Agents get HIPs ‘hidden’ payments

Channel 4 News has seen evidence that up to £100 could be being added to the price of a Home Information Pack because of secret payments to estate agents. Bridgid Nzekwu reports.

HIPs were introduced in England and Wales in 2007 and since April this year it has been illegal in England and Wales to put a house on the market without having a HIP in place first.

The average pack costs £300 to £400 and includes various documents, including a description of the property, an energy performance certificate, searches and a property information questionnaire completed by the seller.

The government has always insisted that HIPs improve the home buying and selling process, yet they have been consistently criticised as a waste of time by estate agents, surveyors and solicitors.

Channel 4 News has obtained documents which show an agreement between a HIP company and an estate agent to add an undisclosed commission to HIPs.

In one, the HIP provider suggests a deal in which the company will supply HIPs at a cost of £220 + VAT “on the basis of being your sole HIP supplier” and suggests that the agent can add any margin onto the pack “which is totally hidden from the vendor”. The HIP company states that this undisclosed fee “will be paid to the estate agent on the last working day of the following month from order”.

A second document, a leaflet given to the seller by the same estate agent, recommends the same HIP provider and states that the price of the pack will be £350 + VAT. So the price paid by the seller is almost £150 more than the price originally stated by the HIP provider.

Peter Ambrose of The Partnership says he is approached regularly by estate agents requesting secret payments in exchange for recommending his company to sellers.

He told Channel 4 News: “We think the idea that someone is paying an estate agent without telling the consumer is almost tantamount to bribery in some ways, in that saying to the agent use us and we’ll pay you for doing this and they’re paying them anything in the region from 50 to 150, 200 pounds. We’ve even had situations where people are paying £50 of M&S vouchers… it may not be illegal what people are doing, but it’s definitely unethical.”

Approximately 80 per cent of HIP companies belong to the voluntary trade association AHIPP. The body accepts that undisclosed commissions are commonplace and has told Channel 4 News it sees nothing wrong with the practice which it believes to be “the nature of commerce”.

In a statement AHIPP said: “In collecting the agent’s mark-up as part of the retail price of the HIP, the HIP providers is not in the same position as a solicitor who pays a referral fee in return for receiving work. The fundamental difference here is that the HIP provider acts as an agent for the estate agent in the preparation of the HIP. It is the estate agent who determines the retail price of the HIP.”

However the President of the Law Society in England and Wales, Paul Marsh, insists that secret commissions are “quite wrong” and that solicitors around the country are complaining to the Law Society about it.

He is urging the Government to take urgent action: “We always made it very clear when we were speaking to Yvette Cooper [former Housing Minister] and the ministers at the time when HIPs were introduced that they were introducing a business which was going to be worth half a billion pounds a year and that business needed to be properly regulated.

“We believe the Government should put in place effective regulation to make sure there is transparency throughout the system so the public know what they’re paying for, who’s getting what and that they are getting value for money.”

The Chief Executive of the National Association of Estate Agents, Peter Bolton-King, has condemned practice of adding commissions to HIPs without the seller being informed. Any estate agent that receives such a commission without informing a client selling their home is breaking the Association’s Rules of Conduct.

Mr Bolton-King warned that the NAEA would fine or expel any member found taking undisclosed commissions. He told Channel 4 News: “We can take somebody in front of a disciplinary panel. If they’re found guilty then we fine them up to £1,000 per breach. If it’s very serious we chuck them out.”

Such is the concern at the widespread anecdotal evidence about secret commissions between HIP companies and estate agents that the Royal Institution of Chartered Surveyors is now investigating the issue as part of a wider review of commissions across the entire property industry. It is inviting anyone with evidence to come forward by July. A report and possible recommendations will follow later this year.

Source: http://www.channel4.com/news/articles/business_money/agents+get+hips+aposhiddenapos+payments/3153672

Surprise bounce to March house prices

* House prices increased by 0.9% in March

* House purchase activity reaches highest level since May 2008

* Welcome signals of market improvement but too early to talk of house price recovery

Headlines March 2009 February 2009

Monthly index * Q1 ‘93 = 100 301.5 298.7

Monthly change* 0.9% -1.9%

Annual change -15.7% -17.6%

Average price £150,946 £147,746

* seasonally adjusted

Commenting on the figures Fionnuala Earley, Nationwide’s Chief Economist, said:

“Spring brought a surprise bounce to house prices in March. The price of a typical house increased for the first time since October 2007, rising by 0.9% during the month and reducing the annual rate of fall from -17.6% to -15.7%. This brings the price of a typical house to £150,946. The moderation in the annual rate of fall is somewhat distorted by conditions last year and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached. The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices.

Mortgage Approvals highest since May 2008

“Mortgage approvals have started to increase after reaching levels which were thought out of the question two years ago. February saw the number of monthly approvals increase to 37,900, its highest level since May 2008. This is still far below the long run average of the series which started in 1993 of 94,000 per month, but is a significant improvement on the average for the second half of 2008, which was only 32,000. The upturn is welcome and is certainly a signal that there is some movement in the market. The sales-to-stock ratio, which is a good indicator of movements in house prices, has begun to stabilise in 2009. However, it is still too soon to say that this will be the beginning of sustained house price rises and a reflection of a wholesale return of confidence to the market. The ratio remains at very low levels and house price expectations are still very weak. The current upturn in activity is therefore more likely to reflect the return of buyers who have delayed purchasing through the worst of the financial turbulence at the end of 2008 rather than the beginnings of a swift recovery. Nevertheless, the willingness of borrowers to return to the market is encouraging and likely to in part reflect the falling cost of borrowing.

Source:  http://www.nationwide.co.uk/hpi/?source=nationwide&campaign=homepage&execution=hpi_lhs_01122008

6^th April Changes For PIQs and Searches

Don’t worry we have made it easy.

6^th April is fast approaching and there are 2 BIG changes to the way we compile HIPs we need to tell you about:

• A Property Information Questionnaire will need to be included in every HIP pack
• The cost of Searches will change for all HIP providers

We have gone to great lengths to make sure that using the Abbey Estates system is still the easiest and quickest way to make sure you are compliant.

That’s how much the Stamp Duty threshold would rise to if the Government reacted as they did in the last major UK recession…

THE National Association of Estate Agents has highlighted research from a leading ‘think tank’ as evidence of the Government’s flawed stance on Stamp Duty.

The Centre for Policy Studies compared Government responses to the last major UK recession in 1991 to how Westminster has reacted to the current downturn.

In the early 1990s, the CPS points out, Stamp Duty thresholds were increased eightfold, which meant that 99 per cent of the country was exempt from the tax. A comparable rise today would see the threshold raised to £1 million. In comparison, the current, temporary extension of the Stamp Duty threshold to £175,000 was found by the CPS to have been ineffective.

The NAEA has long argued that Stamp Duty should be completely suspended and revised and the Association’s chief executive Peter Bolton King said: “These figures reveal Stamp Duty in 2009 for what it is – a tax on first time buyers and ambitious home owners with no other purpose than to give the Government as much cash from as many people as they can get away with. The CPS report confirms that the current policy on Stamp Duty is not helping anyone – and that a substantial revision of the tax, as introduced during the last recession, would.It also suggests that the Government could not afford to get rid of Stamp Duty or to raise the threshold to a comparative level to that set during the last recession.

“The NAEA believes that a confident and recovering housing market would deliver more benefit to the country’s economy than any short-term measures hatched at the Treasury.”

Source: http://www.estateagencynews.co.uk/news/news-0309a.asp

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House prices ‘up 1.9% in January’ The average price of UK homes rose by 1.9% in January from December’s figure, according to the Halifax. However it warned that one month’s figures did not indicate an end to the downward trend in prices, which it says have dropped 17.2% in the past year. The average house price has now reached £163,966, according to the Halifax. Last week, a survey by Nationwide suggested house prices fell by 1.3% in January, and they said job worries were putting off people buying homes. Martin Ellis, chief economist at the Halifax, said his bank’s latest survey did not mean the property market had reached a turning point, after last year’s dramatic slump in mortgage lending, completed sales and prices. “It’s far too early to make any conclusion,” he said. “The figures are going against the trend and our survey shows that if you compare the last three months to the previous three [months] then prices are still down significantly, by about 5%,” he added. ‘Modest rise’ Market experts are still agreed that prices will keep falling this year, probably until the economy stops shrinking, with continued restrictions on credit reducing the number of people taking out mortgages. However earlier this month, the Bank of England reported that the number of new mortgages approved for home buyers had picked up slightly in December. House price surveys explained What are your property plans? The 31,000 mortgage approvals were up from 27,000 in November, though they were still the second lowest figure on record. Estate agents have also been reporting more would-be homebuyers registering with them, though so far these have not yet been converted into a consistent rise in sales. “The Halifax report is consistent with the recent modest rise in activity as shown in our own surveys,” said Brigid O’Leary, a senior economist at the Royal Institution of Chartered Surveyors (Rics). The Bank of England has been cutting the base rate sharply in recent months in an effort to stave off recession. It trimmed the rate further on Thursday, from 1.5% to 1%. Different surveys One explanation for the Halifax survey recording a rise in prices in January, while the Nationwide reported a fall, is that they cover different time periods as well as just their own lending activity. “We report prices for the full calendar month, while the Nationwide reports sales from the 20th of one month to the 20th of the next, so they may have include some sales that took place at the end of December,” Mr Ellis explained. When simply comparing the average price in January with the average price a year ago, the Halifax survey suggests that prices are down by 16.8% from £197,243 in January 2008. But the lender prefers to compare the average price for the past three months with the average price for the same period a year ago, which produces its current estimate of a 17.2% annual fall. All Halifax’s house price data is based on mortgage approvals.

Source: http://news.bbc.co.uk/1/hi/business/7871614.stm

THE flurry of ‘accidental landlords’ who joined the lettings market in the summer as their homes failed to sell, are now giving up on ‘riding out the slump’ and are returning to the sales market with more realistic price expectations, the Cluttons agency have reported.

Thousands of vendors found they were unable to sell their property over the summer and opted to rent it out in the short term, in the hope that the market would recover in a few months and they would achieve close to the peak prices of 2007.

However, say Cluttons, reality has now sunk in and sellers are accepting that the market is not experiencing a short-term dip, but a longer-term house price correction, which has seen prices fall by approximately 25 per cent from their peak.

James Hyman, partner for residential sales at Cluttons, who have 11 offices in London and four others around the country, said: “Those people who need to sell their homes are realising it is not an option to sit tight and wait for prices to recover.

“This is good news for the sales market, which has been stalled in part by the reluctance of sellers to recognise that their homes are worth considerably less than they were a year ago.”

“Many sellers, who are not in a position to rent their property out in the long term, are now accepting that they are better off selling at current prices, as the market is unlikely to recover to previous heights for some considerable time.”

“There are plenty of buyers out there at the right price, especially in the mid-market, with large enough deposits to access finance, and there are deals to be done with reasonable sellers.”

 source: http://www.estateagencynews.co.uk/news/news-1208c.asp