Mortgage lenders have breathed a sigh of relief after the government scrapped Hope Information Packs (HIPs)
The controversial Labour government scheme was widely criticised within the housing industry but mortgage providers and estate agents alike celebrated the Government's decision to axe the packs yesterday after it was announced in their new coalition document only days after coming to power.
The schemes have been suspended with immediate effect from today, May 21.
Since December 2007, every homeowner in England and Wales who wanted to sell a property has had to pay an average of £500 including VAT for a Home information Pack.
The packs were designed to help new buyers by containing all the information about the property, such as local authority searches and a 'green' rating – but they were criticised for being a waste of money because estate agents said they were rarely looked at.
It is thought that up to £1 billion was spent on the scheme, including training thousands of staff to administer it, before it was finally given the chop yesterday.
Good riddance and goodbye was the message from John Heron, Paragon Mortgages' managing director. “The decision to suspend HIPs is a welcome move and long overdue. The original policy objective to improve the house purchase process was sound, but HIPs were simply the wrong vehicle. They added a new, expensive layer of bureaucracy and did the opposite of what they were intended to do.
“Just one of the problems with HIPs was that it discouraged those that didn't have to sell from testing the market because of the hassle and upfront cost of the pack. Suspending HIPs could therefore encourage some potential sellers to now put their home on the market. This can only help stimulate activity in the housing market.”
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