Hips roll-out may affect first-time buyers

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by Kay Murchie

The Royal Institution of Chartered Surveyors (Rics) has warned that first-time buyers could struggle even more if the government proceeds with proposals to extend Home Information Packs (Hips) to include smaller properties.

Rics said there could be a considerable decline in the number of 1 and 2-bedroom homes put up for sale if the government goes ahead with plans to extend the controversial packs to cover such properties.

Rics forced the government to delay a full roll-out in the early summer by launching legal action against the packs and said an extension would further limit the supply of homes on the market and drive prices up.

Hips were launched on 1st August this year for 4-bedroom properties and rolled out to 3-bedroom houses on 10th September. Currently, they cover roughly 63% of all housing stock in England and Wales and were designed to speed up the property buying process by giving prospective buyers more of the information they require.

In 2008, sellers will have to compile a pack, which includes search information, title deeds and an energy performance certificate, before they can put a property up for sale. However, at present, they can start marketing their home as soon as a pack is commissioned.

Following the launch of the packs in August, Rics claimed that the amount of properties up for sale had declined by 50% during the month.

Furthermore, in October, Rics claimed that 67% of chartered surveyors had seen a decline in the percentage of houses with 3 or more bedrooms on the market during the month compared with the same time last year.

Jeremy Leaf of Rics said buyers and sellers are in “wait and see” mode so activity in the housing market is grinding to a halt. He added that Yvette Cooper, the housing minister, needs to understand that rolling out Hips to include these smaller properties could find first-time buyers caught between a rock and a hard place as accessibility to the market would go off the scale.

A shortage of smaller properties for purchase will force first-time buyers to stay in the lettings market where rents are already climbing to the fastest pace in over 8 years.