Government warned over Hips rollout

Housing Minister Yvette Cooper said from December 14 the controversial packs would be extended to cover one and two-bedroom homes. The move means all properties in England and Wales that are put up for sale on or after this date will now need Hips.

Ms Cooper claimed the move would particularly benefit first-time buyers by removing many of the upfront costs they would have faced.

Hips came into force for homes with four or more bedrooms in England and Wales on August 1, and three-bedroom properties on September 10. They aim to speed up the house-buying process by giving potential buyers more of the information they need upfront.

But many commentators responded angrily to the announcement, claiming it would distort the housing market, lead to a fall in the number of starter homes put up for sale and make it harder for people to get on to the property ladder.

The Royal Institution of Chartered Surveyors warned that the full introduction of the packs would wipe 300,000 properties off estate agents' books as homeowners baulked at the idea of paying £300 to £500 just to get an idea of how much they could sell their property for.

It said 67% of chartered surveyors had reported seeing a fall in the number of homes with three or more bedrooms that had been put up for sale in October, compared with the same month of 2006, with levels around 26% lower.

The group warned that the reduction in supply would increase demand, causing house prices to inflate well beyond affordability, and pushing first-time buyers further out of the market.

Rics spokesperson Jeremy Leaf said: "The Housing Minister needs to understand that rolling Hips out to one and two-bed properties could find first-time buyers caught between a rock and a hard place as accessibility to the market would go off the scale.

"If the Housing Minister genuinely wants to improve the plight of first-time buyers, she should not continue with this flawed policy."