' such as HFX and Countrywide will almost certainly employ their own HIP surveyors and only pass the cost on to the vendor on completion or if they take the property off the market. Many of the smaller agents may well not be able to finance this thereby losing customers and leaving the door open for the (bigger) ones who are left to jack up rates - my forecast is that by 2011 we may well be seeing commission rates similar to many other countries which are closer to 6% than 1.5%

Also expect to see owners of 'less than perfect' properties dumping them into the market prior to June 2007!

Edited by ILikeBigBoobs

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On a slightly different issue with regards to surveys - if you commisioned a survey would you want to be at the house when it is done?

Do many buyers do this Father Fred?

If I were buying a house now, I would want to be there when the surveyor turns up. Then I can shadow him and he can explain what's going on... (Will also feel presured to spend longer inspecting)!

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heh! surveyors are bricking it as they won't be able to make the easy money time and time again charging £150 for getting out a tape measure (a crack you say - hire an structural engineer - I just look at the gutters!).

75% of the time they charge £100 for a photocopy of an existing report. Old rope.

I imagine all the other parasitical coat tail hangers won't be chuffed either.

Edited by geneer

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You can sue surveyors on vals by the way.

even if the bank pays for the survey, the surveyor knows (or should know) that the buyer will rely on it and therefore there is a legal relationship (case law has proven this). if the property then has a serious problem which significantly affects the value, you can sue the surveyor.

I always read your posts father fred, they are qualified opinions (rare!)

But I do beg to differ on this point.

In short. The small print disclaimer, is the surveyors get out of jail card!

The cast you quote was / must have been rare and unique.

All the surveys I’ve had carried out (I read small print religiously)

State no liability for negligence.

(That’s the definition of a professional, you can’t sue them for f**k ups).

My cousin has an underpinning company (all insurance work)

The stories he has told me about faulty surveys and ‘botch-up’ repairs

Could fill this forum with liable anecdotes.

If you are having a mortgage, the lender will insist as a minimum that a valuation report is carried out. This is only a cursory look at the property and the valuer may only be at the property for 5-10 minutes. A valuation is merely to ascertain the value of the property for the benefit of the lender so that they can make a decision as to how much money they are prepared to lend to you to purchase the property. It may give general comments with regard to the condition of the property. If the valuer makes a mistake then the valuation is not worth the paper it is written on in terms of you suing the valuer or the lender. The valuation is prepared solely for the purposes of the lender and this is set out on the valuation document although normally in very small print. The only situation where it may be safe to rely upon a valuation report is if you are purchasing a brand new property with the benefit of an NHBC, Zurich or long term guarantee.

http://www.coles-miller.co.uk/public/lates...e=about&key=169

Edited by burnt before

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I like big boobs -

Wise words

Jason –

I can see benefits of being there, but very few buyers do this. Part of it is that a significant number of surveyors would refuse to let them! If you were a conveyancer acting for a buyer, and he insisted on looking over your shoulder while you were reading through the contract, I think you might have a problem! No-one likes being observed working (apart form actors maybe, but that’s a bit different.)

I did shadow a surveyor on my own re-mortgage recently and we chatted a few things through (eg signs of damp that he guessed were one thing, which I told him were something else (less serious) and he trusted my take on it.) But a lot of surveyors do not like that at all.

Burnt before

I have re-read some notes from a course I have just done (Law for Property Professionals.) I disagree completely with what Coles-Miller says… the valuer might wriggle out of it sometimes, but certainly not every time.

Most contracts will have disclaimers of every sort and it is good practice to insert them if you are offering a service, but at the end of the day you have a right to a certain level of service / product.

If you buy a radio from a shop they might have an “absolutely no refunds” policy, but if the radio is not fit for purpose (eg it doesn’t work) then they have to refund you.

Equally, they might try to avoid liability but the court will not enforce unfair contract terms. Saying that there is a fair chance that they can justify why they could not have been expected to spot the problem (eg rotten floorboards hidden under laminate floor).

See -

Contractural negligence

Sale of goods act 1979 Section 14 (2)… sales form a contract and an implied clause in all sales by a business is that the goods supplied are of satisfactory quality

Supply of goods and services act 1982 (update of above) “In a contract for the supply of a service where a supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill”. (in the case of a surveyor, spot things that a reasonably competent surveyor would have spotted)

Exclusions

Canada Steamship Lines vs The King (1952) AC192… CS stores goods in warehouse owned by the crown. A crown employee negligently burns down warehouse. Contract says CS “shall not have any claim… for damage to goods” in the warehouse, court says the crown could not rely on the clause as it did noot cover liability for negligent damage.

Unfair contract terms act 1977. Liability for loss or damage to property can be restricted or excluded as long as the terms or notice satisfies the requirement of reasonableness.

Yianni vs Edwin evans (1982) QB 438… Yianni wishes to buy a house. Building society instructs Edwin evans valuers and advise Yianni to instruct his survey. Edwin Evans values at £15k and bank lends £12k. House suffers subsidence. Yianni sues Edwin evans, Edwin evans admit negligence but deny duty of care to yianni. court says that Edwin evans knew yianni would see the report and should reasonably have contemplated that yianni would rely on the valuation, therefore yianni win.

Similar cases smith vs bush and harris vs wyre forest district council both 1990 and both backed up yianni case.

(note – even if exclusion clauses were “reasonable” then if the mortgage applicant did not instruct the valuation (the building soc did), therefore didn’t see the clauses therefore they did not apply to the mortgage applicant.)

Also,, just reading an article about probs with HIP regulations

(1) what is the definition of a property “being put on the market”

(2) will banks or buyers rely on HCRs (the home condition reports)

(3) a seller can’t use an existing HCR (eg a housebuilder takes a house in part exchange, they must get a new HCR even though the old one may have been prepared the previous week)

(4) If the property is not being sold with vacant possession (eg tenants in place) then no HIP needs to be provided.

(5) the home use form and the contents form are both compulsory and are the only documents in the HIP that a layman will understand. They can be left blank.

(6) home contents form is muddled.

(7) housebuilders cannot do a standard HIP for all props in a devlopment, they have to do individual ones.

(8) it will stop DIY conveyancing

(9) It might break the human rights act

(10) out of date very quickly

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In some cases, proof of negligence is straightforward, (open & shut case)

For the rest of the majority, “Sod your luck!

80% do not commission an independent survey. That’s why HIPs is being introduced.

I believe that's better than a £80+ valuation that's a waste of time and not worth the paper it's on.

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In my experience as an agent there are a surprising number of people who "know" what their house is "worth" and will not sell for a "loss" (a figure below what they "know" their house is "worth") under any circumstances, even if it means they are still in a one bed flat with the second kid on the way or are living alone in a massive run down house, rather than trading down to a nice little home to see them through their retirement.

FF, classic, nice post!

I'd be interested to hear any anecdotes of the second type you have come across in your work life.

:)

frugalista

So my question for the experts is: What impact will the introduction of of Home Information Packs have on the UK housing market?

It is definitely having an effect on me. I am not buying till after the HIPs come in!

frugalista

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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