Walter Sweeney: Unpalatable home truths for the Government

EVERYONE I speak to who is involved in the buying or selling of houses, tells the same story; the property market is flat, with prices falling and very few sales, apart from those forced through at low prices due to repossessions or relationship breakdowns.

I do, of course, realise that after a long period of rapidly rising house prices, a price correction is not only inevitable, but desirable for those unfortunate people trying to buy their first homes. However, I consider that the Government's implementation of Home Information Packs, against the advice of the vast majority of solicitors and estate agents, has exacerbated an already difficult situation.

I know that in the Hull and the East Riding area, several solicitors and their support staff who specialise in property work, and estate agents and their staff, have already either been placed on short-time working, or been made redundant. If the situation does not improve soon, more redundancies will inevitably


More importantly, householders who want to move to be near a new job or school or to obtain a bigger property to accommodate a growing family or to downsize in retirement or following separation or bereavement, are faced with expensive and unnecessary obstacles created by the Government.

I believe that the whole concept of Home Information Packs is fundamentally flawed. Ministers predicted that they would speed up the conveyancing process, but the reverse is likely to be the case.

A person who owns a house should be free to decide how and when to sell it, rather than being made to provide an expensive pack of often worthless information to a buyer who often does not want it.

To save money, sellers tend to go to the cheapest pack provider, who in order to make a profit, purchases insurance-backed unofficial searches instead of the official searches which most buyers and their lenders quite naturally prefer, and often insist upon. This means that, after a seller has spent time and money commissioning searches and preparing a pack, the buyer spends more time and money buying more searches. It is not only the quality of the searches provided in a pack, but also their age, which may necessitate the purchase of fresh searches.

As all conveyancers and lenders know, a search is only completely up-to-date when it is first produced, and the longer the delay between the production of a search and the sale being completed, the more likely inaccuracies in the search results are likely to develop. The best time to do the searches is, therefore, when they are actually needed by a buyer or a lender, and not when the seller markets the property.

I appreciate that the Government has just backed down slightly and extended, until December 2008, the latitude given to sellers to market their properties as soon as the HIP has been commissioned, rather than wait until the pack is complete.

But this misses the point that it would be better to leave the searches until a buyer is found and then (in a free market) for the parties to decide who will actually pay for them. The present law, by imposing the financial burden of HIPS on sellers, is deterring impulse sellers from "testing the water" by putting their properties on the market to see what happens.

I know that the Government's view on this is that estate agents might well either absorb the cost of HIPS, or at least defer charging for them until the sale goes through or the seller takes the property off the market.

Unfortunately, this theory does not match the realities of the market. Estate agents cannot be expected to pay for HIPS out of their overdrafts, at a time of stagnation in the property market with little prospect of receiving much sale commission in the foreseeable future. The same applies to solicitors and licensed conveyancers.

Another cause of concern is the compulsory inclusion of energy performance certificates in HIPS. Although I fully accept the desirability of reducing energy consumption, the reports are of doubtful value in achieving this. It would be far more useful, in most cases, to spend the cost of the report on draught-strips and improved roof insulation.

The experience of solicitors who now see these reports landing on their desks is that clients pay little or no attention to them, and that they do not significantly influence willingness to buy.

A person who buys a large, old house without cavity walls, double glazing or much insulation, expects that it will be cold, unless he or she spends a fortune on heating, and the practical solution for such a buyer may be to insulate and heat only parts of the house, or simply to wear more clothes indoors. The type of buyer who wants a Georgian property or a Victorian rectory will still want it, however low the energy rating.

I notice that, following the mauling received by the Labour Party in the recent local government elections, the Prime Minister has gone on record as saying that the Government will listen more and act decisively in the public interest.

The scrapping of HIPS would seem to me to be a useful way in which the Government could prove that it is capable of listening to those professionals who are closest to the people in understanding the impact of the current recession in the property market.

I would also like to point out that the current penal rates of stamp duty land tax are bound to act as a major deterrent to many people contemplating moving house. To tax people for moving house seems grossly unfair in principle, and deters both freedom of movement and the most efficient use of our limited housing stock. Reducing the impact of stamp duty would be a huge help to many people.

I would urge all your readers who have suffered, or expect to suffer, from this outrageous tax, or who wish to sell their houses, to write to their MPs and demand that stamp duty be reduced substantially, and that HIPS be scrapped forthwith. Both measures are now essential.

Walter Sweeney was a Conservative MP from 1992-97. He now practices as a solicitor in Beverley, East Yorkshire.