The October RICS Housing Survey of showed a substantial fall in the sentiment, the biggest one since July 2005. 22,2% of the Chartered Surveyors indicated a fall in the prices of houses, although the supply is limited.

The reasons are multiple: the rise of interest rates, the financial crisis, the hardening of the credit conditions and… the introduction of the HIPs? (Home Information Packages).
The stock of properties for sale was this high in the UK since 2003 (64,9, compared with 59,7 in September). Prices fell clearly in most of the country with East Anglia, followed of West Midlands and the Southwest of the Kingdom United topping the list. London has been the only zone that has not reported a fall.

One of the elements allegedly triggering this fall is the introduction of Home Information Packages. Although the British government has tried to calm down the professionals in the sector by showing studies from the European Union to demonstrate that the introduction of the HIPs is not having a negative effect, the reality is that according to estimates of RICS its introduction in the 1 of August for properties of four or more bedrooms has reduced the supply, eliminating a good percentage of the approximately 20% of speculative sellers who gave to the market it liquidity.

From the 14 of December all residential properties (although the legislation anticipates some exceptions like properties sold without vacant possession or properties that are sold with planning consent for change of use to commercial) they must have a HIP with information about the title, an Energy Performance Certificate of the property along with recommendations about how to cut carbon emissions, information about the charges positions, as well as permits and licenses for developments, possible highways or other infrastructures that can affect or come to affect the value of the property.

At the same time, the financial crisis and the hardening of the credit conditions have contributed significantly to the decline of a before buoyant sector in the United Kingdom. The “buy-to-let” market is set to fall. Whereas in 2002 a buy-to-let prospective buyer needed a deposit on average of £10,000 pounds (an eight percent of the value of the property), the deposit is now £65,600 pounds, approximately a 30% of the value of the property. An increase of 500% in five years. According to the Council of Mortgage Lenders at the moment banks demand a rent cover ratio of 125% that is to say, the received rent must exceed in a 125% total of the payments of the mortgage.

Although the market no longer is attractive and again these investors do not put their properties in the market, the good news are that yields in the residential property will rise slightly in the next months. Therefore those that already are in this market, will not have intentions to leave.