Feb 09 2007

Blow to Harrow’s housing market from Home Information Pack red tape

New Government rules will make it harder to buy and sell your home

Bob Blackman, Conservative Parliamentary Candidate for Harrow East, expressed concern for Harrow’s fragile housing market, following the introduction of complex and expensive new Home Information Pack rules.

From 6 April, extra Home Information Pack (HIP) regulations will hinder sellers from putting their homes onto the market, mislead buyers and create a real danger of £200 fines from town hall officials.

  • New delays if you sell your home: The Government is cancelling the ‘first day marketing’ provision – which allowed sellers to market their home if a HIP had been ordered, but had not yet been completed. Sellers will now have to wait even longer before they can put up a ‘For Sale’ sign.
  • New untrustworthy Property Information Questionnaires: Also from 6 April, HIPs must have a so-called ‘Property Information Questionnaire’ completed by the seller. The Questionnaire is useless as unscrupulous sellers can sidestep difficult questions that could reduce their house price by ticking a “don’t know” box. The buyer cannot be certain that the information is reliable about such things as past dry rot or damp, insurance claims, experience of flooding, and whether past alterations had official permission. Honest sellers will also suffer, as disputes over information in Property Information Questionnaires will end up in the courts, with buyers suing sellers.
  • Heavy-handed town hall fines: Town halls have been instructed to “identify specific cases of non-compliance and enforce the requirements” – and start fining homeowners £200 a time if they do not follow the new rules.
  • HIPs are already harming the housing market: The Government’s own research has found that there is little public knowledge about, or interest in HIPs; that the industry thinks they are a waste of time; that they duplicate costs and that buyers are not bothering to consult HIPs. Ministers have emergency powers under the Housing Act to suspend HIPs, but have refused to use them.

Bob Blackman said:

“Home Information Packs have already damaged the market and discouraged sellers. Now Gordon Brown is making things even worse. You cannot trust the contents of a Home Information Pack, and these regulations will lead to yet more wasted time and expense.

“A Conservative Government will scrap Home Information Packs outright. If Ministers really wanted to help homeowners, they would use their emergency powers to suspend HIPs and provide a shot in the arm to Harrow’s ailing market. Only Conservatives are on the side of Britain’s home owners and the many people who want to move on and up the housing ladder.”

Notes to Editors

NEW DELAYS TO SELL YOUR HOME

New restrictions on advertising your home for sale

The Home Information Pack rules apply to England and Wales. From 6 April, a seller must have a completed Home Information Pack before putting their home on the market. Previously, they merely had to commission a Pack, which can take many weeks to assemble – especially in the case of complex leasehold properties. This is the end of the so-called ‘first day marketing’ provisions.

From then, a HIP must have the following documents as a minimum requirement before marketing can begin:

  • Index
  • The new Property Information Questionnaire
  • Energy Performance Certificate (requiring an internal inspection of the home)
  • Sale Statement
  • Land Registry documents.

All other required documents, such as local property searches and any lease (where applicable), must be included in the Pack within 28 days of the first point of marketing. Government documents explain:

“What can’t you do?

Under the new rules, the agent cannot use information to start marketing the particular property until a HIP meeting the minimum requirements is available. This includes the erection of sale boards, newspaper advertising and the automated daily uplift of information about properties coming on the market from estate agent databases to their websites and on-line property portals, which identify the property and the location. Estate agents are therefore strongly advised to review their administrative processes and use of software to ensure they achieve compliance” (p.2).

DCLG, Industry briefing note: Changes to Home Information Packs, 16 March 2009

New delays in obtaining property searches

In another change to the HIP rules, Home Information Packs will also take longer to produce. From 6 April 2009, every property search “must be complete”. Previously, insurance could be taken out to protect against the delayed searches missing vital data. This previous provision was introduced because of the delays in obtaining information from local authorities.

NEW UNTRUSTWORTHY “PROPERTY INFORMATION QUESTIONNAIRES” RED TAPE

From 6 April, all Home Information Packs must have a new ‘Property Information Questionnaire’ that must be completed by the seller before the home is advertised.

The questionnaire includes questions on past history of flooding, past insurance claims, treatment for dry rot or damp, when electrical wiring was last checked, if planning permission or building regulation approval was given to past structural alterations and rights of access. However, there is no external checking of the accuracy of the form, and in all those cases, the seller can merely tick a box “don’t know”.

Sample questionnaire – DCLG, Property Information Questionnaire (PIQ) – General version, December 2008

Duplication of time and expense

Buyers’ solicitors will not accept the Property Information Questionnaire as part of the conveyancing process, as Ministers have admitted. It just duplicates work and is no substitute for proper documentation.

Hansard, 17 December 2008, col. 793W.

Estate agents take no responsibility

The Government guidance admits that estate agents will effectively no obligation to ensure that the Property Information Questionnaire is accurate and is not misleading. Their only obligation is to sure that the Pack physically has a Questionnaire included.

Agents will have no liability under either the HIP Regulations or the Property Misdescriptions Act 1991 for the information contained in the PIQ, provided that the form is completed solely by the seller and the agent has no reason to believe the answers are wrong” (p.3).

DCLG, Industry briefing note: Changes to Home Information Packs, 16 March 2009

Lawyers’ charter: sellers face being sued by buyers

The only recourse to a misleading Property Information Questionnaire is to undertake legal action, Ministers have admitted.

Hansard, 16 December 2008, col. 591W.

Friday Property Lawyers, one of the UK’s leading specialist residential property law firms, have warned that sellers will end up being sued for damages by buyers and potential buyers.

“The PIQ, unlike the HIP, is subjective and complex. The way the law is set up will see many sellers will fall into a trap when completing the PIQ, legally exposing themselves to financial claims should any information in it be deemed inaccurate by a buyer relying on the information. Crucially, a buyer can take this action without ever entering into a contract with the seller. Prospective buyers can, and will, sue for damages, including all expenses incurred.”

“Abolition of caveat emptor: The long-standing British legal principle of ‘buyer beware’ is effectively abolished by the PIQ.  Previously, the onus was on the prospective buyer to ensure they protected their own interests. Now, the seller is responsible for protecting the interests of both themselves and (under the law) the buyer, incurring legal consequence if they do not. Buyers will take advantage of this, making it common practice for buyers’ lawyers to actively seek out discrepancies in the PIQ in order to serve the interests of their clients, at a cost to all parties concerned.”

Fridays Property Lawyers, Briefing note: Implications of the PIQ, 27 March 2009.

PROSPECT OF £200 FINES

The Government is also pushing local authorities to be more aggressive into issuing fines for breaches of the new rules. Ministers have called for:

“Local trading standards agencies to identify specific cases of non-compliance and enforce the requirements.

(Margaret Beckett, Hansard, 8 December 2008, col. 26WS)

HIPS ARE USELESS SAYS INDEPENDENT RESEARCH

  • HIPs unreliable and add to costs: The independent Carsberg Review in June 2008 warned that HIPs were the “worst of both worlds”, adding to red tape and costs, but not providing reliable information. It warned that they were duplicating costs, since “a substantial number of conveyancers ignore its existence and recommission searches on receiving instructions from their buyer client” (RICS, Sir Bryan Carsberg’s Review of Residential Property, June 2008, p.42).
  • Buyers ignore them: In May 2008, property firm MDA estimated that over half of all buyers’ solicitors ignore the HIPs searches and commission their own “to maintain due diligence for their client” and make up for the deficiencies in the HIP – much of the search information is voluntary, meaning the seller has no financial incentive to pay to include potentially negative information about the property (MDA Press Release, 22 May 2008).
  • Short shelf-life to HIPs’ searches: The Council of Mortgage Lenders requires mortgage lenders to ensure that a search is not more than six months old at completion. Hence, any search in a HIP practically has an extremely short shelf-life, requiring buyers to commission their own, even if they did trust the selective information in the HIP. In a falling market, when it is takes longer to sell a home, this is a particular problem.
  • Minimal public knowledge and buyers don’t care: The Government’s own research by polling firm GFK NOP has admitted:

Minimal public knowledge and interest in HIPs:

  • “Amongst buyers and sellers: awareness, knowledge and understanding of HIPs poor; lack of engagement, experience and interest in the HIPs process” (p.6).
  • “Superficial awareness of HIPS; minimal knowledge and understanding; not sufficiently aware / interested enough to ask to see HIP; rarely shown HIP; not seeing advantages of seller paying; In London, concern over HIP cost when selling property in future” (p.11).
  • “Dismissive: don’t see purpose… Neither buyers or sellers are proactively enquiring about HIPs” (p.13).

Packs are a waste of time:

  • “[Amongst estate agents] Attitude: resigned… Majority perceive no benefit / tend to be negative / waste of time” (p.15).
  • “Estate agents struggled to think of positive comments about HIPS” (p.17).

Buyers not consulting HIPs:

  • “First time buyers: Little knowledge / indifferent… Buyers and sellers: More knowledge / dismissive… Estate agents: High understanding / resigned” (p.19).
  • “Buyers/first time buyers: Majority not offered to see HIP; majority not asked to look at HIP; seen as … long, boring, technical” (p.21).

Duplicating costs

  • “Estate agents… Concern over houses being on market for an extended length of time and HIP becoming out of date before sale agreed” (p.26).
  • “Portability of HIPs raises potential problems… Sellers may have to pay for multiple HIPs, if they change estate agents” (p.34).

Full HIPs presentation: http://www.conservatives.com/pdf/SecretHIPsResearch.pdf

Feb 08 2007

Bob Blackman slams Government’s hikes to business rates during recession

Higher business rates will drive local firms and small shops to the wall

The Government was accused this week of pushing local firms and small shops to the wall by hiking their business rates during the recession. Business rate demands are being sent to local firms across Harrow and many are seeing startling rises in their bills this year, with the prospect of even bigger hikes next year. After rent and staff, business rates are the third biggest cost that local firms face.

This comes as a survey by the Local Government Association has found that 4 out of 5 councils are reporting an increase in empty shops in town centres. Bob Blackman, Conservative Parliamentary Candidate for Harrow East, criticised a number of Government policies that are pushing up tax bills:

  • Inflation-busting rise this April: Business rates are to rise by 5 per cent this April, despite the forecast of RPI inflation to be negative, because of a statistical quirk in the way business rate rises are calculated. The burden of rates will go up by £1 billion a year. The average business rate bill in area is currently £9,152; this rise will push it up to £9,609.
  • End of transitional relief from the 2005 revaluation: Transitional relief from the 2005 business rates revaluation has now expired, pushing up bills for many firms in April 2009 by two or three times more, and raising another £100 million for the Government.
  • Small shops to be hammered by the 2010 revaluation: The April 2010 rates revaluation will hit the retail sector hard, because of the Government’s decision to use April 2008 as the snapshot for the revaluation – when relative retail rents were artificially high compared to industrial and office rents. The resulting rating hikes could push many small shops out of small business rate relief, which means rocketing bills.
  • New empty property hike: When Chancellor, Gordon Brown slashed back rate relief on empty properties. As the recession bites, firms are unable to rent out vacant property, but still have to pay rates in full despite no income from rent. This has increased rates by £1 billion in 2008-09 and by a further £715 million from this April.
  • Retrospective ports tax: Businesses based in Britain’s ports face a further hammering, as the Government is imposing retrospective hikes on ports firms’ bills, backdated to 2005. The car industry will be hit particularly hard, making a mockery of Lord Mandelson’s claims to be helping it.
  • Poor take-up of small business relief: Small firms are not claiming small business rate relief because they have to fill out complex paperwork. In Wales, small business rate relief has been automatic since 2007.

Bob Blackman said:

“Gordon Brown is dragging local firms down his road to ruin. It is the height of economic madness to be increasing taxes on local firms in the depths of a recession. Local shops in  Harrow will be hardest hit by these rises, leading to boarded up shops on our high street and yet more job losses.”

Notes to Editors

“GHOST TOWN” BRITAIN

The Local Government Association has warned that 4 out of 5 councils are reporting an increase in empty properties in town centres, and two-thirds of councils warned that these empty properties are having a significant or moderate impact on high streets (LGA Press release, Urgent action needed to stop high streets becoming ‘ghost towns’, 28 February 2009).

INFLATION-BUSTING RISES THIS APRIL

  • Business rates up 5%: Business rates are to rise by an inflation-busting 5% from April 2009. This is since bills are based on RPI inflation in September 2008, when it was unusually high. This is the highest rate since the introduction of the modern system of business rates back in the early 1990s. However, RPI inflation is now falling and was forecast in the Pre-Budget Report 2008 to be negative (-2¼%) in 2009-10.
  • An extra £1 billion: The standard business rate multiplier will rise from 46.2p to 48.5p, and the small business multiplier from 45.8p to 48.1p (Hansard, 12 March 2009, col. 750W). This will push the average business rates bill in England from £11,239 in 2008-09 to £11,801 in 2009-10, raising an additional £1 billion in revenue in England. The Government has refused to produce an impact assessment of the effect of the changes (Hansard, 12 March 2009, col. 750W).
  • End of transitional relief – another £100 million: In addition, transitional relief from the 2005 revaluation is due to expire, in the fifth year of the five year revaluation cycle. The end of transitional relief will increase bills by a further £100 million this year, doubling or trebling bills for some firms (LGA press release, 23 March 2009). In previous revaluations, transitional relief lasted for five years, not four.

RATE REVALUATION

  • Retail sector to be unfairly penalised: The 2010 business rates revaluation will be based on rental values in April 2008. The change in bills will thus depend on the relative change in rateable values from 2003 to 2008. However, unlike in previous revaluations, the retail rental sector was artificially buoyant in April 2008, relative to the office and industrial sectors. Since then, the credit crunch has brought retail rents down to a closer alignment, relative to 2003 values.
  • Massive hikes for small shops: But if the revaluation goes ahead using the current methodology, the net effect will be to push up significantly Rateable Values (and thus bills) for the retail sector. In many cases, this could push small shops out of being eligible for small business rate relief, and lead to massive increases in bills for shops – pushing many over the edge.

EMPTY PROPERTY RATES

  • £1 billion hike in empty rates: Without proper consultation, in the 2007 Budget, Gordon Brown slashed back empty property rate relief for commercial and industrial premises. The empty property tax rise will raise an estimated net £950 million in extra tax in 2008-09 (HM Treasury, Budget 2008, p.128). There was no offsetting reduction in rates elsewhere. The tax changes came into effect in April 2008 – just as the economic downturn was starting to bite.
  • Compounding effects of recession: This tax rise is particularly harmful in a recession, since firms are unable to rent out vacant property due to lack of economic demand. They must therefore pay for the cost of business rates, without any income from rent to pay for it. Large and small firms now have an incentive to demolish buildings as a result.
  • Pre-Budget changes will not help: In the 2008 Pre-Budget Report, the Government announced that it would increase the threshold to £15,000 for 2009-10 only (HM Treasury, Pre-Budget Report 2008, p.70). Yet the Government is merely exempting some small firms from this tax for one year only, meaning tax hikes in 2010-11 onwards. When introduced, small business rate relief never applied to empty property business rates (Hansard, 3 November 2008, col. 132W), so the temporary changes only undo one manifestly unfair aspect of the tax changes. The reduction in revenue is only £185 million in 2009-10 (Pre-Budget Report 2008, p.194). This compares with the forecast total of £900 million in 2009-10 (Budget 2008, p.128). Hence, the net increase is still £715 million (albeit, even this net revenue may be reduced if firms avoid the tax by demolishing their buildings).

SMALL BUSINESS RATE RELIEF

  • Small firms not claiming: In England small businesses are generally entitled to small business rate relief if the rateable value of their premises is less than £15,000 (£21,500 in London). The discount is worth up to a 50 per cent reduction on their tax bill. However, small firms must fill out a form to claim the relief – it is not automatic. The Local Government Association has estimated that some 870,000 firms are eligible for the rebate but only less than half have claimed (LGA press release, 1 June 2006). By contrast, in Wales since 2007, small business rate relief is automatic.
  • Calls to make it automatic: Conservatives are calling for small business rate relief to be made automatic. But the Government has refused to support a Private Members’ Bill by Peter Luff MP which sought to legislate to make this happen.

SUPPLEMENTARY BUSINESS RATES

  • £600 million hike on local firms: The Government is pushing a Business Rate Supplements Bill through Parliament, which will allow town halls to increase business rates on local firms. Local authorities will be able to issue a 2p supplement on the business rate multiplier, which could increase taxes by up to £600 million a year if levied by every local authority, based on 2007 rateable values (Hansard, 5 June 2008, col. 1068W).
  • Revaluation will push up cost: Although the Government has stated that there will be a threshold of £50,000 (Rateable Value), it has refused to increase the thresholds as a result of the 2010 rates revaluation (Hansard, 6 October 2008, col. 350W). Hence many firms which are currently under the threshold will be pushed above it. Worse, transitional relief will not apply to supplementary business rates (Hansard, 28 February 2008, col. 1828W). The total potential cost of supplementary rates will thus be far larger than the £600 million estimate.
  • Government cuts back business incentive scheme: Supplementary business rates are likely to be used to fund local authorities’ current expenditure, rather than new infrastructure. The Government has slashed the amount of funding that councils will receive under the Local Authority Business Growth Incentive scheme (LABGI) which is supposed to reward economic development, from £1 billion over the last three years, to just £150 million over the next two years (Hansard, 23 April 2008, col. 2107W; 18 March 2008, col. 975W). The supplementary rate will thus effectively displace the LABGI revenue.

PORTS TAX

  • Retrospective taxes on port firms: Up to this year, in each of the 55 statutory ports in England & Wales, one combined business rate bill was paid by each port operator on behalf of all the firms within it. However, following a review that was originally initiated in May 2006, the Valuation Office Agency (VOA) has decided that each firm is now a ‘separate occupation’ and must each pay an individual business rate bill. Rather than giving advance warning of future changes, the VOA has retrospectively backdated the new tax bills for local firms to 2005. As a result, port firms across the country have been hit with unexpected, massive bills, just as the recession bites. The car industry will be particularly hit, due to the nature of globalised car manufacturing.
  • No proper assessment on economy: No impact assessment was made (Hansard, 7 October 2008, col. 594W), no consultation was undertaken (Hansard, 6 October 2008, col. 351W; Hansard, 16 October 2008, col. 1410W), no assessment has been made of the effect on the wider economy  (Hansard, 14 January 2009, col. 761W), and the policy contravenes the Treasury’s own guidance on retrospective taxation  (Hansard, 9 October 2008, col. 802W).
  • Government inspectors at fault: Due to poor communication and lack of forward warning, this has been an unexpected tax change. The ports firms are contractually unable to renegotiate their contracts with the port operators to have a reduction in rent to compensate. The Government has admitted that it failed to warn local firms in advance properly: “The VOA has recognised that, in the exercise of re-assessing rateable values within ports, it should have done more to inform businesses of developments” (Hansard, 10 February 2009, col. 1853W).
  • Firms to become insolvent: The Government’s Insolvency Service has warned Ministers that the liabilities will remain, even if paid by instalments: ‘The debt, like any other, would indeed have to be ‘booked’ immediately… Depending upon the company’s overall financial health, it may not have assets to cover this additional liability.  In such circumstances, the company would be “balance sheet insolvent” but it is possible for companies to trade on in such a situation if they have reasonable expectation of being able to pay their debts as they fall due. However, these companies might be unable to pay their debts (i.e. their other trading debts together with the part of the backdated tax debt now payable) as they fall due.  In such circumstances, the company would be “commercially” or “liquidity insolvent”.’ (Letter from the Insolvency Service to John Healy, 9 February 2009).

LOCAL FIGURES

The table below shows the number of premises which pay business rates in each local authority, the amount of money which is raised by levying business rates on local firms, and the current average business rates bill.

It then estimates the average bill from April 2009 following the 5.0% increase in bills. This excludes the effect of the withdrawal of transitional relief, which will force up bills even more for some firms.

Number of Business Premises

Current tax revenue (2008-09)

Current average business rates bill (2008-09)

Estimated bill from April 2009 if 5% rise

 

£ million

£

£

England total

1,686,778

18,957.8

£11,239

£11,801

Brent

7,845

85.0

£10,838

£11,380

Harrow

5,001

45.8

£9,152

£9,609

 

Original data source for 2008-09 figures: House of Commons Library / CIPFA.

Feb 07 2007

Budget response: Labour Government “taxing the many, not the few”

Bob Blackman gives his analysis of Government’s tax and spending plans

Bob Blackman, Conservative Parliamentary Candidate for Harrow East, delivered his verdict on the Budget, which sets out the Government’s plans for taxes and public spending.Bob Blackman expressed concern at plans to increase taxes on families and local firms across Harrow.

  • National Insurance will be increased for workers and for firms. This jobs tax will discourage businesses from hiring staff, cut people’s pay packets, and mean anyone earning £20,000 a year or more will be worse off.
  • National debt will double to £1.4 trillion – this is equivalent to £22,500 of debt for every man, woman and child. Taxes are to rise by £1,000 for every family over the next two years.
  • Fuel duty is up 2 pence per litre, and will continue to rise by more than inflation for the next four years, increasing the cost of travelling to work, taking children to school and going shopping.
  • Alcohol duty, which was hiked up in December, will rise again as part of the Government’s plans to increase the cost of beer, cider, spirits and wine by more than inflation every year. This punishes responsible drinkers and is putting small local pubs out of business.
  • Business rates are rising by £1 billion in the middle of a recession. Business rates are the biggest cost for firms after rent and staff costs. Bills have soared for local firms since the beginning of April, and further large hikes are expected next year too.

Bob Blackman said:

“In these tough economic times, families and local firms across Harrow are going to pay the price for Gordon Brown’s failings. These aren’t taxes for the few; they are taxes for the many. At a time when people are losing their jobs or facing pay freezes, hard-working families now face smaller pay packets and a higher cost of living thanks to Labour.

“It’s time for change. Conservatives will work to repair our broken public finances and help lead the country out of recession.”

Notes to Editors

The Budget was published on 22 April.

http://www.hm-treasury.gov.uk/bud_bud09_index.htm

SOARING NATIONAL DEBT

National debt will rise from £609 billion in 2008-09 to £1.4 trillion by 2013-14 (HM Treasury, Budget 2009, p.226).

HIKES IN NATIONAL INSURANCE

In November’s Pre-Budget Report, the Government announced that employee and employer National Insurance contributions will rise by 0.5 per cent from April 2011. More than half of all workers (anyone earning over £20,000) will be worse off.

HIKES IN FUEL TAX

Fuel duty will go up by 2 pence per litre from September, with a further 1 pence per litre rise above the rate of inflation each April for the next four years (Budget 2009, p.165-166).

HIKES IN BEER TAX

In December 2008, duty on beer, cider and wine increased by 8 per cent, and spirits duty by 4 per cent. In the Budget, alcohol duty is increased by a further 2 per cent (Budget 2009, p.169) – adding 1p to a pint, 13p to a bottle of spirits and 4p to a bottle of wine.

This is part of the Government’s ongoing plans to increase beer taxation by above inflation every year.

Almost six pubs close every day and more than two thousand have been forced to close in the last twelve months alone (British Beer & Pub Association press release, Chancellor Betrays Britain’s Struggling Pubs, 22 April 2009).

HIKES IN BUSINESS RATES

Business rates are rising by £1 billion in the Budget, a rise of 4.4 per cent (Budget 2009, p.231).

Business rates bills have risen by an inflation-busting 5 per cent from April 2009. On top of this, transitional relief from the 2005 revaluation has expired; in previous cycles, transitional relief lasted five years not four; this has doubled or trebled bills for some firms. The Government announced on 31 March that firms will be able to partly defer some of these rises – but firms will just be billed for the increases later.

On top of this, Gordon Brown has slashed back empty property rate relief for commercial and industrial premises, with compounds the effect of the recession when firms have empty property they cannot rent out or sell.

Page 21 of 33« First...10...1920212223...30...Last »