'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
Sunday 08 February 2009
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?"
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
How couples can protect their financial interests when cohabiting
Money alert: Overdrafts at HSBC and First Direct
'Dismal' eurozone data sparks concerns
How to protect your assets if the stock markets begin to head south again
Child Maintenance Service to replace Child Support Agency - but is it better?
- 1 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 James Foley beheading: Fox news presenter Megyn Kelly annoyed by Ferguson update during broadcast about murdered journalist
- 4 Kajieme Powell: Missouri police release video footage of second man killed by officers
- 5 Paul Scholes: Manchester United need five experienced players who can turn round a desperate situation
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Isis threat: Cameron wants an alliance with Iran
Crisis? What crisis? A visiting US doctor gives the NHS a rave review
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Scottish Independence Referendum: Salmond described as 'arrogant, ambitious and dishonest' by Scottish women
iJobs Money & Business
£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...
£50000 - £65000 per annum: Harrington Starr: Senior Application Support - Fide...
£45000 - £60000 per annum: Harrington Starr: Product Specialist - (Application...
£50000 - £60000 per annum: Harrington Starr: Technical Specialist - (Applicati...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony