Wednesday, May 23, 2007

HIP's in chaos

This has been making the news somewhat yesterday and is carried throughout the papers today.

In short the home information pack is to be delayed by two months and then to be applied to houses with 4 bedrooms or more.

No matter what anyone says this is a cop out. How many bedrooms does a house have? Does it have 4 bedrooms, 1 living room, 1 dining room, or does it have 3 bedrooms, 1 living room 1 dining room and a study? You can do this sort of exercise for houses of all sizes to re adjust the number bedrooms a house has to suit the circumstances.

That cop out aside, we need to look at the root of what the Home Information Pack is for.

There is, or at least there was a real problem or at least a perception of a problem with the way the housing market worked. Gazumping was, and still is a problem but sales falling through is the major problem.

We now live in a property owning democracy and so anyone who could solve this problem would be popular.

To be fair what new Labour promised when it came to power in 1997 was a simplified system that would get around the problems. To that end they trialled a system that cut some of the paperwork out of the system in the sense that some of the paperwork was already done before the process started.

It has to be said that sounds good, and that is what HIPs is about.

The question is, and always has been, does that solve the problems?

Why do house sales fail? Why does Scotland seem to do so much better?

Well the first problem is that the house as seen may have faults with it that were not obvious to the eye. In theory a prearranged house survey would deal with that, if it was accepted as a decent survey. For reasons I am unclear about it seems they are not. Mortgage companies are not happy unless they instruct their own despite the fact that professional negligence law is clear that a duty of care is owed to all who may reasonable rely on a report.

Then there is the problem of people not getting a mortgage whilst a deal is going through. Again this can be dealt with by people pre arranging a mortgage. Some do some don't.

Then there is the problem of gazumping. If people had mortgages in place and a useful survey was done you could exchange contracts. Part of the problem here is that whilst you may have found the perfect house to move to, or you may have had a very good offer to buy your house you may not have the other. As in you either have found your dream house and have not sod yours or vice versa.

HIPS only really ever addressed one problem. That is why they are a disaster. Of course the author of the disaster, Yvette Cooper, (aka Mrs Balls) won't get the sack, and Ruth Kelly will.

The BBC has this.

7 comments:

Welshcakes Limoncello said...

Well, I am glad I sold my house when I did [2005] as this scheme looks like an added nightmare on top of everything you have to go through to me. Like you, I can see the good intentions behind it but now I understand vertain businesses are jumping on the bandwagon and making a killing by giving certificates that would have been obtained through your solicitor before. It's already all an expensive enough business! I think the trouble is that whenever an "add-on" piece of legislation comes in,nothing else is allowed to drop, so it all becomes terribly compliceted for the non-specialist in these matters.

youdontknowme said...

If they do have it that way they will change it for all houses within about a year. You see it's the EU that is making us do it - I showed so on my blog.

Benedict White said...

Welshcakes Limoncello, yes simplifications never end up that way!

I am not sure they would hep sell houses anyway.

youdontknowme, The energy certificate bit is the rest is not in the directive.

It is still bonkers though!

erik said...

You're all missing the major point, and that is corruption.
Take a developer, he buys an older property with a large garden, and gets planning permission to build 30 flats.
They duly come on the market, and are purchased by the public.
Solicitors do 30 identical searches, from the same local authority. The local authority gets paid 30 times for the same friggin'answer, and the solicitoracting for the seller gets paid 30 times, and the solicitor acting for the buyer (probably for several buyers of several apartments) gets paid.

Search answeres from council = one;, gets paid 30 times.

Search answeres from selling solicitor = one;, gets paid 30 times.

Search requests from buyers paying 30 times = one

Milk the punters. Now THAT"S corruption on a grand scale!
So what's your answer Mr conservative hero?

Benedict White said...

Erik, Firstly I would not describe doing 30 searches that are in principle the same as corruption per se. Profiteering yes.

However, in the case of the solicitors, it may well be 30 different solicitors, and in the case of the council they have a block charging price in any case.

erik said...

So it's not corruption, per se. Well, many would disagree with you, given the price cartels that are obvious in solicitor circles, barriers to entry for conveyancing, time taken, etc.
But let's use your word, profiteering.
What's your stand on this deliberate profiteering by privilaged members of the legal profession.
Examination by the law society? (a joke). Don't say "market forces", because they can't, historically won't, and basically never will because it's a controlled market.
In detail please, not waffle.

Benedict White said...

Erik, The reason why it is not corruption is that the term implies having to pay back handers etc.

As it happens you no longer need to be a solicitor to do conveyancing and that has provided a bit of competition there.

There is however a problem with the legal proffession operating as a combination of closed shop and cartel rolled into one whilst also making sure that not too many people get into the game.

What to do about that? No idea, I personaly have not given it that much thought, but I will do at some point and then write an article about it.