From next month, Home Information Packs (HIPs) will be required for the sale of all homes. While they have been roundly criticised by many in the housing industry, we ask if HIPs are really such a bad thing?
HIPs were first introduced in August when they were only required for the sale of four-bedroom houses. In September, this was extended to three-bedroom homes. However, from December 14 next HIPs will be required for the sale of one and two-bedroom homes as well.
So, what is a HIP? Basically, the packs include detailed information about the home that is going on the market. This information will include the state of repair of the home, title deeds, leasehold details, land search and energy performance certificates.
The Government claims that HIPs will be of benefit to buyers because they will know exactly what they are buying, and that they will speed up the selling process. However, it is not quite so quick to point out that HIPs will provide it with valuable records on the number and status of residential properties in the country.
Not surprisingly, HIPs have met with fierce resistance from housing industry representatives. Former NEAE president, and long-time HIP opponent, Trevor Kent has spoken out strongly against yesterday's announcement.
“Vendors are very unhappy to pay £350 – £700 for HIP reports, listing personal information on them and their homes and incorporating the Energy Performance Certificate, especially when they learn what is happening to the reports once prepared – nothing,” he says
“Prospective purchasers have no interest in reading them, and their solicitors are actively asking that the packs are not sent to them when a sale is agreed. Lenders have always indicated they would not rely on pack information prepared by sellers and this is certainly the case in practice.”
He also points to a 35% fall in the number of three and four-bedroom properties coming on the market since the introduction of HIPs. While yesterday, the Royal Institute of Chartered Surveyors said 67 per cent of its members saw a drop in the number of new three or four bedroom homes coming on the market compared with last year. However, it is far from certain that HIPs are the cause of the slowdown in the sale of properties.
While HIPs currently apply to 60% of the homes in Britain, this will be extended to all homes in December when the Government feels there will be enough assessors to meet demand.
Although Trevor Kent points to costs for HIPs as high as £700, most home sellers report that the assessments usually cost under £500. It should also be pointed out that some of the charges, such as search fees, would have to be paid even if a HIP was not required. So in reality, the real cost of a HIP is more likely to be in the £150 to £300 range.
The requirement for energy performance certificates is also seen as a positive step in many quarters. Buyers are well aware that an energy efficient home will save them money in the long run while a good energy rating allows sellers to push up the price of their homes.
While HIPs may have their benefits, the timing of the Government's decision is questionable given the uncertainty hovering over the housing market in general. Warnings of HIPs causing a slump in the market may be a little extreme, but they certainly will not do anything to boost sales.