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BobProperty
Posts: 3,245 Forumite
This was written a while ago on another forum. I offer it as a starting point and admit it may be out of date.
The HIP looks to be coming into effect in June 2007. It looks like there will be a brief trial (6 months) then the government will go ahead with the idea. Now I'm all for making the buying process simpler but that is a bit like voting for “motherhood and apple pie” as our American cousins put it. I think this scheme combined with a downturn in the housing market could slow the property market to a crawl. And it won't get improved for a couple of years after its introduction.
A personal view of some elements of the HIP:
Homebuyer level survey - paid for upfront by the seller or covered by the estate agents fees (at a price). When this was first mooted, several lenders said they wouldn't accept a valuation given by a survey done by the seller. So to get round that problem, the survey won't include a valuation. So someone still has to do a valuation and pay for it. I think the ODPM has been bending the statistics here too. Only one in five buyers was it, commission a valuation? Could that be because 4 out of 5 lenders insist on one and as the buyer is paying for it they get to see it? I think the survey is going to be the biggest risk area in the system. One dodgy surveyor taking backhanders to do a whitewash on the seller's house, everyone on the selling side is happy because they got more than they should have done for the property. The buyer's side is left picking up the bills and wondering if and how long it will take, to sue the surveyor and get any money back, if it is at all possible. Yes, I know there's going to be indemnity insurance, but there's a big difference between getting stitched up on a property and having to pay for it to be put right now and getting an insurance payout in 2 years time. By then you could have been repossessed.
Section H will provide an energy performance certificate. What? Apart from a few environmentalists and strapped-for-cash pensioners, when has the energy efficiency ever bothered anyone when they went looking for a house?
Included in the HIP will be local searches and land registry information. Anyone who has bought a house knows that these can take several weeks to get hold of. Estate agents are not supposed to start marketing the property until the HIP is complete (with a few exceptions from what I can see). So they need the searches and a survey before they start marketing? Don't make me laugh. They will be phoning all their clients saying “I've got this property coming onto the market”. When the market is buoyant they will have half a dozen people through the doors in the first days, and eight round at the first weekend. There will be created a category of property “coming onto” the market but not officially on it. What is ODPM going to do? Prosecute every estate agent in the country? How many sellers will be happy with signing up with an estate agent and then being told we can't show anyone around your house until we have the HIP sorted out. (“Might take 7 weeks Mrs, the Local Authority is a bit slow with its searches at present.”) The alternative apparently is that the HIP will be produced with gaps in it. So what will happen is that you will be given an almost empty HIP pack as "the house has just come on the market" and the details will be added later as time goes on. Hardly what was intended.
I await responses particularly from the professions affected.
The HIP looks to be coming into effect in June 2007. It looks like there will be a brief trial (6 months) then the government will go ahead with the idea. Now I'm all for making the buying process simpler but that is a bit like voting for “motherhood and apple pie” as our American cousins put it. I think this scheme combined with a downturn in the housing market could slow the property market to a crawl. And it won't get improved for a couple of years after its introduction.
A personal view of some elements of the HIP:
Homebuyer level survey - paid for upfront by the seller or covered by the estate agents fees (at a price). When this was first mooted, several lenders said they wouldn't accept a valuation given by a survey done by the seller. So to get round that problem, the survey won't include a valuation. So someone still has to do a valuation and pay for it. I think the ODPM has been bending the statistics here too. Only one in five buyers was it, commission a valuation? Could that be because 4 out of 5 lenders insist on one and as the buyer is paying for it they get to see it? I think the survey is going to be the biggest risk area in the system. One dodgy surveyor taking backhanders to do a whitewash on the seller's house, everyone on the selling side is happy because they got more than they should have done for the property. The buyer's side is left picking up the bills and wondering if and how long it will take, to sue the surveyor and get any money back, if it is at all possible. Yes, I know there's going to be indemnity insurance, but there's a big difference between getting stitched up on a property and having to pay for it to be put right now and getting an insurance payout in 2 years time. By then you could have been repossessed.
Section H will provide an energy performance certificate. What? Apart from a few environmentalists and strapped-for-cash pensioners, when has the energy efficiency ever bothered anyone when they went looking for a house?
Included in the HIP will be local searches and land registry information. Anyone who has bought a house knows that these can take several weeks to get hold of. Estate agents are not supposed to start marketing the property until the HIP is complete (with a few exceptions from what I can see). So they need the searches and a survey before they start marketing? Don't make me laugh. They will be phoning all their clients saying “I've got this property coming onto the market”. When the market is buoyant they will have half a dozen people through the doors in the first days, and eight round at the first weekend. There will be created a category of property “coming onto” the market but not officially on it. What is ODPM going to do? Prosecute every estate agent in the country? How many sellers will be happy with signing up with an estate agent and then being told we can't show anyone around your house until we have the HIP sorted out. (“Might take 7 weeks Mrs, the Local Authority is a bit slow with its searches at present.”) The alternative apparently is that the HIP will be produced with gaps in it. So what will happen is that you will be given an almost empty HIP pack as "the house has just come on the market" and the details will be added later as time goes on. Hardly what was intended.
I await responses particularly from the professions affected.
A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.
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Comments
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BobProperty wrote:Section H will provide an energy performance certificate. What? Apart from a few environmentalists and strapped-for-cash pensioners, when has the energy efficiency ever bothered anyone when they went looking for a house?
There was a time when no one was bothered about the energy efficiency of domestic appliances. I would suggest that the compulsion to display a label stating the energy efficiency has significantly raised awareness of the benefits of some models and most certainly plays a part in most buying decisions.
Similarly, I would expect Section H to raise awareness of the differences in consumption between different houses and, particularly in the light of increasing energy costs, may well become a significant factor in house purchase decisions.
I'm not suggesting that people will fundamentally change the type of property they wish to buy but, much like extras on a used car, it may well be enough to sway buying decisions.What goes around - comes around0 -
From what I remember it will be a band or grade system giving approximate values (a bit like council tax bands). I think it will be a bit of a guess by the surveyor and 95% of the time anyone who thought about it could make the same guess. e.g. new build flat - very efficient, victorian semi - not very good - but surveyor didn't check loft insulation as either "not part of remit" "not insured to go up ladder" "no access" or "my ladders weren't long enough". Not very worthwhile, which is my general complaint about the whole system. Anyway, any significant recent work (which would include high insulation standards) would be covered by the building reg approval the vendor has (er hopefully).zappahey wrote:...Similarly, I would expect Section H to raise awareness of the differences in consumption between different houses and, particularly in the light of increasing energy costs, may well become a significant factor in house purchase decisions....A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
On the surveyor issue, I think you will quickly get surveyor firms who, if used by the buyer, are acceptable to large numbers of mortgage lenders, speeding up post offer process.
Personally I think that the seller ought to pay for the land registry and planning searches as part of the pack. Surely the buyer should be told exactly what they are buying before they have to make an offer? If I buy a can of beans from Tescos I am given an ingredients list and a picture, and can get a refund if it turns out to contain tomatoes. Not a policy that would work with houses, so the seller should have to provide the "ingredients" list.
To compensate for the upfront cost, the vendor could add the cost to the price, and any offer could be made legally binding on the purchaser, making the buying process a lot quicker and less stressful for everyone involved.0 -
Pal wrote:On the surveyor issue, I think you will quickly get surveyor firms who, if used by the buyer, are acceptable to large numbers of mortgage lenders, speeding up post offer process.
I sorry but I don't understand your point. HIPs will include a survey which has to be done up front, i.e. before the house goes on the market. Hence the problem with them doing a valuation as it's paid for by the vendor. The whole point is supposed to be that it speeds up the process.
If you are talking about valuations for mortgages then I think what you are saying is already happening. But where does it save time? You must have already lost time by needing to approach a second lender. It will only help where the first mortgage company declines to offer a mortgage.A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
I mistyped, hence the misunderstanding. I meant to say :
On the surveyor issue, I think you will quickly get surveyor firms who, if used by the VENDOR, are acceptable to large numbers of mortgage lenders, speeding up post offer process.
Perhaps I am misunderstanding the proposals, but I would be very surprised if, within a few months of HIPs being introduced, there were not a few large surveyor companies who were able to provide reports for the vendor's HIP that they have also pre-agreed will be acceptable to a panel of the larger mortgage lenders.
This would mean that a vendor would wish to get the report from a specific company on the basis that the mortgage survey is less likely to hold up any eventual sale. The advantage for the mortgage company would be that they reduce their admin (arranging surveys) and speed up the mortgage process so they can lend the money faster. The sale is also more likely to go ahead reducing unnecessary admin.
For the buyer they know that the survey is not going to show any unwanted surprises that lead to their mortgage being refused.
No doubt the first surveying companies to offer this service would be those that already do surveys for mortgage companies, as it helps them retain that business and they already have the relationships with a few lenders.
Advantages all round I would think, unless you can see a problem?
The only problem I could forsee is that a couple of large surveying companies could effective tie up the market by being linked to most of the larger mortgage lenders. But then competition requirements have never stopped Tescos...0 -
Right - I understand you now. Yes, your view makes sense but there are difficulties. Originally the surveyor was to give a valuation. This happend in the pilot in Bristol, I think, but there are two problems. The first, which caused valuations to be removed from the survey, was that lenders wouldn't accept a valuation by whoever, paid for by the vendor. (It's a client / responsibility thing as well as lenders relying on their own selected surveyors). In the extreme, as I said, it would be open to fraud. The second problem I see is that if the surveyor gives a valuation before the vendor goes to an estate agent, what does the vendor do when the estate agent's valuation is nowhere near the surveyor's? If it is done the other way round, you still get the same problem. Vendor approaches estate agent, estate agent gives valuation, starts HIP process, surveyor undervalues house by significant amount. Vendor does what? EA says what?
Any consumer has the right to be wary of a report on a house compiled by the seller.A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
Fraud could be largely eliminated by the use of surveyors with contractual links to the mortgage lender. There is already scope at the moment for fraud against the vendor if a survey is carried out by a friend of the buyer.
So you are saying that the surveyors do not actually value property - they just copy what the EA has said? Is that a good thing?
Surely it is better if the vendor gets the survey and then argues with the surveyor and EA about the value up front, rather than having multiple potential buyers having to shell out and then have arguements about the value just because a vendor has overpriced their house or "forgotten" to mention the rotten roof?
I agree that consumers need to be wary, which is again why the use of surveyors with contractual links to mortgage lenders to simplify the buying process would help a great deal and provide more reassurance to the buyer.0 -
At the moment the surveyor goes to the EA to collect the keys. The EA lets him know the price of similar properties in the road and his estimate of the valuation. The surveyor walks around the property, checks its still standing etc then values it at more or less what the EA has said.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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I suppose in the strictest sense the report will be "complied" by the seller but it won't be composed by them. Survey by a pro, searches etc from the LA.BobProperty wrote: Any consumer has the right to be wary of a report on a house compiled by the seller.
I don't know all the ins & outs but the survey will be by a professional, same as now I expect, and though you pick up on the possibility of corruption I think that's as remote as it is now TBH. The seller sees the the surveyor now, whereas most buyers though they instruct them never meet them, so the opportunity exists for the seller to bribe the surveyor now. Not ever heard of it happening though, have you?
And wouldn't it police itself? How long would a bent surveyor be able to get indeminity insurance for if s/he was picking up far more claims than others?
I also think your point about delays in marketing a prop are only applicable when the scheme first starts - if it takes one, four or eight weeks to get on the market, there will still be properties going on every week after the initial delay. In a weak market taking stock off the shelves, as it were, should provide the fewer buyers with fewer props rather than an over-supply, as now.
I think the scheme will probably have teething troubles but is a step in the right direction. I don't think you can take delays out of the whole process, eg searches etc, but you can reposition them so that the delay between an offer being accepted and completion is lessened. IMO THAT IS THE REAL STRESSFUL TIME FOR BUYER & SELLER ALIKE, THERE'S SO MUCH UNCERTAINTY THAT AT LEAST THIS SCHEME MAY REDUCE THE LENGTH OF IT.
If a property goes to auction it has a legal pack with draft contract, deeds, searches and so. This is not dissimilar but adds in a homebuyers survey. Auction props complete within 28 days and whilst I don't suggest this will acheive the same I think it will reduce the ave 13 weeks downward quite a bit.
I think it also evens things up a bit in terms of committment to the process. ATM the buyer pays for everything until completion so it's much less costly for the seller to pull the plug. If the seller has to spend £1K or so up front to be marketed, sure they'll try and get it back in the price, be they won't be going on speculatively. I also think, as certain info may need renewing at cost after x months, prices may be set more realistically rather than risk further expense.
For the last 30yrs consumer & protections rights have grown out of all recognition except for the biggest buy of all. It's still caveat emptor all the way with houses [at least resale ones] and I believe this is a genuine attempt to redress that and at least speed up the process. Whether energy efficiency is in or not to me is a side issue. Most of us are both buyers and sellers several times in our lives and that 13 weeks wait is never pleasant.
I hope that if it works it leads on to the system working like Scotland where it becomes binding much sooner after offers are accepted. Gazundering/ gazovering, last minute pull-outs are all frustrating and a complete waste of time.
I think HIP will be important but I fear you may have peaked too early with this thread, least ways it's not attracted the attn of the professionals as yet. If it doesn't perhaps try again later in the year as it should be subject to a good airing.0 -
Forget mortgage lenders, I am talking Homebuyer Inspection Report (or whatever it will be called). It is a low level survey without a valuation, to be done to put in the HIP before the property is marketed (allegedly).Pal wrote:Fraud could be largely eliminated by the use of surveyors with contractual links to the mortgage lender. There is already scope at the moment for fraud against the vendor if a survey is carried out by a friend of the buyer.
Surveyor and EA is chicken and egg in this situation. There is nothing stopping a vendor employing a surveyor to do a report before they employ an estate agent. Equally there will be nothing to stop EA's from signing up a vendor and arranging the EA's pet surveyor to do the report. They do not give a valuation as I pointed out in my OPPal wrote:So you are saying that the surveyors do not actually value property - they just copy what the EA has said? Is that a good thing?
Surveyor won't give a valuation for a HIP. Even if they did, lenders won't use it. The surveyor does not owe the mortgage company a duty of care, there is no legal contract between surveyor and mortgage company.Pal wrote:Surely it is better if the vendor gets the survey and then argues with the surveyor and EA about the value up front, rather than having multiple potential buyers having to shell out and then have arguements about the value just because a vendor has overpriced their house or "forgotten" to mention the rotten roof?
I agree that consumers need to be wary, which is again why the use of surveyors with contractual links to mortgage lenders to simplify the buying process would help a great deal and provide more reassurance to the buyer.A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0
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