Why are we asking this question now?
Few experiences can rival moving home for sending stress levels soaring. The interminable delays caused by organising surveys, local authority searches, keeping the solicitor up to speed while juggling the sale of your own property, all the time fearing that the deal could collapse around your ears at any minute, have long presented one of life's great tests of endurance and nerve
It was with this in mind that the Government - after what it claimed was extensive consultation with the consumer and industry groups involved - brought forward legislation in 2004 to require vendors to put together what became known as a seller's pack, officially called a Home Information Pack (HIP).
It was to have become a compulsory requirement for all sellers by June 2007 and was heralded by the Government as a key consumer reform.
The pack, initially paid for by the seller although recouped in the final sale price, would include documents clearly outlining the terms of the sale as well as proving the property was rightfully theirs to sell in the first place. There would also be copies of any planning or building consents, or restrictions imposed by listed building status or other covenants.
The vendor would also have to provide guarantees for works such as double glazing or a new roof, as well as providing the responses of the local authority searches on how the property might be affected by planned work in the area, such as road-widening schemes or other developments.
Most controversially, it was planned that the pack would include a Home Condition Report, based on a professional survey of the property, giving a basic outline of the property's structure and its soundness as well as providing a basis for valuation and hence negotiation.
What is happening now to Home Information Packs?
Since Parliament voted for the packs in 2004, despite the opposition of Peers, the Government department responsible for them - John Prescott's old empire - has been dismantled, renamed and is now headed by former Education Secretary Ruth Kelly. Her housing minister, Yvette Cooper, announced on Tuesday that while HIPs remained a terribly good idea, not all measures would be compulsory. Most embarrassingly for the Government, gone was the very centrepiece of the scheme - the much derided Home Condition Report.
In an attempt to sugar the pill, Ms Cooper attempted to trumpet the introduction of the Energy Performance Certificate. This would allow each property to be awarded an A-G rating, much like modern electronic consumer appliances, indicating a home's green credentials. While clearly an important consideration amid concerns over global warming and, with energy costs soaring, it laid the Government open to angry accusations that it had watered down its proposals to render them meaningless.
However, the new Department for Communities and Local Government insists that HIPs will become a reality, and that making them mandatory remains a "back-up option". Ms Cooper said the full roll-out would now proceed on a "market-led" basis.
Why the change of tack?
The Government insisted that the cost of an HIP for a typical home would be around £600, although industry experts estimated a more realistic figure is in excess of £1,000. But, according to the critics, the costs did not stop there and first-time buyers, already struggling to get a foot on the property ladder, would be hardest hit when they find the costs are passed on to them.
The Council of Mortgage Lenders, which represents banks and building societies, said its members would still require buyers to pay for a valuation if the loan they were seeking was worth more than 80 per cent of the asking price. This would affect 60 per cent of all transactions over the next five years.
Tory claims that this would allow the Chancellor to pocket a further £111m a year in additional VAT receipts left the Government open to accusations that the HIP was another Labour "stealth tax". As well as upsetting the lenders and estate agents, the Government found the new packs played badly in the press, and even found itself criticised by Kirstie Allsopp, presenter of Channel 4's Location, Location, Location. There were also dark warnings that, as well as driving up house prices, the packs could lead to a reduction in the number of properties sold as sellers were deterred from putting their homes on the market by the prospect of shelling out up front for the information. Analysts at Oxford Economic Forecasting envisaged losses to the economy caused by a pack-inspired housing slowdown of anything between £.3bn and £5,6bn.
Was anyone in favour?
Professional bodies providing the services demanded by HIPs saw their mandatory introduction as a lucrative pay day, of course. The consumer group Which? championed the introduction of the packs, which it claimed helped consumers negotiate the single biggest purchase of their lives armed with greater information. Since the announcement that the Home Condition Report would not be a requirement, Which? has withdrawn its support and now accuses the Government of caving in to estate agents' interests and criticism from the media. The U-turn has also angered those companies that have spent millions of pounds gearing up for the change in the law.
From June next year, all buyers will be required to produce a pack containing local and environmental searches, details of the lease, warranties and any pending or previous planning applications. But this will still cost. According to the Association of Home Information Pack Providers producing the slimmed-down pack will cost buyers more than £200.
Embarrassing U-turn or sensible precaution?
Despite nearly five years in the planning, it was obvious the Government had failed to win the hearts and minds of the estate agents and the lenders in order to implement the change. But the consumer is left perplexed. Already confused over the much-heralded proposals, home buyers and sellers may be forgiven for feeling more confused than ever by the latest changes.
Are Home Information Packs a good thing?
* They simplify the process of buying and selling by making the process easier and quicker, not to mention less stressful.
* They give knowledge to buyers, which helps them make what is often their biggest-ever purchase.
* Sellers will find that buyers are not deterred from considering their properties by the cost of commissioning surveys.
* Government intervention in the housing market is a bad thing, because, like all markets, they function better when left alone.
* They will lead to fewer houses being sold in the short and medium term, as well as increased costs for both buyers and sellers.
* A one-size-fits-all package will fail to meet the many varied requirements of buyers and sellers.Reuse content