'Utterly pointless'. Are HIPs breaking the back of the housing market?

As the rules are tightened for home information packs, Julian Knight asks if they can help sellers and buyers

For some, they have advanced consumer protection and shone a light on the dark workings of the property market. For others, they have been nothing more than a monumental waste of time and money – a piece of botched legislation that has helped turn a housing market correction into a full-scale crash. Home information packs are either heroes or villains.

HIPs have been compulsory since December 2007 for all homes being sold in England and Wales. But soon the regulations governing the packs will get tighter; break these rules and sellers and their agents could face fines of up to £200 a time.

For the past 14 months, vendors have been allowed to put their homes up for sale without actually being in possession of a HIP; they have only needed to show a pack is on order. But from 6 April, this period of grace will be abolished. "You won't be able to place an advert, or so much as tell a potential buyer that a property suiting their needs is about to come on the market, without having a HIP in place first," says Trevor Kent, a former head of the National Association of Estate Agents and a longstanding opponent of the packs.

HIPs contain key details of the property being sold, including local authority and utility searches, copies of title and an energy performance certificate obtained from a qualified inspector.

The big idea behind the sellers' packs is that the conveyancing process will be speeded up as the buyer can see a lot of the information upfront, and any potential snags. To this end, from 6 April, HIPs will also contain answers to some of the questions raised most often by buyers' solicitors, such as the risk of flooding and whether there are service charges. Mike Ockenden, director-general of the Association of Home Information Pack Providers, says: "In trials of these new-style HIPs, sales have definitely been faster because less time is eaten up by solicitors asking each other questions. As a result, people are moving from offer accepted to exchange within three weeks."

But those at the sharp end, dealing with HIPs day in, day out, tell a different story. "They are good in theory but the execution has been so bad – frankly, they are a bit of red tape," says Alan Thompson from conveyance specialist Act Legal.

"For instance, many of the independent HIP providers include personal searches in the packs. This means either they or a third party source the information rather than getting it straight from the local authority. This is understandable, as some authorities charge over £200 for a search. But the buyer's solicitor will want to protect their client and arrange for a full search bought from the local authority. And if they don't do so, the mortgage company may insist. As a result, both the seller and the buyer can end up paying for searches."

The price of HIPs, though, is no- where near the doom-laden predictions at the time of their introduction, when opponents said costs could touch £1,000 in some instances. Tough competition has forced the expense down and charges of between £250 and £400 are common . "Providers can put packs together cheaper than individuals can do it for themselves," adds Mr Thompson.

Typically, sellers arrange HIPs through an independent provider or their estate agent – which will usually farm the pack out to one of the independents anyway. What's more, some agents offer to tack the cost of the HIP on to the commission they charge should the property sell. There is a risk, though, that agreeing to this kind of arrangement could limit your options. "There is a real issue of portability," says Mr Kent. "Will the agent allow you to take your HIP with you should you wish to move to a rival."

The true cost and quality of HIPs should be transparent, he says: "Some agents get kickbacks from the providers that they farm their packs out to. I would like to see agents declare upfront if they receive any commission on HIPS.

"In truth, many of these HIPs are slipshod, cobbled-together affairs. I have even heard anecdotally of instances where energy inspections are not carried out by qualified people but are simply signed off by them." he adds.

A recent investigation by Birmingham Trading Standards found the overwhelming majority of HIPs it examined were of "unsatisfactory" quality.

The home pack industry is keen to counter its critics. "There is a code of practice overseen by an independent body, the Property Codes Compliance Board. Anyone who is responsible has signed up to this and I recommend only buying a HIP from these companies," says Mr Ockenden. "Roughly 75 per cent of the HIP market by volume is signed up to the code."

However, HIPs legislation still seems to be marked for repeal if the Conservatives get in at the next general election. A recent memo from shadow housing minister Grant Shapps to anti-Hip campaigners says the packs could be living on borrowed time. "We remain completely committed to abolishing HIPs. In these difficult times for hard-pressed homeowners, I look forward to quickly and efficiently tearing away this utterly pointless piece of red tape," the memo reads. Under this vision, HIPs are unloved and living on borrowed time.

But in response, Mr Ockenden says, it would be a mistake to use HIPs as a political football, adding that he detects growing goodwill: "We do not want to go back to the bad old days. Industry bodies that were once sharp critics, such as the Royal Institution of Chartered Surveyors and the National Association of Estate Agents, are beginning to come onside. I recently asked a room full of property professionals, many of them pack opponents, whether or not it was a good idea to give buyers more information at the outset. Not one disagreed."

As for the charge levied at HIPs that their introduction has helped exacerbate the turmoil in UK's housing market, Mr Ockenden says nothing could be further from the truth: "If the packs were having such a negative impact on the market, why is there a record number of properties up for sale? If HIPs were such a problem, surely they would be deterring people from putting their properties on the market in the first place?"

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