Will Home Information Packs (HIPs) be ‘scrapped’?
Interestingly, and perhaps a telling factor, the NAEA has chosen not to carry out a survey of its members on this subject. I find it ironic that estate agents are purporting to support abolition when on the admission of a number of their profession it has been the revenue earned on the sale of HIPs which has helped keep businesses afloat.
Not all conservative party members advocate the abolition of HIPs. Some say the HIP should be retained but on a voluntary basis. I can understand why they say this but I wonder how many of them have actually thought this idea through. One of the major benefits of the HIP is the positive impact this is having on the reduction of time it takes to proceed to exchange. If in say a chain of three only one of the vendors had made use of the HIP the transaction would not as a result of this be any quicker as it will only be as fast as the slowest part to the chain.
Making the Home Information Packs (HIP) voluntary would also lead to the return of the abortive sale and the loss of the associated costs.
We have looked at what the Conservatives say and have addressed their arguments. I have already touched upon some of the stated benefits of the HIP but I thought it would for the sake of completeness be helpful to summarize the main arguments for retaining the HIP:
- Lower Costs: The cost of property related searches have reduced by at least one third since their introduction, thereby making the cost of purchasing a home cheaper.
- Greater Efficiency: The time between accepting an offer and moving to exchange of contracts has reduced considerably thereby reducing the risk of gazumping as well as taking some of the stress out of the home buying process. Data released by Connells in October 2008 showed that vendors with HIPs exchanged contracts on their property on average six calendar days faster than those without a Home Information Pack (16,000 vendors who had instructed estate agency branches within the Connells Group after 2nd August 2007, and who subsequently exchanged contracts before 12th October 2008).
- Upfront Information: The introduction of the Property Information Questionnaire has also helped by providing useful upfront information about the property to be sold making it easier for the prospective purchaser to make an informed decision on a property before viewing. This has also led to the consumer becoming more engaged in the marketing and sale process of their property. In turn those selling and purchasing property are beginning to take a greater interest in both the pack and its benefits. A survey of 1,000 home sellers undertaken by Simply HIP in May 2009 showed that 96% of sellers completed the questionnaire in less than 30 minutes (52% taking less than 10 minute), 98% found the questionnaire straightforward or very straightforward to complete and 86% believe the information provided in the questionnaire will be useful to buyers.
- Established and innovative: Both HIPs and EPCs have led to an improvement in the home moving process; including the development of new products such as ‘exchange ready’ HIPs. Why start all over again when an established, innovative and productive industry already exists? Without exchange ready HIPs Government figures show it takes 82 days from acceptance of offer to exchange but with an exchange ready this is reduced to 52 days. Evidence from some providers shows that on average exchange is taking place within 28 days with exchange ready packs and that there have been instances of exchange occurring within 7 days. Grant Shapps on exchange ready HIPs: “If an exchange-ready pack can be produced because estate agents know its best practice and they’ve got evidence that it speeds up the process, it’s obviously a great idea. Why don’t estate agents get together and propose exchange-ready packs?”
Conclusion
So having looked at, and considered the arguments from an intellectual angle, rather than form a political one, where does all of the information and evidence point?
To ‘scrap’ the HIP without a replacement would send us back into the dark ages and therefore one thing is for certain this should not be viewed as an acceptable option.
Apart from destroying overnight a well established and high value industry what would ‘scrapping’ the HIP achieve? Surely such a policy can no longer be viewed as a ‘vote winner’ with the Conservatives so far ahead in the polls? It’s not going to win them any further votes. The only argument that could conceivably be advanced with a degree of credence is that the Home Information Pack is stifling the market. There is no evidence however to show that this is so. No economist has come forward to support this view; all we have are estate agents with vested interest saying it is putting sellers off. Surely this in not enough evidence to justify the total scrapping of regulations, which after a shaky start, are beginning to deliver, and delivering well. Ask yourself if you were in control of keeping or retaining HIPs would you base your opinion solely on what some estate agents are saying? You would almost certainly take on board the views of all interested parties, particularly the consumer. The imminent publication of the Mori Poll results will signify the production of the only truly independent survey of the consumer and will without be doubt be a piece of evidence which even the hardest opponent to the HIP would find difficult to ignore.
At the meeting with Grant Shapps he agreed to review his position on the production of evidence to show that the HIP is producing benefits and in particular is helping the consumer. It will be interesting to see what his view will be on considering the results of this poll and also the feedback I know he has and will continue to receive from his fellow MPs following their meetings with DEAs and HIP supporters around the country.
One thing is for certain, until the Conservatives are elected, nobody knows for certain what they will do. To do nothing at this stage and hope for the best is a dangerous and unadvisable policy. Whatever your view may be I would urge you to contact and engage with your local conservative MP or the prospective conservative candidate.
By David Pett, Solicitor and Director of Hipshomes Limited
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