Mortgage adviser Lawrence Garry says new government regulations could cost you
With the government’s forthcoming Home Information Packs (HIPs) I thought I would use this week’s column to cut through the red tape to share my thoughts on what’s going on as they could have financial implications for homeowners.
Getting HIP for your home
Contrary to the first impression HIPs are not some new craze or fad to describe your home or something you do at home. The controversial Home Information Pack (HIP), despite the fact that it has been mooted about for around two years, means little to nothing to the majority of home owners who I have come across.
If you have been following it from the start you will know that HIPs were designed to speed up the home buying process by making sure the seller has information about their property ready before marketing the property for sale. HIPs require homeowners to provide a pack with information on a range of areas covering ownership of the property and the supporting documents. The additional requirements to provide a report on the condition of the property for sale and energy performance certificates of the likely energy costs of occupying the property became the basis of debate and led to major concessions before the scheme could be introduced.
The principles of home information packs and energy performance certificates are sound. I agree with more transparency in the buying and selling process and greater accountability of our actions for the state of the environment. However I do not necessarily agree with these schemes. The natural state of the market serves to keep buyers and sellers working together on property transactions. Home information packs will not change whether a buyer is gazumped. If a third party wants to pay more for a property they will do so whether the buying process is two months or four weeks. In terms of any justification for the policy under the Misrepresentation Act, well that’s what solicitors are paid for, to inspect the title of a property before you purchase it to ensure you have not been misled by the sales pitch.
In terms of the second premise of the regulation, environmental accountability, I understand the need for energy performance certificates to bring us in line with European Union regulation but telling a homebuyer that the property they are about to buy has been rated in band C or D for energy efficiency will mean very little. It is unrealistic to expect people who are struggling to get on the property ladder due to a shortage of properties and spiralling property prices to think about the environmental impact of their decision before putting a roof over their family’s head. Besides if someone bought a modern apartment with a good energy performance rating then packed it full of modern electronic appliances and gadgets that flood the environment with CO2 emissions what bearing does their property’s EPC have in reality? I am not convinced that energy ratings for homes will help cut carbon emissions and family fuel bills.
Lets not forget the costs involved. In order to provide an energy performance certificate and home condition report for your home you would have to appoint an approved professional who will charge at least £400. This is in addition to the agent’s commission for selling it for you. Most sellers will simply add this to the cost of the property and the buyer will end up picking up the tab.
The concessions to postpone the introduction of home information packs and energy performance certificates from 1 June to 1 August, remove the need for home condition reports and limit the initial introduction to properties with four bedrooms or more signifies a lack of support for the policy.
Lawrence Garry writes as a property investor and is a director of mortgage adviser, Milestone Financial Services. Email him your questions for future columns at lawrence.garry@milestonefs.com. Also call 020 7719 0171 or visit milestonefs.com