Happy birthday, HIP. But do sellers think it's worth the candle?

The reports intended to make housing chains run more smoothly are accused of achieving the opposite, finds Kate Hughes
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The Independent Online

This week marks the first anniversary of the home information pack (HIP), the scheme that was supposed to stop property transactions falling through and add support to the mortgage market by ensuring that all those involved knew exactly what they were getting themselves into. The rollout of the scheme is relentless, and Scotland is soon set to join England and Wales in having compulsory HIPs.

But far from celebrating the anniversary, debate is now raging instead over whether the packs serve any real purpose – and even whether they are actually adding to the misery in the housing market.

One in four property deals fail between an offer being accepted and the final exchange, says the Government, costing the economy £1m a day. "We all know these are some of the most stressful events of our lives," says Mike Ockenden of the Association of Home Information Pack Providers (AHIPP), "but we don't have to resign ourselves to it. HIPs are there to reassure everyone and help the exchange run more smoothly."

As things stand, the law requires every seller to provide a HIP. The pack includes an energy performance certificate (EPC); a sale statement – confirming details like the address and whether the property is lease or freehold; the results of standard searches on local authority reports and water and drainage services; and the title documents for the property. Meanwhile, if the home is lease or common hold, lease and insurance documents must go in.

All these elements are designed to keep the buyer fully informed about the true nature of the transaction, removing the potential for any nasty surprises that might stall or scupper the deal further down the line. Housing minister Caroline Flint has hailed the packs: "Property search costs are falling and new information on energy efficiency can help cut carbon emissions and enable prospective purchasers to get a better idea of the likely costs of energy bills."

But HIPs caused controversy as soon as they were announced by the Labour Government in 1997, and the discord has hardly died down, especially with the downturn in the mortgage and housing market.

The only point on which there is anything like consensus is that the scheme was rolled out badly. Critics on both sides of the debate – the HIP providers versus estate agents, solicitors and others – have accused the Government of delays and u-turns: a home condition report, for example, was set to be a mandatory part of a HIP until industry lobbying saw it off.

But the main points of controversy come down to the documents themselves. Peter Bolton King, chief executive of the National Association of Estate Agents, says the report on the condition of a home would have been the only useful piece of information, adding: "There is a major problem obtaining the details required for a HIP. They are hard to get hold of quickly and cheaply, particularly the leasehold information and searches from local authorities." If this is the case, it doesn't bode well: the ultimate aim is that vendors will have to provide HIPs from the first day the property goes on the market.

Even proponents of the packs admit that the story of the first year is very mixed. Ross Bowen, managing director of Connells Survey & Valuation says; "Our research on more than 4,000 vendors who exchanged contracts in the first quarter of 2008 revealed that, on average, those with a HIP exchanged contracts 12 days faster than those without." But he admits: "The HIP content is diminished without the mandatory home condition report."

What's more, some critics suggest that HIPs have contributed to the failing housing market: to the free fall in prices and transactions we see today. The cost of compiling a HIP, generally ranging between £300 and £400, may simply be too much for a would-be seller when the value of their property is dropping, preventing them from putting it on the market.

But Gerard Buckley, chief executive of HIP provider Open Book, disputes this: "Consider how much a buyer spends on stamp duty and solicitor's fees. It's thousands of pounds. The idea that HIPs are damaging the market is absurd.

"And those buying one house and selling another will find they break even," he adds. "You will have to pay for one pack, but the seller of your new house will cover the other. And first-time buyers are in a good position, with no HIP costs to cover at all."

But then there is the question of whether anyone even reads a HIP. Some estate agents would argue that buyers don't use them, and even Mr Ockenden admits that "consumers are not using the energy certificates to reduce their energy bills and carbon footprint".

Regardless of the debate, you face a £200 fine if you have not commissioned a HIP for your property by the time you put it on the market, so consumers have to bite the bullet.

A number of high-street banks and building societies offer to produce packs, including the Halifax and Skipton building society. Chartered surveyors like Opus ( myhomepack.com) also offer HIPs, along with a number of specialist providers like ehips ( ehips.com).

Estate agents will often have an added service, or a preferred HIP partner, and the cost can often be rolled into their fees. But this may not be the cheapest option and sellers are urged to shop around for the best deal.

Alternatively, you can put your pack together yourself; a list of qualified energy assessors is available at hcrregister.com. You will also need to contact a solicitor and the Land Registry for search and legal documents. Check out homeinformationpacks.gov.uk for more information on do-it-yourself sellers' packs.

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