House pack change hits Rightmove

Rightmove shares proved popular with investors on their debut

Shares in property website Rightmove have tumbled after it said changes to the UK government's planned homebuyers' kit would "significantly" hit earnings.

The UK said on Tuesday that it would tweak plans to introduce the Home Information Packs (HIP) and that their survey element needed further testing.

Rightmove, which had identified HIPs as a key profit driver, said the move would cause it to miss market targets.

Its shares had fallen 21%, or 74 pence, to 277p by 1515 BST on Wednesday.

Cut price

It was originally envisaged that the HIP packs would cost about £1,000... now it is thought to amount to perhaps only £150 Numis Securities Rightmove's share price Countrywide's share price

"The implication is that the overall value of each HIP will be lower than previously expected," Rightmove said in a statement.

"Accordingly, revenues and potential earnings from Rightmove's HIPs product are likely to be significantly lower than current market expectations," it added.

Rightmove is part-owned by estate agent Countrywide, and its shares also dropped on Wednesday, shedding 8.8% to 389p.

Analysts at Numis Securities explained that "it was originally envisaged that these packs would cost about £1,000".

"However, plans now are for a report to just contain an energy efficiency rating, searches and title deeds, the cost of which is thought to amount to perhaps only £150.

"This will obviously have severe consequences on the financial prospects for estate agents and surveyors such as Countrywide," Numis added.

Rightmove floated its shares on the London market in March this year and at the time said it listed more than 700,000 properties around the UK and got 10 million visits per month.

The company reported revenues of £18.2m last year - almost double 2004's figure of £9.2m.