HIPs confusion spells market chaos-survey

LONDON, May 1 (Reuters) Confusion over the government's controversial Home Information Pack (HIP) scheme is set to bring chaos to the summer housing market, research predicts.

Just 27 per cent of the general public know what the acronym HIP stands for, while 36 per cent think it means ''homeland immigration policy'', according to a study of 1,800 people by propertyfinder.com.

Those actually buying and selling property are much better informed: 80 per cent of buyers and 94 per cent of sellers identified the correct answer.

But there is still confusion over what a HIP will contain.

Due to become mandatory in England and Wales on June 1, HIPs shift most of the burden of gathering information about a property prior to sale from the buyer to the seller.

They aim to cut the number of housing sales that fall through and are expected to cost the seller around 500 pounds.

HIPs will include evidence of title, copies of planning, listed building or building regulation consents, guarantees for any work, an energy performance certificate, standard searches and legal documents, and an optional home condition report.

But they will no longer have to include a survey of the property -- which would have been the most expensive part -- following a host of objections.

The packs will also not contain local building and planning searches after area trials showed councils taking at least four weeks to release the information.

But the propertyfinder.com survey shows that three-fifths of buyers expect to receive at least a home condition report, and two-fifths expect a full structural survey.

Less than half of buyers expected evidence of title or a search -- the two key legal documents in the pack.

Warren Bright, chief executive of propertyfinder.com, said: ''The level of ignorance in the general public is astonishing given the publicity HIPs have had over the last year.

''But at least most buyers and sellers have heard of them, even though they have little clue of what will actually be in the pack.'' The Web site's April survey of estate agents reveals nothing to suggest that homeowners are rushing to sell up ahead of the introduction of HIPs.

But Bright expects the current supply shortage to worsen in June and says HIPs will also make the impact of higher interest rates harder to measure.

''Supply has been extremely tight in the housing market for months now, but come June 1, the number of homes coming onto the market will go into a tailspin as agents and sellers struggle to assemble all the documents needed to meet the new regulations.

''Buyers thinking they will save some costs by waiting until after the HIPs deadline may find themselves fighting for a much smaller number of homes for sale -- and end up paying a lot more to secure one of them.'' Some 85 per cent of estate agents believe HIPs will increase the cost of moving, yet 77 per cent do not believe they will improve the house buying process, according to another survey.

The cost of moving for sellers has fallen by 10 per cent to an average 4,666 pounds since last year, as sellers use their strong position to drive down estate agency and legal fees, according to Woolwich's annual ''cost of moving'' survey.

But these savings are likely to be cancelled out by the additional cost of HIPs.

Andy Gray, head of mortgages at the Woolwich, said: ''We expect the pressure to continue on fees as long as it stays a sellers' market, especially as the introduction of home information packs will only add to the cost of selling a house.'' And cost savings for buyers are likely to go unnoticed, due to the rising burden of stamp duty.

The average buyer currently forks out 10,745 pounds on moving and will spend just 200 pounds less following the launch of HIPs, according to the survey of almost 1,100 solicitors, estate agents and removal companies.

The scheme has spawned opposition group SPLINTA -- Sellers' Pack Law Is Not The Answer -- and the Council of Mortgage Lenders, whose members account for 98 percent of UK residential mortgages, has also urged ministers to re-consider the move.

Opponents say the packs will not eliminate the practice of gazumping, where a vendor reneges on an understanding to sell in order to take a higher offer. They also believe owners of less energy-efficient properties will be hit with higher council tax.

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