Hip loophole risk

Millions of homeowners are set to exploit a loophole that means they would avoid paying for a Home Information Pack (Hip) on the sale of their home, but in some cases this may not be a good idea, according to one mortgage company.

New regulations stipulate that anyone selling a home with four bedrooms or more must purchase a Hip, but a study has shown 4.5 million owners of affected properties would be prepared to declare their home as a three bedroom in order to avoid the added cost.

Fourth bedrooms are passed off as play rooms, games rooms, TV rooms and studies, in order to get round paying for a Hip, however Abbey has warned homeowners of the disadvantages of reducing the amount of bedrooms advertised in a property.

"You might make your property seem over-valued as potential buyers will be comparing the price of your bigger abode against someone else’s," explained Nici Audhlam Gardiner, head of mortgages at Abbey.

Ms Gardnier also highlighted that homeowners selling their houses could be limiting their options by choosing to sacrifice a bedroom.

"By remarketing your home as a two or three bedroom house with a study, you’ll become invisible to thousands of potential buyers that are searching online, specifically, for three or four bedrooms and above," she said.