HIPs (Home Information Packs) suspended with immediate effect, EPC’s to stay

HIPs: Another failed Government scheme, that made some money for them but also upset the property market for introducing too much red tape. They are now “removing unnecessary regulation” and having it replaced with a bunch of other EPC rules, which seems like yet more ‘unnecessary regulation’!

It doesn’t matter who’s at 10 Downing Street, you will still have to keep up with unecessary rules and regs to justify keeping paper pushers in work.  Read the report below.

Bobby Gill


“HIPs are history: Pickles suspends Home Information Packs with immediate effect

Published: 20 May 2010

In an important step at a point of fragile recovery in the housing market, Communities Secretary Eric Pickles and Housing Minister Grant Shapps today announced that with immediate effect, they are suspending the requirement for homeowners to provide a Home Information Pack (HIP) when selling their homes.

Mr Pickles today laid an Order suspending HIPs with immediate effect, pending primary legislation for a permanent abolition. The Secretary of State has taken this swift action in order to avoid uncertainty and prevent a slump in an already fragile housing market. Today’s announcement sends a clear message of encouragement to people thinking of selling their home that they can put it on the market with less cost and hassle.

HIPs are currently holding back the housing market because sellers are having to fork-out extra cash, sometimes hundreds of pounds, just to be able to put their home up for sale. Suspending HIPs will reduce the cost of selling a home, remove a layer of regulation from the process and provide a welcome help to the housing market during the recovery. It will also mean a saving for consumers to the tune of £870m over ten years, giving sellers more money in their pocket to spend in the wider economy.

Mr Pickles and Mr Shapps also said that the Government is determined to help people reduce their energy bills, improve our energy security and tackle climate change by increasing the energy efficiency of their homes. Sellers will therefore still be required to commission, but won’t need to have received, an EPC before marketing their property, and the Government will consider how the EPC can play its part in the new drive for a low carbon and eco-friendly economy.

Eric Pickles said:

“The expensive and unnecessary Home Information Pack has increased the cost and hassle of selling homes and is stifling a fragile housing market.

“That’s why I am taking emergency action to suspend the HIP, bringing down the cost of selling a home and removing unnecessary regulation from the home buying process.

“This swift and decisive action will send a strong message to the fragile housing market and prevent uncertainty for both home sellers and buyers.

“HIPs are history. This action will encourage sellers back into the market, and help the market as a whole and the economy recover.”

Today’s move is part of delivering a key manifesto comment made by both parties in the new coalition Government. It will mean that sellers will no longer be told they have to buy a HIP before putting their home on the market, but they will now have the choice to provide one if they want to.

Housing Minister Grant Shapps said:

“This is a great example of how this new Government is getting straight down to work by cutting away pointless red-tape that is strangling the market. Rather than shelling out hundreds of pounds for nothing in return we’re stripping away bureaucracy and letting home owners sell their properties.

“But we’re also showing our commitment to a greener housing market by keeping Energy Performance Certificates and making them more relevant in helping buyers make informed decisions on the energy costs of their new home.”

Notes to editors

1. Photos and video footage of the announcement will be available at: www.communities.gov.uk/newsroom/

2. Home Information Packs (HIPs) put sellers of residential properties in England and Wales under a duty to provide a pack of standard information to potential buyers when marketing the property for sale.

3. The duty was introduced in three phases, depending on the size of the property, starting in August 2007 and ending in December 2007.

4. The duties relating to HIPs are set out in Part 5 of the Housing Act (sections 155 to 159). The Government has decided to suspend the HIP duties with immediate effect pending their outright abolition at the earliest opportunity.

5. The effect of this is to provide that sellers and estate agents are no longer required to have or to provide copies of HIPs with effect from 21 May 2010.

6. In order to ensure that people selling their homes continue to make an Energy Performance Certificate available to prospective buyers, we have also laid before Parliament the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2010 which introduce a number of new requirements including:

* a new duty on the seller to secure that an energy performance certificate (EPC) has been commissioned before marketing of the property commences where no such certificate is already available
* an EPC has been commissioned when a Domestic Energy Assessor has been instructed to prepare the EPC and the EPC has either been paid for or has given a clear undertaking to pay for it
* a new duty on the person acting on behalf of the seller to be satisfied that an EPC has been commissioned before commencing marketing
* a new duty on both the seller and a person acting on their behalf to make reasonable efforts to secure an EPC within 28 days
* all of the new duties carry fixed penalties where somebody fails in the duty conferred on them by the new regulations.”

Source: www.communities.gov.uk


I am a HIP provider – will I get compensation?

No. The present Government (Conservatives and Liberal Democrats) have consistently opposed the introduction of HIPs and promised to abolish them in their respective manifestos.

Important to note that only requirement to provide a HIP is suspended. Sellers are free to choose to provide information to buyers on a voluntary basis and HIP providers can offer such products.

Thousands of people involved in the production of HIPs will now lose their jobs?  

It is not good enough to carry on with a policy that is both unnecessary and costly, purely on the basis of providing job security. HIPs are not providing value for money for sellers or for buyers, so we should not continue burden to the market with this extra layer of bureaucracy.

HIP providers could still have a part to play in the housing market offering as buyers and sellers will still require Energy Performance Certificates (EPCs), evidence of title and local searches.

I am a Home Inspector and abolishing HIPs means that there is no possibility of using my qualifications?

There is work available to Home Inspectors who are accredited energy assessors in producing domestic EPCs which continue to be required for rental properties and properties marketed for sale.

Will the Government compensate Home Inspectors?

We appreciate that abolition of HIPs would remove the option of compulsory Home Condition Reports. However, when the Government was in opposition they made it clear that they opposed HIPs and set out in their manifestos plans to abolish them if elected.

More Questions and answers at: www.communities.gov.uk

Councils rate HMO landlords on ’secret’ database

Are councils breaching data protection act and not giving you access to YOUR information? Here’s an article I received from Paul Allison at StudentHousing.co.uk about a private database of HMO (House of Multiple Occupancy) landlords.

Bobby


“Local councils are rating HMO landlords and sharing the information on a secret database, according to information disclosed on a government web site.

The database classes a landlord as good, bad or average and is one of the factors considered when making a decision whether a landlord or a manager is a fit and proper person for running an HMO.

The database is managed by a London council but councils from all over England are accessing the information and adding their own landlord intelligence.

The details are revealed in a Communities and Local Government Department document called Evaluation of the Impact of HMO Licensing and Selective Licensing that is free to download from the CLG web site.

The document was published in January 2010.

The identity of the council running the database is not disclosed.

The information in the document was collected by researchers to support changes in April to HMO licensing and planning rules.

One of the problems the database resolves for councils is that many landlords own several HMO properties in different council areas and officers have no way of checking with other councils whether landlords have contravened fit and proper person rules.

“Many landlords may have properties in locations across England, this database is now being populated by some authorities from outside of London, and the extension of such a database could provide some assistance to local authority officers assessing the fit and proper status of landlords and managing agents,” says the report.

To grant an HMO licence, councils run a background check on the proposed licence holder to check out if they have:

* Convictions relating to violence, drugs , sexual offences, or fraud.
* Breached housing, landlord, tenant or unlawful discrimination laws
* Contravened any HMO code of practice as the owner or manager of any other HMO

Few details about information on the database are known, but the concerns are data protection rules about sharing personal information may not be maintained and how councils rate landlords may be based on inaccurate information that no one can check.

For instance, individuals have a right of reply to contentious details placed on their credit records.”

Source: Paul Allison www.studenthousing.co.uk


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Dodgy solicitors and greedy family = repossession

I’m aware of this case that Simon Zutshi has just written about on his blog. It’s a tough one with so many parties involved but you’re right, a lawyer should be looking after the best interests of the client at the time and not providing financial advice.

Did he back it up with a guarantee that he’d cover the difference, should things not work out as expected? I didn’t think so…

Unfortunately I know of another lawyers / solicitor / legal ‘advisor’ who seems to think that whatever the money men (banks) say is the truth without actually really being able to apply the legal rules in specific circumstances. They tend to open the text book at a certain page and say that’s how it is or discuss things that they have no idea or experience about. There’s nothing worse than bad legal advice from someone who doesn’t have any attachment to the outcome.

Definitely worth bringing up with the law society as someone has to hold them accountable!

Also the other family members are partly responsible too, allowing greed to get in the way of sound judgment. Did they consider the implications of what would happen if they couldn’t sell it for a higher price?

What happened to common sense? Clearly it doesn’t pay the bills.

Bobby


Screwed by their Lawyer!

by Simon Zutshi

I still can’t believe it. I have been dealing with a motivated seller in London who is being repossessed on the advice of a lawyer acting for one of the family members and even worse this decision has been backed up by a Judge.

I was speaking at an event in London last week and at the end I was approached by a gentleman who for privacy we shall call Mark. Mark asked me if I could help because his mother’s property was due to be repossessed this week!

He asked me to come and look at the property to see if I could help them. It is a large four bed property in North London in need of some work but a fantastic location. Mark explained that his mother lives in the property but that he, his sister and his mother were all on the mortgage.

The loan was with a subprime lender who was charging them 10.5% per annum and they were finding it very hard to keep up the payments and so had decided to sell. Another brother and sister had been helping to pay this mortgage but had decided enough was enough and they had to sell

So the house was put on the market and as a sale had been agreed the lawyer representing Mark’s sister (let’s call them “Bungle & Scarper”) had suggested that the family members stop paying the mortgage and the arrears that build up could be paid off when the revenue comes in from the sale.

This is a risky strategy in the event that the sale could fall through, which surprise, surprise it did. We all know what happens if you do not pay your mortgage (or maybe we don’t all know) …eventually you will get repossessed. Mark had already been to court with his mother and the Judge advised that the property had to be sold.

Mark was a very motivated seller. He and his mother agreed that they would rather sell the house at a discount, to clear all the debt and walk out with £100k rather than get repossessed, have their credit records trashed and potentially not get much money after all the associated legal costs. Mark had an investor lined up ready to buy the property who also went to court with them to present the solution.

Unfortunately, Mark’s sister and the other brother and sister had a different view. On the advice of their lawyers, Bungle & Scarper, they thought the best solution would be good to get repossessed and then do a deal with the lenders solicitors to sell the property on the open market get the best possible price and then hopefully they would get more money from the sale, not to mention the trashed credit rating or maybe they are unaware of the full implications.

Incredibly the judge thought that the investors offer was too low (even though it would clear all the debt and give the family £100k plus), and agreed to give possession to the lenders solicitors. How can being reposed be the best solution for the property owners? Maybe the judge was thinking that they will get more money by selling the property on the open market. Well, whilst I agree they may receive a higher offer I wonder if the Judge has conserved all the associated costs. For a start an estate agent in London would want 2.5% of the sales price. I am sure the lenders lawyers and Bungle & Scarper will also have very high costs associated with their time involved in the sale, not to mention all the interest and penalties building up whilst the property is marketed and sold.

This cannot be right! Maybe I have a simplistic view of this. Maybe I have had a bias account of the facts from Mark but this does not seem right to me. Is this fair? What do you think?

I wonder if Bungle & Scarper were more concerned about the fees they can earn from the prolonged case rather than the best interests of their clients. It looks to me as if this lawyer has been giving financial advice to their clients. Interesting as I don’t think they can do that. I wonder what the law society would have to say about this?

The lessons I would like you to draw from this are as follows:
1. Most sellers do not understand the implication of getting repossessed. Often the bury their head in the sand and think everything will be better once the property is repossessed
2. You need to be aware the advice that sellers are given may not be the best course of action for them.
3. When you are dealing with sellers always put their interests first ahead of your own and try to come up with an ethical win win solution.
4. When there is a disagreement between family members the judge can decide the course of action he sees fit.

Feel free to post what you think about this case study.

Source: Simon Zutshi, Property Investors Network

All parts of the UK to have Mandatory Landlord Licensing

Below is an article I was emailed by Netrent, updating the latest news on the new Mandatory Licensing of landlords and properties. Yet more red tape to provide accommodation to people who want it and are willing to pay what they think is a fair price in terms of market rent.  Once again, the bad/rogue landlords will just ignore it and good landlords ‘taxed’ even more.

Bobby


“On 24 March the Northern Ireland Executive announced it’s intention to implement mandatory landlord licencing. Scotland already has a mandatory licencing scheme and on 3rd February the Government announced it’s intentions to bring in mandatory licencing for England and Wales. This means that the whole of the UK will adopt mandatory licencing of landlords in the future.

The response of the Conservative Party, if elected, is to have another review of the Private Rented Sector “to examine how the sector can play an enhanced role in the housing market”.

The Private Rented Sector accounts for 13% of the total housing market in the UK, over 2.5 millions homes are privately rented. In the past couple of years we have seen the collapse of Buy-to-Let lending, yet more regulation and the promise of more to come. Most landlords we have spoken to see mandatory licencing as just another stealth tax and they are deeply concerned that the Private Rented Sector is not sufficiently valued by our politicians.

We share those concerns.

There has been a succession of reviews over recent years, surely by now a sensible consensus should have been reached? Whilst the Government and Opposition have made it clear that they want to support British business neither seems to truly value the Private Rented Sector. The Banks that we have bailed out still refuse to offer decent Buy-to-Let mortgages and many have pulled out of the market completely.

The Government wants to start a website to allow tenants to make statements and comments about their landlords. There are no plans for a similar website for landlords to share their experiences about tenants.

The vast majority of landlords try to offer decent, affordable housing. Standards have risen considerably over recent years. The next Government must work with and not against landlords. Regulation must be simplified and applied to all equally. Banks should be made to lend on reasonable terms. Most of all we must learn to value the Private Rented Sector and the one million plus landlords in the UK.”

Source: www.netrent.co.uk

Click here to view the Government’s consulatation on the Private Rented Sector


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New York – ‘Thinnest house’ sells for £1.3million

If you thought houses and rents were expensive in the UK, take a look at this 2-bed house built in an alleyway that just sold for $2.1 million (£1.3 million)

Listed in August 2009 for $2.7m, the Real estate broker said that “despite the awkward dimensions, the property will fetch its listed price due to its uniqueness, history and location in one of the city’s most famous preserved neighborhoods.”

Well there can’t be too much confidence in the US / New York Market if it took 4 months to sell and at 22% below the value they expected! It’s still good money for an approx. 1071 sq ft property. That’s nearly $2000 per square foot (£1200 sq.ft.) they got from the $2500 sq.ft. it was valued at!

Then again, with a rental of $10,000 per month, the new owner is not exactly looking for cashflow either! So that’s at least one person with cash who is confident that the real estate / property prices will go up giving them capital growth.

Bobby


“A home less than ten feet wide, which has been dubbed New York City’s skinniest house, has sold for $2.1 million (£1.3million).

Number 75½ Bedford Street: one of New York’s narrowest, and most photographed, houses

The red, 9.5 foot wide, 42 foot long brick building in Manhattan’s fashionable Greenwich Village neighbourhood was built in 1873. Located at number 75½ Bedford Street, it was built on land which previously had been an alleyway between numbers 75 and 77.

The interior, unsurprisingly as the house isn’t a TARDIS, is even smaller, measuring just 8.5 feet wide.

The two bedroom, two bathroom home, which went on the market priced at $2.7 million in August last year, was last sold in 2000 for $1.6 million.

At the time it was listed last August, real estate agent Alex Nicholas admitted: ‘Due to the narrowness of the house, I think you have to be very clever in how you decorate.’

The narrow home has had some famous residents in the past – a plaque on it notes that poet Edna St. Vincent Millay once lived there; so did anthropologist Margaret Mead.

However, it looks like the new owners might not be living there themselves – the newly-sold building was listed on real estate websites on Wednesday as a rental available for $10,000 a month.” – Source: Tom Phillips – www.metro.co.uk