Property industry hit by the cost of Hips U-turn

Property industry hit by the cost of Hips U-turn

Dismayed mortgage lenders, estate agents and home pack providers have collectively spent an estimated £225m on preparations for the introduction of the packs in June next year. An estimated 4,400 people have also trained as inspectors to carry out the report, at a cost of £7,000 each.

In the wake of minister for housing Yvette Cooper's announcement to drop obligatory home condition reports, which would have formed the survey element of the packs, much of the money spent by companies is likely to have been wasted and demand for the inspectors' work is likely to be far lower than anticipated.

Ms Cooper instead said the packs would go ahead containing local authority searches, title deeds, key legal documents and energy performance certificates. Home condition reports will still be available, but on a voluntary basis.

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The property website Rightmove saw its shares plummet by nearly 20% in early trading today, as the group, which had planned to offer services linked to the packs, warned that revenues were now likely to be "significantly lower" than previously expected.

Meanwhile consumer groups have warned that the watered-down packs would do little to prevent sales from falling through. Which?, formerly heavily in favour of the packs, yesterday withdrew its support for the packs which, it said, had become "a useless but a very expensive waste of time".

The Council of Mortgage Lenders also said some lenders had "invested heavily" to deliver and use home condition reports instead of a separate mortgage valuation survey from June next year.

The government has yet to put a figure on how much the revised packs will cost, although it said the energy performance certificates alone were likely to be in the region of £250.

It had originally been estimated that the packs could cost up to £1,000 to put together, but some people still estimated they would cost about £600 even without the home condition report.

Mike Ockenden, director general of the Association of Home Information Pack Providers, said: "Packs without home condition reports will only be marginally cheaper because home inspectors will still have to visit a house to carry out an energy review and grade the property for its energy efficiency. They will still cost at the thick end of £600."