Time to get HIP

After the government announcement that all properties marketed from 14th December 2007 now require a Home Information Pack (HIPs), the Conservatives have stated yet again that once they get into power they will repeal the law requiring them, a prospect relished by their (many) opponents. There is of course, the small matter of a general election to overcome.

Once again the spats have started between the Association of Home Information Pack Providers (AHIPP), the Royal Institute of Chartered Surveyors (RICS), the National Association of Estate Agents (NAEA) and the Law Society, all eager to protect hard earned positions.

So what are the ongoing arguments against HIPs?

Estate Agents seem to feel that this is a wrong solution to the wrong problem, that is that bringing the information enclosed in a HIP to the front of the process is not likely to save time at all. The government has championed the provision of upfront information but Spicerhaart recently commented that only 10% of buyers seemed bothered enough to even read the HIP before making an offer. The NAEA seem to believe that what is needed is a more joined up house purchase process with more of the process completed electronically. The market price for a HIP seems to have settled at around £350 for an average sized property although as expected it has already become a commodity and the price is likely to fall still further.

Their position is no doubt influenced by the fact that they may see a decline in the speculative seller, now forced to commit to several hundred pounds in advance. These speculative sellers have, in the past, accounted for as much as 30% of all listings and around 10% of sales. Having to present the need for a HIP when completing the valuation complicates a sales process that has remained simple and unchanged for a decade - no sale-no fee, sign here please.

RICS continue to assert that the requirement to provide an Energy Performance Certificate every time a property is sold goes far beyond the European requirement to certify a properties energy performance every 10 years. They also oppose the Home Condition Report on the grounds that they see it as a poor replacement for the existing Home Buyers report.

In truth, RICS have enjoyed a monopoly on valuation and survey business in the UK for decades and a new army of pseudo surveyors is seen as a threat to their influence and their future. The irony is that the HIP was 'dumbed down' by the removal of the Home Condition Report (survey) as a compulsory section and this was probably the most desirable element from a purchasers perspective.

The Law Society have stated that there is little advantage in completing searches in advance of a sale and that the purchasers solicitor would be duty bound to recommend that they be repeated. They also seem to have a problem with the fact that most HIPs will include a personal search, as opposed to one from the local authority - perhaps assuming that this could impact on their PII premiums. It is a fact that some searches will be repeated as the HIP begins to date as soon as it is compiled and there is no duty on the vendor to refresh the information whilst the property is continually marketed.

So who is championing the worth of HIPs as they become law?

AHIPP is a trade association representing the multitude of HIP providers ready to provide them to an unwilling audience. A look at the AHIPP website shows a plethora of different companies touting their wares. As you would expect, they are enthusiastic about the positive effect that HIPs can have on the house sale process and maintain that they are largely cost neutral if the purchasers solicitor accepts the contents. They rightly point out that first time buyers benefit in that they essentially have some of their legal disbursement costs covered in the HIP and that for leasehold properties it advances the sometimes lengthy process of obtaining the lease.

Needless to say, AHIPP are lobbying the Conservative government to modify their position and have (up to) two years to convince them of the worth of HIPs.

The main HIP facts

• From 14th December the law requires all properties that are marketed for sale to have a HIP ordered and evidenced as such.
• Properties on the market prior to their respective requirement to have a HIP have an exemption until further notice as long as they are continually marketed.
• As soon as the Energy Performance Certificate is available it must be referred to within the particulars for the property.
• The exemption that permits a property to be marketed once the HIP is ordered as opposed to received has been extended to 1st June 2008. This is referred to as '1st day marketing'.
• From April 2008 the requirement for an EPC will be extended to the sale of new build properties as well as on the sale, rent and construction of commercial properties.
• By October 2008, all public buildings will have an Energy display certificate.