Some home truths about the joint tenants of Downing Street
How will the Lib Con coalition government affect the property market? Sharon Dale reports.
IT may not be top of their agenda, but the Lib Con coalition could soon bring big changes to the property world.
The biggest bombshell for the 3,000-plus employees in the Home Information Pack industry is the abolition of HIPs.
Both Conservatives and Liberal Democrats have agreed to scrap the compulsory packs that cost sellers at least £300 though homeowners will still need to have an energy performance certificate costing about £50 before they can put their property on the market.
Kevin Hollinrake, MD of Hunters estate agency, says the sooner HIPs are scrapped the better.
“I think HIPs being scrapped will increase the supply of properties coming to the market.
“The Queen’s Speech will be made within the next few weeks and I expect that the abolition of HIPs will be included in that so the effect will be almost immediate.”
Mike Ockenden, director general of the Association of HIP Providers, is still clinging to the hope of consultation over the fate of the packs.
He maintains that since they were introduced in August 2007, they have reduced the number of failed sales from 28 per cent to nine per cent and he is lobbying for a revised version to remain a compulsory part of the selling process.
He suggests that Exchange Ready Packs, a slightly enhanced HIP costing about £200, would be a good alternative.
Aimed at speeding up the buying and selling process, these would include HIP documents such as the energy performance certificate, the sale statement, which explains who owns what, a standard searches document and evidence of ownership.
The ERP would also have a contract for sale prepared by a lawyer, Seller Property Information and Fixtures and Fittings forms, copies of planning permissions, building regulations consents and guarantees and a lawyer’s certificate confirming the pack is exchange-ready.
But it still won’t contain what many feel is the ultimate dealbreaker – a survey.
“If HIPs are scrapped altogether, 3,000 people directly and 10,000 will be affected indirectly That’s 3,000 taxpayers out of the system.
“The Government will also lose £100m a year in VAT from HIPs,” says Mr Ockenden.
“The argument that HIPs stopped speculative sellers isn’t strong because we’ve already got too many sellers and not enough buyers. More homes on the market would mean a downward pressure on prices. I don’t think scrapping HIPs is in anyone’s interest.”
Patrick McCutcheon, head of residential at Dacre, Son and Hartley estate agents, disagrees and says that although they were a good idea in theory, in practice they have been an expensive waste of time.
“They sounded like a good idea to speed up the selling process but they have a short shelf life and the information is dated within three months.
“I can count on the fingers of one hand the number of buyers who have asked to see one and they are a millstone for sellers. They won’t be missed.”
Other coalition driven changes affecting property owners include the inheritance tax
The Queen’s Speech will be made in a few weeks and I expect the abolition of HIPs will be included.
threshold. The Conservatives said they would raise the threshold to £1m but have agreed to put the plan on hold to appease the Liberal Democrats.
There are grave concerns that Capital Gains Tax will rise to help fund the budget deficit and some fear it could rise from 18 per cent to 40 per cent.
This will have a major effect on second home owners, professional landlords and the legion of amateurs who have entered the buy-to-let market over the last few years. If these investors sell their properties to realise profit, they could pay a high price to the Treasury.
There could now be a rush to sell before any CGT rise.
The good news is that interest rates should remain low.
Martin Ellis, chief economist at the Halifax, says: “The main focus of this Government will be the budget deficit and cutting public spending.
“They also want to keep the economy growing and to do that they will wan to to keep interest rates low.
“We are likely to see interest rates staying low for the next year and possibly beyond.”
Both the Liberal Democrats and the Conservatives have promised green grants and incentives for householders to
NEW ADDRESS: Nick Clegg and David Cameron in the garden of 10 Downing Street.