Tories confirm that they will abolish HIPS

Tories re-affirm their pledge to abolish HIPs
Friday 30th January 2009

The Tories have been misrepresented in the press recently in relation to their stance on HIPS, with several commentators stating that they were now in favour of keeping them as a part of the house moving process.

The Tories stepped up their campaign against HIPs with two heavyweight statements yesterday reaffirming their total opposition.

Shadow housing minister Grant Shapps told Estate Agent Today: “Conservatives always warned that HIPs were a bad idea that would damage the housing market.

“We have voted against them at every stage in Parliament and just last week voted against the latest piece of Government HIPs gold-plating which means that sellers will from April have to fill in additional paperwork before even being able to market their own home.

“Taking all of this into account, it shouldn’t surprise anyone that we remain completely committed to abolishing HIPs. In these difficult times for hard-pressed home owners, I look forward to quickly and efficiently tearing away this utterly pointless piece of red tape.”

Owen Inskip, the special adviser on housing to the Conservatives, also went to lengths to deny that he has ever expressed support for HIPs.

Speaking at a conference of conveyancing lawyers last year, Inskip made some remarks which he says were mis-reported in a legal publication.

He said: “I have never said I liked HIPs. I don’t like them. Clearly, my remarks were misinterpreted.

“I did say that there is considerable advantage in learning the lessons and reviewing the HIPs debacle, but that is obviously very different from saying that I support HIPs.

He underlined that the Tories are fully committed to scrapping HIPs should they win the next election. “Grant Shapps, the shadow housing minister, has repeatedly said that he will get rid of HIPs,” said Inskip.

It is refreshing to see a government party listening to experts within the industry.

Lloyd Davies

Convey365

Action required to avoid a ‘War of Attrition’

The Government needs to act and act quickly to stimulate an increase in the availability of mortgages if the housing sector is to pull itself out of its recent slump, according to a leading Group of residential conveyancers.

Despite experiencing some of the lowest ‘attrition rates’ in the industry, the Convey Group has seen the number of house purchase transactions being cancelled before completion rise sharply through 2008 and the availability of mortgage finance has been the key driver.

Chief executive Lloyd Davies, commented: “Of course there are always other reasons for not completing on deals, a search might highlight an unknown problem on a property or a customer might simply be changing their mind about moving, but we’ve never seen the rate as high as this.”

The Convey Group, which can complete up to 1000 residential property transactions in a month, reported ‘normal’ attrition rates of around 25% prior to the sub-prime issues in the US and the onset of the credit crunch. At times in 2008 the rate has hit a peak of 40%, which has not only spelt misery for buyers and sellers, but had a drastic knock-on effect on the entire housing sector.

The attrition figures coincide with a Bank of England report showing the lowest rates for mortgage approvals since records began in 1993, with just 32,000 deals done in October this year, down from an average of 114,000 a month in mid-2007.

Davies continued: “Falling house prices mean that buyers are struggling to meet the loan-to-value requirements that lenders are demanding on their best products and as a result the base rate reductions are having little impact. If buyers can’t qualify for these mortgages then they are going to keep withdrawing from the market, which is going to suffer as a result.

“The Government has already committed to underwriting defaulted payments and recently announced a package to help to first time buyers, but more needs to do be done to encourage new mortgage deals that buyers can afford.

“Northern Rock was the UK’s largest mortgage lender, but we have seen the bank offloading its mortgages in an attempt to strengthen its balance sheet. The effect of this is to use up funds from other lenders that would otherwise be going to new borrowers and provide the credit life line that’s needed to kick-start the housing market.”

This sentiment is reflected in a Government-commissioned report from Sir James Crosby, the deputy chairman of the Financial Services Authority, which called for more Government help for the mortgage market.

Whilst stopping short of calling for US-style state run mortgage organisations, Sir James did indicate that the Government should help the mortgage market by guaranteeing £100bn of mortgage-backed securities in 2009 and 2010, a strategy which he also suggests could make money for the Government.

Blog entry by Convey365