“Mr Pickles today laid an Order suspending HIPs with immediate effect, pending primary legislation for a permanent abolition. The Secretary of State has taken this swift action in order to avoid uncertainty and prevent a slump in an already fragile housing market. Today’s announcement sends a clear message of encouragement to people thinking of selling their home that they can put it on the market with less cost and hassle.” Source: Communities.gov.uk
Delivered by Labour housing minister Ruth Kelly, in 2007, HIPs were intended to streamline the house selling process, by requiring sellers to provide conveyancing information when properties are first put up for sale. Paid for by sellers, they contain property information, title deeds and local searches.
However, from the off, the packs drew criticism. Some have suggested that they lack vital elements, such as structural surveys. Meanwhile estate agents, and industry figureheads such as Kirstie Allsop, have cited the £100-£400 upfront fee as deterring house sellers from testing the market, and in effect, contributing to the stagnation of the housing market. Seemingly, many are painting HIPs as a scapegoat for the market's woes. Whether their claims are verifiable, remains to be seen, especially given number of factors contributing to the volatility of the housing market over the last three yeas.
Whilst today's news has been warmly received in some quarters of the housing industry, many in the HIP industry feel that little thought has been given to their livelihoods and clients.
The move was not unexpected, as both the Lib Dems and Conservatives have made no secret of their opposition to HIPs. However, what has surprised many in the HIP industry, is the speed with which the suspension will come into affect. Homes Minister Grant Shapps, had previously promised a 100 day consultation period to decide the future of HIPs. This would have given the HIP industry time to wind down or adjust the focus of their operations.
The eradication of HIPs, could see the first major job loses under the new coalition government. The Association of Home Information Pack Providers (AHIPP) suggests that between 3,000 and 10,000 livelihoods are either directly or indirectly dependent on HIPs.
Paul Sailes of HIP-Consulant.co.uk, has contributed an industry insider's view of today's announcement:
It is sad day for both HIP providers and the home buying and selling process. The HIP gave a great vehicle to deliver upfront information about the property marketed for sale. Of course, it had areas which could have been improved, what doesn’t. It would not have been hard to amend if the various parties shared the desire to do so. It is a sad reflection on our property market that various groups facilitated targeted campaigns aimed at the HIPs demise rather than utilising their efforts to help improve the HIP and reform our antiquated home buying and selling process.
Unfortunately, I believe the Home Information Pack will go down in history as a failure due to actions of those with vested interests; that also includes those who were consistently pro-HIPs. The home buying and selling process requires reform and still does, never more so than yesterday if it is intended we revert back to pre-HIP days. HIPs were a good first step towards the ultimate goal of successful reform. I see no winners from the actions taken by the government today and it worth sparing a thought for those businesses, jobs and families who will be directly affected due to no fault of their own and will undoubtedly suffer.
The future for HIP providers?
One element of HIPs, the Energy Performance Certificates (EPCs) will remain. EPCs grade a home's energy efficiency on a scale of A-G ratings. Costing considerably less than HIPs, at around £60, the seller will be required to supply one within 28 days of putting the house on the market. Sources have suggested that EPC's will remain valid for up to 10 years. However, questions have already been raised about the quality and scope of EPC's. Whether EPCs can absorb the fallout from the HIP industry remains to be seen. What is certain is that the original need for a full report, which would produce a fairer market, free from gazumping and gazundering remains.
Update: 21/05/10 Today Countrywide has announced that it is to reimburses clients for HIPs. Could this be another thorn in HIP provider's sides, as clients call for refunds for an effectively defunct product?
