Hips to have'negative impact'

Home Information Packs (Hips) will have a negative impact on the housing market, according to 84 per cent of building society chief executives.The government will be introducing Hips to the UK property market in June next year with a view to making transactions more transparent and cutting down on the number that breakdown as a result of misunderstandings and deception.A new report from the Building Societies Association (BSA) shows that building society CEOs are far from convinced, not least because of the expected cost of up to £1,000 to produce a Hip.One of the chief complaints from the chief executives is that Hips will simply add extra costs without offering any tangible benefits.While the government is keen to stress that the packs will offer peace-of-mind to buyers, the chief executives also doubt this, with some saying that they will do very little to reassure buyers.Another concern is that they will fail to speed up housing transactions because lenders will still need valuations, which comes despite the government's claim that Hips will improve efficiency.Far and away the biggest gripe, however, is that Hips could significantly reduce the number of properties on the market, with potential sellers resolutely refusing to advertise a property because of the new fees involved. This would clearly have a significant effect on the property market in the UK and it would also seriously impact upon . While it is not a wholly desirable situation, the likelihood is that house prices would soar, with demand focussed on a fewer number of houses.In a speech at the BSA's Annual Conference in Manchester, Adrian Coles, the BSA's director general, argued: "People's homes represent their most important asset. As such, it is imperative that they can have confidence that there will not be any unexpected fluctuations in the market over 2007. "And with so much uncertainty amongst consumers and the industry over how Hips will work, it seems wrong that it will be an offence to seek to sell a house without a Hip." Mr Coles went on to say that Hips should be made voluntary to ensure there is no negative impact on the property market, but the government remains set on the compulsory scheme.On the other hand, many experts have come out in support of Hips, claiming that the impact will be wholly positive, with first-time buyers in particular benefiting from the redistribution of costs.Charlotte Sjoberg from Nationwide Building Society has argued that it is too early to predict the effect of Hips and has said that it is crucial to see how they work before dismissing them.She added that the scheme will "offer some real benefits to first-time buyers" and emphasised that Nationwide is in favour of anything that makes the house buying process easier.