Idle speculation - what if the seller had to pay all the costs instead of the buyer

MaryNB

Tiglet2 said:

One of the problems with the HIP pack was there was no comeback on the surveyor by the buyer, since the surveyor's contract was with the seller.  Therefore, many buyers still paid for their own surveys.  Also, title documents and searches were quickly out of date, so if a property takes some time to sell, the seller would need to obtain updated copies at their cost.  HIPs were estimated at the time to cost around £600, which the seller would need to spend before marketing the property.  Consequently, a lot of sellers decided to stay put.

I agree the 3 months is ridiculous.
But £600 isn't a lot in the grand schemes of things and if the seller has an onward purchase they save the £200 valuation fee + £400 survey fee on that side of things.

How does the Scottish system deal with home report liability?

p00hsticks

user1977 said:

Tiglet2 said:

One of the problems with the HIP pack was there was no comeback on the surveyor by the buyer, since the surveyor's contract was with the seller.

That doesn't necessarily follow. Home Reports in Scotland can be relied upon by buyers and lenders. Would be a bit pointless otherwise. Are you sure that wasn't the case with HIPs?

This archived doc says "The Home Condition Report will have to be completed by a qualified, certificated Home Inspector who will carry out an on-site assessment. Sellers, buyers and lenders will all be able to rely on it as an accurate report."

I didn't buy or sell in that period of time, but I seem to remember plenty of articles / adverts offering training as Home Inspectors as being the next big thing and that you could make loads of money doing it. I suspect the only people that did make money were the companies offering the training, and I don't think I would have had a great deal of confidence in those that did the training, many of which I think were estate agents.

Crashy_Time

Can definitely see SD being put on the seller, great way to get more borrowers into the bubble as the "holiday" has shown us, but good luck raising the price when banks are "down-valuing" more and more.

Falafels

When I sold my house recently, I was happy to provide everything up front. However, I stayed put during the HIP time, so to speak, because of all the extra expense if the property didn't sell and the hassle involved. When I bought the place it had been on the market for eighteen months.

Ironically, when I did come to sell, it was under offer within a week of putting it on the market. I HAD done a lot of work on it in the interim, though....

Tiglet2

MaryNB said:

Tiglet2 said:

One of the problems with the HIP pack was there was no comeback on the surveyor by the buyer, since the surveyor's contract was with the seller.  Therefore, many buyers still paid for their own surveys.  Also, title documents and searches were quickly out of date, so if a property takes some time to sell, the seller would need to obtain updated copies at their cost.  HIPs were estimated at the time to cost around £600, which the seller would need to spend before marketing the property.  Consequently, a lot of sellers decided to stay put.

I agree the 3 months is ridiculous.
But £600 isn't a lot in the grand schemes of things and if the seller has an onward purchase they save the £200 valuation fee + £400 survey fee on that side of things.

How does the Scottish system deal with home report liability?

£600 was the average in 2008.  I assume it would be considerably more today!

Tiglet2

user1977 said:

Tiglet2 said:

One of the problems with the HIP pack was there was no comeback on the surveyor by the buyer, since the surveyor's contract was with the seller.

That doesn't necessarily follow. Home Reports in Scotland can be relied upon by buyers and lenders. Would be a bit pointless otherwise. Are you sure that wasn't the case with HIPs?

This archived doc says "The Home Condition Report will have to be completed by a qualified, certificated Home Inspector who will carry out an on-site assessment. Sellers, buyers and lenders will all be able to rely on it as an accurate report."

Good point @user1977, that does make more sense!

MaryNB

Tiglet2 said:

MaryNB said:

Tiglet2 said:

One of the problems with the HIP pack was there was no comeback on the surveyor by the buyer, since the surveyor's contract was with the seller.  Therefore, many buyers still paid for their own surveys.  Also, title documents and searches were quickly out of date, so if a property takes some time to sell, the seller would need to obtain updated copies at their cost.  HIPs were estimated at the time to cost around £600, which the seller would need to spend before marketing the property.  Consequently, a lot of sellers decided to stay put.

I agree the 3 months is ridiculous.
But £600 isn't a lot in the grand schemes of things and if the seller has an onward purchase they save the £200 valuation fee + £400 survey fee on that side of things.

How does the Scottish system deal with home report liability?

£600 was the average in 2008.  I assume it would be considerably more today!

Going by inflation alone it would be approx £820 today.
I bought a small 2 bed house last year and the lender valuation  and homebuyers report done separately would have been £780 (I got my bank to do both so saved a bit). The local searches were £300.

Going by what I actually paid (although not everyone has the option to get their mortgage valuation and homebuyers done at the same time) still would be more at £565 + £300.

Section62

MaryNB said:

Not sure why some people claimed it was 'expensive and deficient red tape'.

Because it was.  A reasonable indicator of how good or bad legislation is is how long it takes to implement, and how many times the planned implementation date changes. Just from the Wikipedia article -

"Originally the HIP was going to be required from 1 June 2007. However, just ten days before that date, Communities Secretary Ruth Kelly announced that they would be phased in from August 2007, and initially only for larger properties. Between 1 August and 10 September only homes marketed with four or more bedrooms were legally required to have an HIP. This was extended to cover homes with three or more bedrooms from 10 September."

"First Day Marketing (FDM)..... Initially, the date was set for the requirement to commence on 31 December 2007 but was delayed until 1 June 2008 to allow a period of transition.....  However, on 8 May 2008 the Housing Minister, announced a further delay to first day marketing until 31 December 2008."

If the whole thing was as simple and straightforward, and had the effect of just shifting the responsibility from buyer to seller, then why the implementation delays?  Bearing in mind the principle of HIPs was rooted in an election manifesto in 1997.  Taking over 10 years to get from manifesto commitment to (half) implemented law is an indication of just how bad the idea was.

Moreover, the whole reason for introducing HIPs was founded on the idea that something needed to be done to stop gazumping.

Again, from the Wikipedia article, "Research after the election revealed that around 28% of sales fell before exchange of contracts, with gazumping occurring in less than 2% of sales. The emphasis subsequently moved to the benefits of increased speed, transparency and consumer friendliness."

The decade long implementation was primarily because HIPs were a solution looking for a problem.

MaryNB said:

The Home Condition report and Fixtures and Contents wasn't mandatory so the cost of the condition report was still optional.

This is an example of why I said "(half) implemented law".  They were supposed to be mandatory.  The fact they weren't is another indication of just how bad this legislation was.

MaryNB said:

People could shave so much time off the buying process if that information was provided up front. 

If time really is an issue a cash buyer can always instruct their solicitor not to bother with all those inconvenient checks.

And for those buying with a mortgage, the lender will have their own checks and processes to go through, which in normal times often take as long (or longer) than getting a survey and searches done.

This is one of the reasons why HIPs ultimately failed - the causes of delay in property transactions (in England) are complex and varied. The final implementation of HIPs picked some low-hanging fruit, but without making the fundamental structural changes to the process which would be required to stop gazumping (/gazundering) and speed the whole process up.

To answer the OP's question - the result would be an increase in house prices as sellers seek to cover their costs and additional risks.

It is one of those Parkinson's Law type things that whenever Government legislates to make things 'better' for the consumer that the consumer ultimately ends up paying more than they did before.