Homesearch
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WILL the Government’s last-minute decision to delay the introduction of Home Information Packs on property sales, at least until August 1, be a reprieve for hundreds of estate agents who might have gone bust?
It would be a strange sequel to the Commons drubbing accorded to Communities Secretary Ruth Kelly if the HIPs concept which began life a decade ago with the aim of clipping estate agents’ wings eventually keeps more of them in business.
Ms Kelly scrapped the June 1 start-date for HIPs in all home sales – and ruled they will only be required for houses with four bedrooms and more from August 1. The plan is to extend the scheme to the rest of the housing market as more Domestic Energy Assessors (DEAs) qualify.
HIPs on June 1 as planned could have accelerated the widespread closure of estate agencies which began earlier this year when the supply of homes for sale began to dry up. Many agencies opened in the the last five years, it seems, have failed to build a turnover which made them profitable. Few bothered to add a separate lettings business, which keeps longer-established agents ticking over when the market slows.
Over and above these pressures, larger agents intended to use HIPs to squeeze weaker, smaller rivals – for instance, by offering to supply HIPs for nothing and incorporating the cost into standard fees.
One agent said that if the current closure rate in areas of London Docklands was repeated nationally third of estate agents across the UK could have soon been in difficulties.
The added pressure is that commissions have fallen in recent years. If sales volume dwindle, it might be difficult to push commissions up again rapidly.
Longest campaign
Trevor Kent, owner of a one-branch agency in Buckinghamshire, who probably waged the longest campaign against HIPs, says: “I don’t doubt that once the supply of HIPs forms had become dominated by a handful of providers, they would have made it more difficult for smaller, independent agents to compete.
“The market would have been dominated by 15-20 estate agencies, and anybody keen to stay independent would have had to get a franchise from them.”
What happens next to HIPs and the housing market?
Many doubt the Government’s Plan B – inflicting HIPS on a small part of the market from August – will get off the ground. Says Trevor Kent: “It’s an attempt to pander to energy assessors, some of whom have have spent thousands getting qualified. But those north of Watford will have so little work that they will either have to come south, or find another career.”
But Mr Kent does think that agents will eventually offer to help to bring in the Energy Performance Certificates (EPCs), demanded by Brussels.
“The obvious time to do them is between exchange and completion”, he says.
He thinks the market will go so quiet in this month that many agents will take a long holiday: they have rushed to get homes on sale to beat the June 1 deadline, and many owners who went on sale just in case they saw their next home might not push their own sale too enthusiastically until prospects are clearer.
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