The Conservative party has made no pretence about its desire to ‘scrap’ Home Information Packs (HIPs) should as is likely it gain power in spring of next year. Is this a credible policy which can be backed with intellectual argument or is it simply an easy way of trying to win the populist vote?
In this article I will look at both sides of the argument and will, despite my vested interest in seeing the HIP retained, try and provide a balanced analysis of the issues.
I start with recording below an e-mail which was recently forwarded to me in response to a letter sent by a DEA to the Conservative Leader’s office:
David Cameron has passed your email onto Grant as the Shadow Housing Minister and he in turn has asked me to get back to you with his thoughts.
Governing means deciding and we’ve always been very clear about HIPs and voted against them from the outset. It’s not therefore that surprising that we will abolish them.
I fully appreciate how difficult this is for you and share your anger about the money you and others have spent on training. I believe that this Government has led you up a garden path by introducing a needlessly bureaucratic, expensive and largely pointless piece of legislation and I have every sympathy for someone in your position. However, it does seem to me that the people to blame are the ones currently in power. We have been consistent in our intentions and have warned the market place that HIPs didn’t enjoy our support throughout.
We will of course look at ways to ease the transition for those who are already trained or training as HIPs inspectors, but we will not be keeping the current system.
This clearly leaves one in doubt where the Party’ policy currently stands. Indeed, it mirrors what was said to me at a meeting I attended earlier in the year with the Party’s Shadow Housing Minister, Grant Shapps. He made it clear HIPs were to go but the EPC would be saved though it would not be required before the property is marketed.
So why do the Conservatives wish to see an end to the HIP?
In short they see the Home Information Pack (HIP) as a:
- Damaging barrier to the housing market
- Restricting factor on the supply of housing
- Duplication of sale costs
- Burden to the consumer
On the face of it and without closer analysis do these reasons stack up? Even if they do, the real question which needs to be considered is whether it would still in the best interest of the consumer be wise to ‘scrap’ a system without having an alternative plan for reform?
The introduction of HIPs was shambolic, that there is no doubt. However credit must be given to the Government for making changes to the home selling and buying process, the first changes since 1925!
It’s easy to pick holes and attack. but much harder to come up with ideas on how an antiquated system can be improved for the benefit of the consumer.
So let us look at the conservative arguments.
Is the HIP restricting the supply of property to the housing market?
There is no evidence to support this view. Other more significant factors are more likely to be the cause such as the shortage of mortgage funds and rising unemployment.
Apart from the cost of the EPC which the Conservatives are looking to retain, there is no extra upfront expense to the home seller and purchaser.
The cost of the HIP which is around £300 plus VAT can in any event be deferred using interest free credit with Lloyds Bank and Close Brothers, active lenders in this market.
Furthermore, the Conservatives are proposing an increase in the Stamp Duty threshold which would be a far more effective means of encouraging people to market their property.
I also wonder whether the Conservatives have given any thought on how their policy will affect the market come early next year. If, as expected, the election is held in May or by 3rd June at the very latest, a Conservative Party pledge to scrap HIPs would be likely to cause vendors to hold off putting their houses on the market until after the election, during what is normally the busiest period of the year. Recovery in the housing sector is already fragile and this would stifle further recovery to the detriment of the whole economy.
Do HIPs add to the cost of selling?
If HIPs are scrapped the seller will still need to commission the EPC and property searches and the cost of this will be no cheaper than a HIP!
In all probability the price of EPCs and property searches would increase. Indeed, the price of property searches since the introduction of HIPs has come down by around a third.
At present the only extra cost to the selling process is the EPC as all of the other documents in the HIP would be required with or without the HIP!
Is the HIP of benefit to the consumer?
The anti-lobbyists comprise some estate agents and lawyers.
It is in their interests to ensure that reforms to the home selling and buying process are kept to the minimum.
They have all done well out of the boom years under the old regime and see no reason for change. They have little regard to the consumer’s best interests.
Over the summer, Ipsos MORI conducted a survey of over 2,000 consumers actively involved in the home buying and selling process. The results are due to be published shortly. I can at this time tell you that the headline findings show a positive consumer attitude towards improving the home buying and selling process through the provision of upfront information.
Another way of looking at the arguments is to consider what the consumer would be left with without the HIP. In short we would be left with:
- An antiquated home selling and buying system – one which up until the HIP was introduced had not been reformed since 1925!
- A return to those days of wasted costs on abortive sales and speculative selling.
- Increased property search prices
- The loss of the innovative work of HIP suppliers as regards for example ‘ready to exchange’ packs. Ideas designed to speed up the property conveyancing process and save further cost.
So what is the alternative?
AHIPP is encouraging the Conservatives not to ‘scrap’ without first providing time for reflection, review and consultation. They are being asked to:
- Consider which parts of the HIP are of benefit to the Consumer and which can be built upon and improved to make the home selling and buying process quicker and more effective.
- Look at ‘ready to exchange’ HIP products– the idea of having all of the draft legal documents made available at the time the property is marketed will clearly help to speed up the selling and buying process and should lead to the cost of the transaction falling further.
- Talk to suppliers about ‘exchange ready HIPs’; many are already leading the way with ready to exchange products to help speed up conveyancing transactions.
- Consider the wide spread economics of dismantling an industry which has now been growing for the past two years – unemployment/loss of VAT revenue.
- Consider the green issues of dismantling a ‘vehicle’ which has introduced and implemented energy assessment at a point in the selling process which is leading to sellers and buyers taking advantage of grants to introduce energy saving measures.
The wider economic ramifications of abolishing HIPs should not be ignored.
The industry has now been up and running for over 2 years and has already become firmly embedded within local and national economies.