It is Official: HIPs Constrain The Residential Market

This nugget, and several more, appears in the recent Carsberg Review of Residential Property.

The report with thirty recommendations, headed by Sir Bryan Carsberg (formerly Director General of OFTEL) highlights the need for major residential property reform.

Consulting various property bodies (including the National Association of Estate Agents) the report reveals that consumers are badly informed, with generally poor experiences when buying, selling or renting property. It also wanted more regulation across the property spectrum to improve the protection of members of the public.

Such a regulatory regime could include minimum qualifications for estate agents, a central governing body, powers of enforcement and harsh sanctions.

Normally, the market regulate these sorts of activities, since the processes of supply and demand make for natural selection. However, the report states that residential property markets are not working well. It seems we do not know the status of who is acting for us, and what standard of behaviour we can expect.

Sir Bryan says anyone giving substantive advice to residential property clients should have a basic qualification, and there should be general requirements for giving good information about property transactions. Whilst these recommendations are welcomed and not unsurprising, the next challenge will be securing the requisite Parliamentary time (and interest) to bring life to these ideas.

Of particular interest, is the recommendation for sellers to provide a standard draft contract to prospective buyers. This is a view shared by many solicitors, and indeed practised daily amongst the FASTMOVE solicitors in the Plymouth travel to work area. The adoption of an agreed form of contract removes any wasted time and delay in arguing points of law, and technical issues. By working together, the FASTMOVE solicitors have noticed transaction times decrease, all the more relevant in the changing market.

Other recommendations include promoting the use of private search companies (making competition fairer) and for the Land Registry to increase the scope of the information it holds.

And finally, Home Information Packs. Although the HIP no longer needs a Home Condition Report, its price has not fallen and it is less useful. The report confirms that it is “not appropriate for legislation to lay down how consumers should conduct transactions”, and few purchasers have expressed an interest in the packs.

Voluntary HIPs? Now there is an idea. How many people are willingly to spend say £350 for a pack that is optional? The report finds little benefits in the Energy Performance Certificate, since it does not reduce or even encourage efficient energy use.

In the current market, any steps that minimise hurdles and maximise speed must be welcomed. If this is run in parallel with increased public awareness of the residential process and greater consumer protection this may also boost confidence. The Carsberg Report should now be a catalyst for major reform of the property sector. 

For more information or advice contact the Move Forward team on 0845 002 02 01

Published 07/07/2008. The author of this article is Alastair Hargreaves