HIPs become mandatory for properties with three bedrooms from today. But could the scheme push an already shaky housing market over the edge?

HIPs? What now? Well, today it become mandatory for sellers of three-bed homes to commission a HIP - that means 60 per cent of the market will be affected, whereas when it was just four bedrooms and more it was around 20 per cent.

Property professionals - estate agents, surveyors, solicitors, lenders - are dismayed and fear the Packs will kill the market.

Why so glum? HIPs, you'll remember were introduced for properties with four beds and over on 1 August.

New research published today from RICS reveals that the impact on that sector of the market has been substantial.

Fifty-three per cent of agents said there was a decrease in four bedroom or larger properties coming onto the market, and those who recorded a fall found on average that new instructions fell by fifty-one per cent.

Blimey, that's a lot! Yes, it is. And agents are worried. RICS spokesperson, Jeremy Leaf, said:

"Unfortunately HIPs is having a detrimental impact on the housing market, something the Housing Minister assured us would not happen.

"Every region in the country is affected, and we fear that this will only increase as HIPs are rolled out to three-bedroom properties.

"Blindly pressing on without having conducted any market impact study is hardly acting in the best interests of consumers."

But is it all down to HIPs? Good question. It's certainly true that the five rate rises since last August have had an impact, and the turmoil in the financial markets hasn't helped either.

But RICS say the drop has been well beyond anything you can attribute to other market forces. RICS Senior Economist, David Stubbs, explains:

"This is in stark contrast to what we would expect at this point in both the interest rate and housing market cycle.

"New instructions to sell residential property should in fact be rising, as the impact of higher interest rates, and expectations of slower house price growth in coming quarters persuade more households to sell up.

"This was the pattern after the last set of interest rate increases which took place between November 2003 and August of 2004. Those increases caused new instructions to start rising in June of 2004. Instructions continued to increase for all but one of the next 23 months."

But Giles Cook, Area Director for Chesterton Sales, is not so sure: "Despite the hand wringing surrounding their introduction they have yet to have a significant impact on sales.

"The four-bedroom houses affected so far rarely come onto the market during August as they are large family properties. Vendors prefer to enjoy the summer holiday and put the property on the market after schools go back."

Has there been a rise in the amount of stock that doesn't need a HIP? No. According to the RICS report for August 18 per cent more surveyors report a fall than a rise in stock on the market.

I see. So it's fair to assume that the decline in four-beds and over isn't all down to HIPs? Yes, I'd say so. Looking at the big picture, I'm surprised that a fairly innocuous Pack costing £350 - not a huge amount of money in the general scheme of things - could scare off so many sellers.

So I'd say some of it is HIPs related and some market related. On the HIPs side, bear in mind that the scheme is new and suffered various setbacks prior to launch.

There's probably a degree of confusion among consumers about what they need to do - other surveys suggest as much.

Some, too, may have doubts about whether the thing will survive and have probably decided to sit tight and see what happens.

Others probably don't like the idea of a home inspector wandering round their house tut-tutting over the state of their insulation.

There may well be a degree of resentment, too, about having to pay for something that's of no great use - the Pack has been watered down so much that it's hardly worth the effort.

So will the extension to three-beds cause a similar decline in stock? Hard to say - it's possible that people will now accept that HIPs are here to stay and just get on with it.

But if the figures for four-beds are reproduced it will certainly be bad news. Fewer properties will push up prices, reduce choice and distort the market. Cut the number of three-beds and you could freeze the whole market.

Even if that doesn't happen, there's more to come. A big issue for agents is the removal of first day marketing in January - that means they won't be able to market a property until it has a HIP. Peter Bolton King of the NAEA says:

"The most important thing for consumers and the market right now is that the government maintains the right for first day marketing of a property. This has been allowed temporarily and is up for review at the end of the year.

"We sincerely hope that the Housing Minister will recognise the great importance of being able to market a property straight away and that first day marketing will be extended indefinitely."

I need to sell a three-bed home - what do I have to do?

  • If your property has three bedrooms or more and is already on the market (prior to today) you will not need to acquire a HIP to continue marketing it
  • The HIP contains legal documents, local searches, title deeds and an Energy Performance Certificate (EPC) that will rate your home's energy efficiency and offer recommendations to improve the efficiency and reduce energy bills
  • The responsibility for acquiring a HIP rests with the person marketing the property, usually the estate agent, developer, auctioneer, or the seller if the property is being sold privately
  • You can purchase your HIP through an estate agent, solicitor or other pack provider
  • You do not have to purchase your HIP through your estate agent or their recommended provider
  • If you do purchase your HIP through your local estate agent it is likely that you will not have to pay for it until after the sale of your property
  • If you decide to switch agents or take your home off the market you will then have to pay the agent for your HIP, although you will then have ownership of the HIP and it can be transferred for use with another agent
  • The Association of Home Information Pack Providers (AHIPP) has introduced a set of standards for pack providers - the HIP Code, subscribed to by over 90 per cent of the pack providing industry. It sets out minimum standards for subscribers and will ensure regulation and redress for all those who obtain their HIP through a registered provider
  • If you have a complaint regarding your pack provider, energy assessor, Home Inspector or the survey they have carried out, contact your pack provider. If the matter is not resolved, you can contact the Property Codes Compliance Board (PCCB) . Contact details will be available on all packs and on the PCCB website.

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