Home Information Packs (hips) worry mortgage lenders

Nearly two-thirds of mortgage lenders think the introduction of Home Information Packs will have a negative impact on the property market, a survey has revealed.

Lenders are worried that the packs will slow down the speed of transactions, increase the cost of selling a home and create short-term distortions in the market, according to the Intermediary Mortgage Lenders Association.

From June 2007 homeowners selling their property will have to compile a Home Information Pack before they can put it on the market.

The Government claims the packs will cost around £635 to put together, and they will include proof of ownership, local authority searches and a home condition report into the state of the property.

The Government claims the introduction of the packs will speed up the time taken to buy or sell a property, but more than half of lenders said they thought it would make no difference, while 42% actually thought they would slow the process down.

Lenders also expect the introduction of the packs to cause temporary distortions in the market by artificially increasing the number of homes sold immediately before they are introduced, and reducing them afterwards.

In the two months leading up to the packs introduction sales are expected to rise by 15% as homeowners aim to sell their property before they have to compile one of the packs, while transaction volumes will fall by around 17% in the couple of months after their introduction.
Overall 68% of lenders said they thought the packs were a bad idea, with just 16% saying they thought Hips were a good thing, while 63% thought they would have a negative impact on the house selling process.

Lenders were also sceptical about using the home condition report from the packs, with many saying they would still have a separate survey carried out by a surveyor. Just one lender said they would definitely rely on the home condition report to help them value the property.

An IMLA spokesman said: "It is clear that many aspects of the Home Information Packs are of concern to the lending industry, and indeed lenders remain sceptical about the likelihood of the scheme being successfully implemented. It looks as if it could be a recipe for additional delays and greater cost, and at worst could create havoc in the housing market."