GOVERNMENT plans to reform the housebuying process could leave homeowners out of pocket.
Plans to stamp out gazumping by introducing Home Information Packs in mid-2007 could hit homeowners with a £750 million bill for abortive work on homes which fail to sell.
That's the claim from Danish company EIG, which
has supplied HIPs for the Danish market for a decade and will come to the UK when we adopt a similar system.
Using government figures, the company reckons 2.3 million homes a year go on sale in England and Wales each year, and 1.3 million actually sell. The new system will make it illegal to market a house until an HIP
is compiled, perhaps a month after an owner has decided it is time to move.
The one million owners of homes which don't sell - paying an estimated £650 --£1,200 for HIPs which will include a valuation report, local authority searches and introductory legal documents - could lose hundreds if they have to stay put.
Assuming an average price of £750, the bill for abortive work on a million HIPs could top £750m. It is recognised HIPS won't end gazumping completely, but they should make it less likely by shortening the time between putting a house on sale and exchanging contracts.
According to Negotiator magazine, only 77,000 HIPs
are compiled in Denmark each year - a fraction of the British total. Critics of the scheme claim the increased bureaucratic workload could have a disastrous impact on the UK market, if turnover is fairly weak when it is introduced in mid-2007.
The National Association of Estate Agents has warned that the arrival of HIPs is likely to distort the market.
Says NAEA president Christopher Hall: "In the run-up to the introduction of HIPs, the market could become saturated with properties. Conversely it could be starved for weeks.
"Keen sellers may well be looking to avoid any extra cost by marketing their property before the HIP becomes compulsory."