News
News
HIPs and Assisted Sale Schemes
7 August 2006
It is not breaking news to state that post 2007, sales in the housing market might slump. The ‘go live’ date for HIPs in June will arguably have an initial negative effect on the market, with a potentially significant reduction in the number of houses coming to the market and there being a consequent impact on house prices. However, the question on everyone’s lips should be how to make good out of this potentially bad situation.
There are a number of incentives that new home builders can use to convert spontaneous sales, more commonly part-exchange. However from Post-2007 developers will need to take notice of assisted sale schemes .
Whilst part-exchange is an excellent incentive, there are only small percentages that the scheme is actually applicable to, for example, the value of the new build has to be 30% higher than the part-exchange property. Furthermore, the proportion of properties relevant for traditional part-exchange is falling; partially due to a change in the profile of types of new builds (for example more flats).
Assisted sale schemes offer the buyer a more flexible method of purchase rather than a straight part-exchange. Firstly the buyer reserves their desired plot for a pre-agreed period of time, the developer then assists the buyer in achieving a sale on their existing property and agrees to meet the cost of the selling agent. As a result by offering the assisted sale the developer has an instant commitment from the customer, control over the sales process and more importantly, reduces any exposure to their balance sheet.
Assisted sale schemes allow every site visitor with a dependant property sale, the ability to purchase. A recent movewithus independent survey shows that there is a market for those buyers who have a property that is more than 70% of the value of their budget.
Post June 2007 assisted sale schemes will become much more than just a sales converter; they will actually help to protect the new homes market. The HIP, which will be fully introduced in June 2007, will affect the number of buyers able to proceed, initially due to the cost of preparing a HIP upfront. However, developers can attract purchasers who would not have previously considered a new build by offering an assisted sale scheme to those who haven’t already put their house on the market. The developer will be offering a complete service, reducing stress and the overall cost of moving home.
The government’s decision to make the HCR voluntary while keeping the EPC as a mandatory element of the pack could also mean greater interest in the new build market. Arguably, the high energy efficiency rating on a new build property, along with an assisted sale schemes could prove to be a powerful marketing message, translating into more sales overall.
The HIP will be good for business as it will help to achieve faster turnaround times for each plot by already providing Local Authority searches to a purchaser’s solicitor and thereby avoiding potential and costly waiting times.
movewithus’ pre-2007 answer to the Home Information Pack, HIPlite, is helping developers prepare for the changes ahead now. movewithus are already working with some developers, getting them up to speed and capitalising on the transition by delivering HIPs for their new build and part-exchange properties.
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