HIPs reversal forces market confusion

Permalink: HIPs reversal forces market confusion
by Brian Turner

Communities secretary Ruth Kelly has unexpectedly announced that Home Information Packs (HIPs) will not be implemented on June 1st after all, but instead will be applied on a limited basis from August 1st.

The change of date was made in an In an emergency statement to the House of Commons, citing the shortage of energy assessors as the main reason.

She also announced that for the time being only properties with four or more bedrooms would need to apply for HIPs, and even then they could be put on the market so long as one had been commissioned.

The decision is a humiliating defeat for the Labour Party over the much troubled HIPs scheme, not least that a judicial review forced by the Royal Institution of Chartered Surveyors has lead to the implementation of HIPs being scrapped only 8 days before their target date.

The overall confusion immediately proceeding the decision has led to a glut of properties being entered onto the property market, forcing down property prices.

According to Rightmove, more than 200,000 properties - the most they have ever recorded - have been listed on the property market in an attempt to beat the original June 1st deadline.

The sudden surge in supply has taken an everage 2% off property inflation, with different regions impacted according to demand.

The danger now is that this sudden rush to sell could leave market stagnation in its wake, especially with the Bank of England expected to push ahead with further rate rises over the coming months, putting further pressure on already over-stretched affordability issues.

What remains to be seen is whether HIPs being put back 3 months will allow some form of stability to return to the UK property market, or whether the confusion HIPs has created will bifurcate with more dramatic results.