A recent report commissioned for a number of bodies including the Royal Institution of Chartered Surveyors (Rics), the National Association of Estate Agents and the Association of Residential Letting Agents (Arla) by the ex-head of the Office of Fair Trading, has recommended that HIPs become voluntary.
Sir Bryan Carsberg said that the system was not working and represented a "worst of all worlds" approach, by omitting most of the useful information needed and imposing more costs on a property transaction.
His most damning indictment in the report was that it is inappropriate for “legislation to lay down how consumers should conduct transactions unless there is substantial public interest…I do not think there is in the case of buying and selling residential property.”
I'm not surprised by this turn of events. Before the introduction of HIPs the government was widely criticised by property professionals (myself included) arguing that the most important details were missing and that HIPS could have a negative effect on an already difficult property market.
It was plain to see that all HIPs would achieve would be to add an extra layer of bureaucracy and cost at a time when it was the last thing that the housing market needed.
The addition of extra fees and rates seems to have turned into the economic policy for this government.
Take empty rates for example. Rather than forcing owners to find occupiers we are seeing companies seeking to reducing their liability by demolishing buildings or leaving them incomplete. For many regions empty rates has been the final nail in the coffin of speculative development.
So (not for the first time) a well intentioned proposal looks like it has backfired and produced the opposite effect to that intended - instead of encouraging vacant premises to be occupied, the charge will discourage new development of commercial premises. By the time the market’s appetite for development returns (2 years, my guess) hopefully this anti-business tax will have been binned.
Now that the hangover from HIPs appears to be setting in, I would’nt be surprised if the pre-budget report sees the government announce that HIPs will be scrapped and there will be a temporary suspension of Stamp Duty for property under £250,000.
Since I prepared this note the Daily Post reports that the Chairman of the NWDA , Bryan Gray has sent a letter to John Hutton , Secretary of State for business, urging the government to similar intent on these two points.
It’s not all been bad news though – EPCs are here to stay. A relatively straightforward (though costly) process that actually serves a relevant purpose. If used correctly they could help to identify and encourage the use and development of more sustainable buildings. However, the timing of its implementation couldn’t have been worse if they tried! Plus ca change le meme chose!!