GMAC-RFC, the UKÂ’s 10th largest mortgage lender, is today calling for the Office of the Deputy Prime Minister (ODPM) to seriously re-think its plan for a regional dry run of HIPs to make it truly representative.
They have serious concerns that HIPs may cause a similar, serious ‘jolt’ to the mortgage market as was seen with the removal of double MIRAS in 1988.
If this was the case, the company believe HIPs could affect the house buying market for years to come.
Stephen Knight, Chairman of GMAC-RFC, said: “The HIPs ‘dry run’, announced by the Government last week, has surely got to be ‘paid for’ so that any impact on the property market can be properly assessed.
“We believe that this important new measure has been under-researched and, as a result, the potential impact of HIPs has been underestimated.
GMAC-RFC believes that the dynamics fuelling the UKÂ’s property market are such that further costs, in addition to those already borne by the buyer, could cause the market to overheat during the first half of 2007, and then cool off dramatically.
“We applaud the Government for trying to protect house buyers from wasting money on failed property transactions but we are concerned that no-one has fully assessed the potential effect this compulsory ‘tax’ could have on the UK property market.”
The £600-£700 tax for putting a property on the market could cause a significant reduction in the flow of second-hand properties in the future.
Knight said: “A property move in the UK is often triggered by vendors testing the water. When they receive an offer they then understand what they can afford to buy. A chain is created. HIPs could prove to be giant ‘roadblock’ to this process.”
These concerns have been backed up by research carried out by the National Association of Estate Agents (NAEA) in March.
It revealed that 73 per cent of UK homeowners would think twice about marketing their home for sale as a result of the cost and delay caused by HIPs.
