Mortgage lenders urge Government to take action on HIPs
31 January 2006
New reports published today by the Council of Mortgage Lenders (CML) express serious concern to Government over how home information packs (HIPs) will be implemented on time, and the risks of making over-optimistic assumptions about their market impact.
The CML delivers three key messages to Government:
Eleven weeks after the 1 June 2007 was announced as the "go live" date for HIPs, the Government has still not published a detailed timetable for their implementation. Without this it is difficult to have confidence in the process at all.
The CML is concerned that neither the Government nor the public fully understand how little impact the home condition report (HCR) element of the HIP will initially have on the mortgage process. The HCR will not remove the need for lenders to conduct valuations on each transaction to assess potential levels of lending risk. If the HCR is robust and easily accessible, then over time fewer physical valuations may be needed. But as at the "go live" date, most properties will still need a valuation inspection.
The Government must also consider the possible impact HIPs will have on the housing market. The CML has already identified the likelihood of a "feast and famine" in the flow of properties coming onto the market as a result of HIPs going live. But HIPs might also create other unintentional consequences. We are disappointed that as yet the government has done little to simulate the potential impact of HIPs, and we urge them to do so urgently.
Commenting on today's report CML Director General Michael Coogan said: "With only 16 months to go, there is still a huge amount of work to do to make HIPs a reality. The Government must urgently publish a detailed timetable of action, so that the market and consumers can know what to expect and when.
"The Government must also work to dispel the myth that the HCR element of the pack will stop the need for lender valuations. This is simply incorrect and sends out a confusing message to consumers.
"Finally, it is vital that Government addresses the potential consequences the implementation of HIPs might have. HIPs represent a huge change in the process of buying and selling a house and will undoubtedly impact upon the market possibly in unintentional ways. The Government must examine what impact the packs will have so that all stakeholders can be prepared for their onset."
