Housing market shake-up on the way

Homeowners are to be fined up to £200 and run the risk of being sued if they fail to provide potential buyers with a Home Information Pack (Hips) when they put their property up for sale, according to new Government proposals currently passing through Parliament.

Homeowners are to be fined up to £200 and run the risk of being sued if they fail to provide potential buyers with a Home Information Pack (Hips) when they put their property up for sale, according to new Government proposals currently passing through Parliament.

Hips - or sellers packs as they are better known - are set to become compulsory within the next three years, as part of the Government's bid to speed up transactions in the UK housing market, which has one of the slowest completion times in Europe.

Under the proposals included in the Housing Bill, set to reach committee stage in the House of Commons next week, all sellers will have to provide buyers with details of local searches, building guarantees, planning permissions and evidence of the property title document. The sellers pack will also have to contain a "Home Condition Report", which will include a professional survey of the property and an energy efficiency assessment.

The Government estimates that the packs will cost sellers about £635. However, according to documents published recently by the Office of the Deputy Prime Minister (ODPM) - whose minister Keith Hill is leading the Housing Bill - the new legislation will give trading standards officers the power to levy fines of up to £200 for those who fail to provide a pack.

Furthermore, prospective buyers will be given the right to sue property owners, for the recovery of costs involved with obtaining the documents, which should have been included in the pack.

The new rules will be the biggest shake-up to the UK housing market since the 1950s, and have been met with a mixed reaction from estate agents, surveyors and homeowners. While the Government has come under criticism for not addressing the issue of gazumping - where buyers in England, Wales and Northern Ireland can be caught out by a higher offer being tabled at the last minute - the ODPM says its research suggests this only happens in 2 per cent of cases. Ironically, this is the problem the Bill originally set out to tackle.

In Scotland, gazumping cannot take place, as legislation makes all offers binding once accepted. However, the Government rejected suggestions to make these proposals universal.

The ODPM says: "In our view a ban [on gazumping] is very impractical because it would risk stopping legitimate activity. For example, a seller might want to accept another offer because the buyer is deliberately dragging his feet. Also, in some circumstances sellers, such as trustees and executors, are under legal duty to obtain the best price they can for a property.

"The answer lies in increasing transparency and speeding up the process, thus reducing the window within which problems like gazumping can occur."

Unsurprisingly, the Royal Institute of Chartered Surveyors welcomes the idea of Hips, as it will provide much more work for its members. A spokesman said that currently just 29 per cent of people buying a house carry out a survey. This will change to 100 per cent under the new rules.

While provisional research has shown homeowners broadly welcome the proposals, there have been concerns over the cost. However, the ODPM argues that this will not be significantly more if taken in the context of a complete sale and purchase cycle.

Estate agents who took part in a trial of the scheme, said they remained concerned that enough people would be trained up to produce the sellers' packs in time for the launch.