Friday, Jul 21, 2006

Real reason for u-turn on HIPs

In2Perspective: HIPs were set to trigger a 30% fall in house prices

Home Information Packs (HIPs) would have triggered a crash in the property market that would have resulted in up to 1.35 trillion being wiped of the value of UK homes.

Posted by webmaster @ 04:21 PM (717 views)
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1. Miniftse said...

"The Minister responsible for HIPs, Yvette Cooper, is after all married to Gordon Browns right hand man Ed Balls." - I can't believe it! Gordon clearly doesn't want a crash on his watch!

Friday, July 21, 2006 04:40PM Report Comment

2. sebastian said...

"at a time when it is widely agreed that homes are over-valued by as much as 30%"

If they think that is true then surely they would expect that to correct no matter what? Surely you can't truely believe something is overvalued and that it will stay that way forever..otherwise that would's not overvalued...? or am I being daft?!

Anyhow, not to convinved buy this. Where does the 30% actually come from? Are they actually saying HIPs would have corrected the market? Shame then...

Friday, July 21, 2006 04:44PM Report Comment

3. markd said...

Yes, agree Sebastian-an odd bit of research in my view (I haven't obtained the full report as it entails e-mailing them i.e adding your e-mail address to their mailing list). The upshot of it appears to be that the chaos surrounding HIPs would have drastically restricted supply... and they don't explain how that would have brought prices down unless they have got their basic economics back to front.

And as you say if the market is 30% overblown something will bring it down in due course anyway.

Friday, July 21, 2006 04:52PM Report Comment

4. Dave Lammi said...

The only way I can is an affect is if so many people tried to sell before they came in that the market would be flooded.

Friday, July 21, 2006 06:08PM Report Comment

5. P. Doff said...

I think there can be no doubt that HIPS with Home Condition Reports, with the associated high 'up-front' costs would have resulted in fewer speculative sales and an overall reduction in the number of houses sold. Another reason for the U-turn is that the Government have now woken up to the fact that the the additional VAT on HIPS would not even cover the loss in stamp duty revenue.

For those that are interested, this appears to be a phased U-turn, which avoids highlighting that the Government had got it completely wrong. We are now told that HIPS will still be rolled out, but initially just containing legal searches and an energy efficiency report.

I think you will find that there is a further U-turn when it dawns on this Government that it would be far simpler and much cheaper for all concerned to have the energy efficiency report done with the mortgage valuation. Some lenders (e.g. Co-op Bank) already do this, and their valuation fees are lower than many other lenders who do not include an energy report.

We can now see the reason for the pro stance of the VIs. The U-turn has wiped millions of the value of some companies. Right-move for example (part owned by Halifax and Nationwide) quoted a loss in share-value of 90 - 100 million. Countrywide Surveyors has invested millions in a new computer system and portable (laptop style) computerised notebooks for each surveyor, partly in readiness for Home Condition Reports. Many HIPs providers have been set up to cash in on the extra fee bonanza that the HIPs were likely to generate. It's no wonder that Joe Public were being sold the idea by the VIs and government.

My greatest worry is the number of crass ideas that this Government thinks up. After all, our leaders are supposed to be more intelligent and forward thinking than the masses.

Oh dear!!!!!

Friday, July 21, 2006 06:24PM Report Comment

6. Bubbles. . . . said...

Has anyone thought about if HPI falls gordon wont get the money on stamp duty and inheritance tax??? They cant fall as he needs this money and creating a panic for people to continue buying will support this market more....IF it crashes this government will crash n burn as well........But the worrying thing is im starting to believe it wont..even though there are now more repo's and unemployment..Who wants to know its going to crash no one!! This belief in rising prices will carry on along as affordability does, but with no jobs and huge personal debts the question is, is how do people afford this is it masked by the black economy of cash???

Friday, July 21, 2006 08:47PM Report Comment

7. bidin'matime said...

They seem to be saying that the rush to sell before the packs became compulsory would have depressed prices and set in train the downward spiral, which I had rather hoped would be the effect. I agree that the slowdown in sales after the introduction would to some extent offset this, but I would have hoped that the damage would by then have been done. This may have been a shrewd move to lessen the initial downward pressure.

However, I too was intrigued to see the admission that house prices are overvalued I had thought that this was the truth that dare not speak its name, but the fact that the VIs freely admit it is a good start to it becoming accepted by the nave punters.

Friday, July 21, 2006 10:03PM Report Comment

8. talking rot said...

I remain convinced that the lack of a feel-good factor, caused by negative equity, was the real cause of death for John Major's government. It brought the perception of incompetent economic ability. Tony Bliar's government has recently taken a few knocks. Many people pay for the NHS which is hardly "free at the point of delivery". Criminals are percieved to get off lightly which is hardly "Tough on Crime, tough on the causes of crime." Young people can barely write and read. (I read an article about the Army training and education yesterday. It claimed operational effectiveness was being reduced because the average reading age of recruits was 7 - yes, that seven years old. Hardly an indictment for a government that claimed "Education, education, education." Gordon Brown is facing a shortfall of cash and just how much revenue does Stamp Duty etc bring in?

Tony Bliar's government must be petrified by the propect of house price falls. It is the last prop holding up their appearance of competence.

Saturday, July 22, 2006 09:30AM Report Comment

9. The Bald Man said...

Talking rot. The only thing that has supported Gordans economic miracle has been the rise in house prices and the associated taxes that have been wasted by the government on .Take away house price rises and what have you got?

Saturday, July 22, 2006 10:42AM Report Comment

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12. Malcompowder said...

Someone on the homeinspector site has put up the report up on a free server - theres a whole section on the 30% claim and why the market is overvalued.

Saturday, July 22, 2006 05:46PM Report Comment

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