Homeowners: Wave goodbye to HIPs and hello to £200

The much-maligned Home Information Packs have been ditched by the new Government.

One of the first things the new Lib-Con coalition Government announced was its intention to scrap Home Information Packs (HIPs). So after over 10 years in the planning, only three years in operation and a whole load of time and money wasted, it’s goodbye to HIPs.

Many people will be pleased, including the nation’s favourite property princess, TV’s Kirsty Allsop, who was a fierce opponent of the packs. But not everyone will be so happy.

The thousands of people directly or indirectly employed in the industry, who were assured by the Government that the packs were here to stay, may not be so thrilled to be losing their jobs. Indeed, many people gave up careers and invested in training to become a self-employed HIP inspector when the packs became compulsory -- now they are likely to lose their livelihood.

What’s the story?

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The idea was that by giving potential buyers a pack crammed full of key information on the property before they made an offer, fewer deals would fall through at a later stage. Things would move quickly and time-wasters would be discouraged.

In essence it was shifting some of the costs of buying -- like searches and valuations -- from the buyer to the seller (who would pay for and provide the HIP).

And importantly, it fulfilled an EU directive to provide energy efficiency information on all properties, which would become one of the contents of the pack.

Now that is the only bit that will stay under new Government plans.

Watered down

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Unfortunately, although the idea was a good one in principle the contents of the pack got more and more watered down over the years. When they finally launched in August 2007 they were, well, pretty useless.

Most of the intended contents had become optional for sellers, specifically the Home Condition Report -- the jewel in the HIP crown -- which was going to be similar to a valuation. Once that became optional, in a last minute Government u-turn, it was pretty obvious that HIPs were doomed.

Indeed the only compulsory things left in the launch packs were a contents page, the energy efficiency report, proof of title and a few pretty lacklustre searches, none of which represented a determining factor for buying your dream home!

For up to £200 a pack, it hardly represented  a great deal.

Confused roll-out

Another problem with the HIPs rollout was the phased approach, which did little to instill any confidence in the system. First they were launched for some, but not all, four-bed homes. A month later some three-beds were added and two months after that smaller properties were added.

But those who had put their property on the market before the launch didn’t need to get one, leaseholders got away without one for a further six months, and all sorts of other loopholes made it difficult for anyone to know whether or not they needed a HIP, let alone for anybody to monitor the take-up of them. Indeed, when I was househunting in early 2009 many vendors didn’t have them.

HIPS were eventually made compulsory for all sellers but the missing compulsory components meant that the dream of ‘exchange-ready’ packs that contained such comprehensive information that a buyer could have an offer accepted and move straight to exchange of contracts, was leagues away from reality.

In essence they didn’t speed up the buying process because of their watered down state, didn’t stop time-wasters, and didn’t really help potential buyers.

Little wonder then that the Tories jumped on HIPs years ago as a waste of time and money, and as an easy target for political point scoring. When they formed the coalition Government last week it was no surprise they announced they were scrapping the packs.

The losers

Inevitably with a decision like this, there will be those that lose out.

Chief among them are the thousands who trained to work as home inspectors. According to the Association of Home Information Pack Providers, between 3,000 and 10,000 workers will be either directly or indirectly affected by the death of the packs.

Furthermore, it has been pointed out that once HIPs are scrapped property conveyancing costs will rise to cover the searches that were included in the packs -- the local authority searches and water search. What's more, meeting those costs will once again be the responsibility of the buyer.

Deferring the sale

Ever since the formation of the co?alition, there has been a sense of confusion surrounding HIPs. While the Government was clearly committed to scrapping the packs, it had given no timetable for doing so.

As a result there were concerns that potential sellers would defer putting their property on the market to avoid paying for a HIP. The resultant lack of supply could then skew the housing market temporarily, and more importantly threaten the recovery.

Thankfully, the coalition Government has listened to those concerns and acted swiftly, with an immediate suspension of the packs, pending legislation to remove them completely. Energy Performance Certificates remain compulsory due to EU legislation.

The introduction of HIPs was a long-drawn out messy process. Thankfully their demise appears to have been a sharp and short one.

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