Will HIPs help people moving house?

Aug 7 2007 by Vicky Anderson, Liverpool Daily Post

Problem-solver or too costly? Vicky Anderson reports

HOME Information Packs have been dividing the opinions of experts ever since the idea first came to pass.

The packs became compulsory on August 1 for anyone putting a house with four or more bedrooms on the market.

The government scheme will be extended to include all other properties in future. Although a timetable has not been set, experts believe it will be by the end of this year.

A HIP contains an energy performance certificate (EPC) that document the energy efficiency of the property, a sale statement, evidence of title deeds, standard searches, and, where appropriate, common hold or leasehold information.

Labour has been mooting the idea of HIPs since it came into power, with the aim of reducing the number of property sales that fall through and to stop gazumping.

Estate agents agree that HIPs will go some way to prevent certain problems.

But opponents of the scheme say it is costly and has not been thought out properly, and that many mortgage lenders are likely to disregard HIPs and still request their own survey, making it an unnecessary expense.

HIPs were intended to become obligatory for all homes on June 1, but were put back by two months following a last-minute legal challenge from the Royal Institute of Chartered Surveyors.

This week, the Daily Post asks: Are HIPs a good thing for the housing market?

vickyanderson@dailypost.co.uk

NO: The Case Against - There are too many loopholes to be exploited

by Jeremy Leaf, Royal Institute of Chartered Surveyors

THE Royal Institute of Chartered Surveyors is continuing to discuss with Communities and Local Government (GLC) our concerns over HIPs implementation, especially in terms of criminal checks, uncertainties in the legislation, and the number and geographical spread of energy inspectors across the UK.

We remain committed to the implementation of Energy Performance Certificates, and improving the carbon footprint of homes across the UK.

But we continue to be concerned that the implementation of HIPs is not being well handled by government.

In particular, we are concerned that the new transitional arrangements will provide an unenforceable framework in which there are many loopholes for agents and vendors to exploit.

Consumers are likely to be concerned and, in some cases, financially disadvantaged by the phasing – for instance, those downsizing will have to pay for a HIP as well as documents on their purchase.

Equally, the industry itself will be confused and, unless sufficient resources are provided to enforce the phased and transitional HIP requirements fairly and consistently, those professionals who abide by the spirit of the requirements will be at a disadvantage compared with those who follow the letter and decide to take advantage of loopholes.

This would be exacerbated by the likely enforcement gaps.

It seems that Government ministers have created a framework, lasting at least five months, which will permit inconsistent practice and unequal cost for consumers.

Our own judicial review proceedings were intended to call the Government to account for a lack of consultation or justification on its gold plating of a European Directive.

We are concerned that the CLG approach to rolling out HIPs over a five-month period, creating uncertainty and confusion for the industry and consumers alike, is not helpful and could have been better managed with a longer period of reflection and proper consultation with industry experts.

The RICS also believes that the efficiency of transactions will not be improved until the Government tackles problems on the provision of leasehold information and the validity of searches, and works with the market to deliver technological solutions that could now be made available to help improve the consumer experience.

YES: The Case For - HIPs will raise issues of concern at an early stage

by Philip Lawton, director, Sutton Kersh estate agent

THERE are various benefits to Home Information Packs. If we can get as much information about a property into them as possible on day one, then people know what they are buying.

Although there has been opposi-tion to their introduction, I be-lieve in time that will settle down.

HIPS will prevent non-serious vendors from putting the property on the market in the first place, as it involves some prior expense.

A small number of vendors will do this just to test the water and withdraw – it is not a huge problem, but it can be extremely frustrating for those who have their heart set on a property.

More importantly, it will raise any issues of concern at the earl-iest stage. If there is any uncertainty about the title of the property, any possible boundary disputes or rights of way issues, they will be flagged up. Again, not a huge number of transactions are affected in such a way, but those are the kind of problems that can cause abortive sales.

Although HIPs are only neces-sary for houses with four bed-rooms or more, it is the Govern-ment’s intention that by the end of the year, every property put on the market will need one.

They will be particularly useful to buyers in the city centre, where I deal with a large number of apartments. Information about service charges and management companies – again, all those com-pulsory elements of the pack – have to be established before a seller is found.

An awful lot of delays can arise; especially with new develop-ments, which may not have set up a management company or cannot produce first year accounts. These things need to be flagged up.

Often if a buyer is left waiting weeks for this information they will walk away from the sale, so having it to hand should help to expedite matters. Things like ten-ure will be known from day one.

There has been a lot of scaremongering about how the introduction of HIPs will make the cost of selling a property more expensive, when in fact that is not the case.

We offer HIPs packs from £275, not the £500 to £1,000 figure that has been quoted in the media, and there is an interest free deferred payment option which means that in most cases the cost of the HIPs pack would be paid from the proceeds of sale.

We start with an online-only service that can be accessed from our website, and it is a further £20 for a hard copy.

Somebody buying and selling will only pay once and is not going to be any worse off, and those selling but not buying are generally in the minority.