Lenders are generally supportive of home information packs (Hip) according to a survey published by the Council of Mortgage Lenders (Cml).
The Cml claims, somewhat surprisingly, that two-thirds of mortgage lenders intend to provide the packs.
But it says they have also expressed significant concern the technical standards necessary to build the required systems to use home condition reports in their processes could not be made available sooner.
And it says lenders believe the number of properties put up for sale will increase in the run-up to Hips coming into force in June next year and then decrease immediately afterwards.
The Cml survey follows the publication on Tuesday of a report commissioned by mortgage lender GMAC-RFC, and presented to all three political parties, on the possible economic impact of Hips.
The independent report, conducted by Oxford Economic Forecasting, suggests almost 100,000 people could lose their jobs while £5.7bn could potentially be wiped off the UK economy if Hips have a negative impact on the housing market to the extent that housing transactions fall by 25% in the first year following their introduction to the market.
Following the publication of the report the Conservative’s shadow housing and planning minister, Michael Gove stated that it was "not too late for the Chancellor to intervene and force the government to abandon John Prescott's legacy of half-baked and dangerous new regulation."
The Tories also claim the government has “quietly admitted that at least a 10% reduction in housing transactions is likely to result from the introduction of the packs.”
On home condition reports, the Cml research says nearly eight out of 10 lenders believe the need for a physical inspection will reduce, and seven out of 10 believe the use of automated valuations will have increased a year after Hips are implemented. But, it adds, the full impact of home condition reports on lenders' valuations will not be immediate and automated valuations are unlikely to become the default method.
The report claims five years after Hips, lenders still expect physical inspections to account for about half of all valuations, and automated valuations for about 40%.
The research also states there has been a disappointing lack of progress on the National Land Information Service (Nlis) which was established in 2001 to speed up the provision of local authority searches by enabling them to be made and delivered electronically.
It says three quarters of local authorities are still unable to provide a fully electronic service because of inadequate investment, and no compulsion on local authorities to interact fully. The CML says this urgently needs to be addressed ahead of Hip implementation.
Cml head of policy ,Jackie Bennett, says: "This research shows, as we have so often repeated, that lenders are generally not anti-Hip in principle. It is the practicalities, the government's expectations, and the possible unintended consequences that cause them concern.
"Even those who are enthusiastic about Hips do not expect to replace physical inspections with automated valuations on a wholesale basis. Currently a physical inspection is used in 99% of applications for house purchase.
“Although the market may move more quickly than anyone can anticipate, lenders' current best estimate is that 40% of valuations will be automated five years after Hips have been in place. This is less than the 50% that the government anticipated in its recent regulatory impact assessment, but is still a remarkable rise compared to the position today."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
Hires Wellington Management
Introduces 'The Long Dog'
Continuing Square Mile’s series of informal interviews
Happy GDPR day