Hitting the ground running

The usual phrase is something like "the wheels of government grind slowly" but I'm pleased to see that Messrs Cameron and Clegg are getting a plethora of decisions made very quickly. Sure there are items for which a commission or some such similar device has been arranged so that they are effectively kicked into the long grass but there are huge amounts of policy being enacted even though the coalition is less than two weeks old and we only went to the polls a fortnight ago.

Full marks from me for not only stopping plans for a third runway at Heathrow but saying there would be no expansion at Gatwick and Stansted as well. And also goodbye and good riddance to the Home Information Packs (HIPS) - I've voiced my objections to these before. However the energy performance certificate is still there, courtesy of an EU directive. Not nice for HIPS inspectors finding themselves out of a job (although some will carry on with the energy efficiency bit no doubt) but the then government should never have embarked on such a flawed scheme in the first place.

House market picking up or a mirage

There are one or two estate agents making encouraging noises about the housing market but it's very difficult to know whether in fact it is the usual thing of that profession talking things up to instill a bit of confidence or are there any green shoots at all. I was interested to see that this weekend's property supplement in the Western Morning News has jumped back up to 44 pages. Having said that I now see it is headed ''New Year Property Review" and I know that every so often they have an extra large edition and incorporating those words "New Year" might be the clue here.

It should be remembered of course that we have just had the Christmas and New Year holiday when people aren't focused on moving house in the way they might normally be. And because house sales have subsided to such a low number the slightest upward movement will seem like a recovery to some. I would find it surprising to see any significant upturn in the market for many months to come what with the unemployment situation getting markedly worse and general lack of confidence in the economy. Not for the first time I'm pointing out that the cost of the Home Information Packs (HIPS) is a real deterrent for someone to put their home on the market and that tumbling prices are all very well but that aspect of affordability is negated by the much higher percentage deposit that has to be made by those needing a mortgage.

Lots of properties are now being advertised with "new price" attached to them. One particular house I know of in a super situation and with land had been on the market for £1.75 million, now it can be yours for £500,000 less! With much tighter lending criteria I can't really imagine things getting very much brighter for a long time to come; I prefer to be realistic even if it sounds as if I'm being negative.

Another rant on HIPS

House purchase is becoming a real rarity in my area now. Sure one or two transactions are still taking place - one such was a recent sale of a semi-detached cottage up the road from here, it was an 'executor sale'. When mortgages were plentiful and prices forever going up then there would have been houses going on to the market where there wasn't a life or death necessity to move. In the present economic climate one imagines that people would move because of a genuine need rather than on a whim.

This brings me to 'Home Information Packs' or HIPS. I had a right old go about them when I wrote a piece on 9 July under the heading "More thoughts on housing situation". I made the point that it was a big disincentive to put a house on the market when you had to shell out several hundred pounds right at the start. I also pointed out that with the downturn some Estate Agents just wouldn't go on paying for a HIP and wait to goodness knows when for the house to be sold and then deduct the HIP cost from their commission. In other words the vendor would now have to pay out a fair sum (up front) even if the property never sold.

The underlying point here is that in the present climate having to produce a HIP is a massive downside to the idea of putting your home on the market. It is all so typical of politicians, they come up with a hare-brained idea, imagine all sorts of upsides, don't forensically look at the possible downsides, enact legislation and then the whole thing falls apart. Assuming that the solicitor or licensed conveyancer is on the ball the main delay is likely to be securing funds. I really don't believe a HIP helps the process in any meaningful way. Rant over for the moment.

More thoughts on housing situation

I recently wrote about the marked slow down in house sales and I would say "you ain't seen nothing yet". It has to be realised just how much the UK economy is tied in to the property market and the government are very slowly beginning to acknowledge this. At PMQs today it was a subject raised by Vince Cable, one of the sanest MPs in the House, and it forced Harriet Harman, deputising for the absent Gordon Brown, on to the back foot somewhat. It was right for Cable to admonish the government for not taking this matter seriously enough. Now of course it is understandable that the government doesn't want to talk down our economy but I think things will get much worse before recovery takes place. I'm no financial genius but it seems so plain to me that one of the persistent fault lines in UK plc is this constant mismatch between the change in house prices and variations in the rest of the economy. Self evidently greedy mortgage lenders have so relaxed their criteria for would be home buyers over the last few years that they have assisted in the creation of an unsustainable boom. Now we have properties losing value, mortgages drying up, monthly repayments on the increase, estate agents closing or at least laying off staff and the major house builders drastically reducing the sizes of their workforces. It is very serious and will get markedly worse I'm afraid.

At this point I'll mention one of my current pet hates and that is the Home Information Packs or HIPS. Although not affecting me as I'm not thinking of moving it is nevertheless something I constantly rail about. I've never been at all convinced that they would ever really assist the house transaction process and now they will depress the market even more. If you are a vendor and you feel that your home isn't going to sell for what it was worth say six months ago you are not going to be overjoyed about shelling out hundreds of pounds on a HIP before selling. I think some estate agents were prepared to pay the HIPS cost themselves upfront and then recover this money when the commission was paid out (might be wrong on this mind) but with fewer sales and lower end prices and therfore smaller commissions they would be less keen now I would have thought.

With so many mortgage products being pulled and lenders getting more cagey it is securing the finance that will continue to be by far the major stumbling block in the buying process and that is a matter that the HIPS can't address. And as for having a survey included in your HIP my understanding is that the lender will still insist on their chap doing another survey before coming up with the money. At least this was the way of things when HIPS came in and I assume that nothing has changed so in effect both vendor and purchaser will be paying for a survey on the same property - weird.

I have to admit that part of the HIP is the environmental assessment that our masters in Brussels have dictated should be done (are all the other countries in the EU conforming I ask myself) But as to the rest of the info in the packs I think the government were trying to show they were doing something without thinking things through. Par for the course I suppose.

One final comment: in this village folk seem to be sitting tight, I can't remember so few 'For Sale' boards around. Countrywide it seems that people with property to let will be the gainers whilst buying hopefuls sit things out in the hope that house owning prospects will get better again.