News

Home Information Packs: Amputation or HIPs Replacement?

by Ben Carroll

May 2010

Without doubt, the evolution of Home Information Packs (HIPs) from their initial conception, through what many believe was a bungled implementation by the Government, to their present form today, has been controversial.

Conveyancers, estate agents and consumer groups have vociferously debated the advantages and disadvantages of HIPs; there are differences of opinion between, and within, each group on what the finished article brings to the house buying process.  

Many believe that the concept remains sound; that the provision of any information to a potential buyer at the outset is a good thing; that HIPs have demonstrably reduced transaction times and cancellation rates; that further benefits should come from mandatory additional information within HIPs rather than their abolition.

At the Land Data Great Housing debate in April 2009 a panel of experts, including Michael Coogan, Director General of the Council for Mortgage Lenders, unanimously agreed that “while packs had been poorly implemented, they should not be scrapped but instead adapted and improved.”

Those parties with a vested interest in the retention of HIPs will also point to a recent Ipsos MORI poll, commissioned by the Association of Home Information Pack Providers which indicated that 85% of people had not been deterred from selling as a result of HIPs.

The survey also revealed that although the other 15% of sellers thought twice about selling their home because of the cost of a HIP, they did in fact go on to put their property on the market.

The counter-argument suggests that HIPs have failed in what they set out to achieve; are a distraction which is impacting on the recovery of the housing market and should therefore be scrapped.

Grant Shapps, Shadow Housing Minister, is a voluble proponent of this view: “Home Information Packs aren’t worth the paper they’re written on. They duplicate costs as buyers and lenders don’t trust the contents. They impose a barrier to selling your home which restricts housing supply.”

And Shapps is not short of supporters.  Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA) , describes HIPs as "controversial" and "relatively useless"; whilst the President of the NAEA, Stewart Lilly, feels HIPs are “a clumsy piece of legislation” and “not the way to improve the home buying and selling process.”

The anti-HIPs brigade has plenty of stats to back up its argument. According to recent research by HIP provider MDA, 81% of conveyancers rated HIPs poorly, with a large majority suggesting a negative effect on the conveyancing process, as well as relationships with agents.

In a separate survey of over 2,000 solicitors, conveyancers, estate agents and other property professionals, conducted by The Bold Group, 74.5% agree that HIPs should be adapted and renamed whilst 80% call for a cheaper more comprehensive pack allowing first day marketing.

Whatever your personal viewpoint, HIPs seem to be firmly ensconced as part of the property buying and selling process.

The HIP market employs over 10,000 people either directly or through the provision of the constituent parts. It also feeds work to an ever-growing list of professionals such as personal search companies, search departments of local authorities, domestic energy assessors and solicitors. 

At the end of 2009, the HIPs market was estimated to be valued at £292m.  Today, the production of HIPs is one of the most efficient and streamlined elements of the house buying and selling process.  

But despite this, the future of HIPs remains uncertain.  Thursday 6 May 2010 is not only a General Election – it also marks the potential starting point for the abolition of HIPs.

If we awake to a hung parliament on Friday 7 May, HIPs will no doubt be lumped into the pot marked ‘for political horse-trading’, the most likely outcome of which would be an outright abolition.   And then there’s the thorny question of timing.  Depending on what you read abolition could take anything from a matter of weeks to 180 days.

What will happen during this period? Will vendors be concerned or will the widely held view that the requirement or otherwise of a HIP is not instrumental in the decision making process on whether to put their property on the market or not – they will do what needs to be done to sell their home? Will trading standards still police and prosecute agents who fail to comply, knowing that by the time they get to court, the law would have changed?

Michael Day, who heads Integra Property Services, has warned that if HIPs are scrapped, estate agents could be left with a £75m black hole in their collective income. He says: “I am no lover of HIPs in their present form, but I would strongly advise agents to think about a plan for the possible scenario of a world without HIPs and to consider what other options they have to generate revenues and cashflow.”

Of course, if Labour is re-elected, this is unlikely to resolve the issue of HIPs rapidly either. They’re likely to look at review and consultation, possibly leading to adoption of the pack to make the HIP a more comprehensive document.  

Whatever the outcome of the General Election, the situation won’t help to quickly ease uncertainty for the property services industry at a time when we might have hoped to be able to focus on the recovery of the market.

4 May 2010