Commercial insurance article archive
The future of Home Information Packs (HIPs)
Since it was announced in November 2003 that Home Information Packs (HIPs) would be introduced onto the housing market in July 2007, their progression towards implementation has been subject to much scrutiny. For the Labour government that introduced them, the packs would cure many of the ills experienced in the housing market. The main thrust of implementing the packs is to make sure that the selling of properties has as much transparency as possible. Expected to cost between £650 and £1,000, they will make it mandatory for Britons selling their home (hence the fact they have also been given the name seller's packs) to compile a comprehensive dossier of information on the property. The government believed that the packs would lead to major savings being made by property purchasers losing up to £1 million each day on valuations, legal advice and property purchases, only to be gazumped. But how have the packs been taken to by industry and how are expected to alter the property landscape?
Many figures within the industry have questioned the benefit of Hips from the outset. Rather than take the stress out of the homebuying process, various estate agents have speculated that the implementation of the packs will simply delay property sales. Early in 2006, Philip Davies, chief executive of Linden Homes, said the market would be "strangled" in the process. The National Association of Estate Agents (NAEA) concurred with the view, suggesting that the market would atrophy because 'impulse sellers' would be deterred from their selling their properties. Peter Bolton King, chief executive of the NAEA, said this was because the level playing field would be removed, "allowing other people who have already got their pack on the market to jump in and make an offer".
Unsurprisingly the Association of Home Information Pack Providers (AHIPP) has regularly extolled the virtues of the packs. Contrary to the notion that they would stymie the market, Mike Ockenden, director general of the organisation, stated that buyers would "embrace" the packs because they would save them the trouble of having to commission their own surveys. But what is the homebuyer to make of Hips and how will they affect the market for consumers?
Originally, the packs were supposed to contain parts which the home seller would be obliged to bring together. These include documents such as warranties and guarantees, an Energy Performance Certificate (outlining a property's energy consumption bill) and a Home Condition Report, which would gauge the general condition of a property. However, earlier this year, it was announced that the report would be postponed. According to many housing professionals, this would make the principal objective of Hips completely redundant, with the government having predicted a far more transparent process. Louise Cumming, head of mortgages at the group, also said that because part of the packs was due to be compulsory and part voluntary, even greater confusion had been caused.
The government's u-turn caused ripples of discontent within the industry. More than two thirds of mortgage brokers suggested that the plan to introduce Hips should be dropped, research from UCB Home Loans revealed. Almost three quarters of mortgage brokers felt that a purchaser would go ahead and commission their survey in any case, a statistic which would seem to render the process largely irrelevant.
In recent weeks though, the government has been rallying around the implementation of Hips. At a recent conference, Yvette Cooper, minister for housing and planning, gave a firm suggestion that the Hips would have a full roll-out by their June deadline and that the Home Condition Report (HCR) elements of the pack would also be implemented.
And, despite the Council of Mortgage Lenders having recently described Hips as a "costly indulgence" and opining that it did not think that the dry run would be a robust test of the new arrangements, the strongest supporters of the packs continue to staunchly defend them.
This week, Mike Ockenden of AHIPP, said that he looked forward to the implementation of the packs and that the forthcoming dry run would show that Hips "reduce the stress associated with buying and selling homes by reducing the number of failed transactions and providing certainty in the process". Home buyers and sellers can but wait and see.
07 Dec 2006