HIPs

HIPs – still firmly on the table

7 September, 2006

Despite the recent confusion following the government’s announcement in July, deeming the Home Condition Report (HCR) a voluntary element of the Home Information Pack (HIP), both the HIP and the HCR, in the words of Ruth Kelly MP “remain very much on the table”.

In addition, further steps are now being taken to ensure that regulations and standards are in place to provide maximum protection for the consumer.

HIPs have evolved after years of consultation with industry; their introduction, along with the inclusion of the HCR, will aid a more efficient and effective house buying and selling process for the consumer.

However, to make HIPs a reality the government now needs to offer unequivocal assurance that the HCR will eventually form a mandatory element of the pack, and industry needs to remain committed and buoyant towards their future. Thousands of individuals are currently undertaking training to become fully qualified home inspectors, and it is essential that their investment of both time and money not be wasted.

Dry run

AHIPP has recently launched a voluntary roll-out across the UK that will commence in November in six selected locations: Bath, Cambridge, Huddersfield, Newcastle, Northampton and Southampton.

The AHIPP roll-out – which is vital to the future success of the HIP and will include the HCR – will allow consumers in the selected locations to sample the packs ahead of their mandatory introduction next June and will be subject to robust and independent testing to assess their worth.

Once consumers are introduced to packs and begin to experience faster and smoother transactions, I am onfident that there will be a huge demand.

The National Association of Estate Agents (NAEA) has recently called for the abandonment of the HIP programme which to me seems a bit like turkeys wanting to expunge 25 December from the calendar.

Its U-turn appears to be very much against the interests of the consumers they purport to support.

The HCR in its mandatory form provides evidence that a property is – or isn’t – in good shape. This evidence is provided at the start of the transaction so that both seller and potential buyer know the score.

The counter-argument put about by SPLINTA (‘Sellers’ Pack Law Is Not The Answer’) – who seem to have single-handedly turned the NAEA from a pro-HIP trade association into an anti-HIP one – holds that surveys don’t cause house sales to fall through. But I would beg to differ, as I’m sure would the huge number of consumers out there who have withdrawn an offer as a result of survey findings, or who have themselves lost out on a sale because a survey revealed something about their property that deterred a prospective buyer, and in some cases may even have been unknown to them.

Currently, 80 per cent of buyers in the market don’t bother with a survey – but if they did, the discovery that a house’s roof joists were riddled with dry rot might just change their minds. Not to provide a buyer with this information is deeply against the consumer’s interests.

We can understand why an estate agent wants a transaction to go through as swiftly as possible with no questions asked. But to have the

confirmation that a roof needs fixing or windows replacing will actually help that sale proceed. The options are for the vendor to fix the roof, replace the windows or at least obtain some independent estimates so that the price of the property can be adjusted accordingly.

Providing all parties involved with this hugely important information upfront will reduce complications further down the line and will provide the seller with a realistic expectation of the property’s worth from the offset: homes with HIPs will hold a distinct advantage.

Regulation

The government has already announced that it will be regulating all home inspectors - we are now taking this a step further to provide voluntary regulation of pack providers too. All members of AHIPP will be subject to stringent standards to ensure consumers purchasing a pack through one of our members can place total confidence in the information they receive.

All our members’ packs will be authenticated with the AHIPP logo, and we will set up an independent compliance regime whose sole responsibility will be to monitor the output from our members and ensure continued high standards. This team will be stringent and will have the authority to revoke the right to use the AHIPP logo from any AHIPP member who fails to comply and to remove them from membership.

The code is currently undergoing the Office of Fair Trading (OFT) Consumer Codes Approval process to ensure maximum protection for the consumer, and we plan to have this in place before November when our roll-out is due to commence.

In addition, the code will streamline the process for consumers, giving a single point of redress and offering compensation wherever appropriate.

Insurance and compensation

If the HCR becomes a mandatory element of the pack, as I strongly believe it should and will, additional insurances will be developed to protect consumers should they need to pull out of a sale. I would expect this type of insurance to be very competitive and to offer additional peace of mind - covering the cost of the HIP for anyone who may be forced to pull out of a sale as a result of unforeseen circumstances.

The consumer will be able to place total confidence in any HIP purchased through one of our members. The government will be regulating home inspectors to ensure that they carry out their role to the highest standard, and all those purchasing a Home Information Pack through an AHIPP member can be confident that their provider is being stringently regulated and that any problems that may arise will be picked up immediately and resolved quickly, with minimal disruption.

Why choose a HIP and HCR?

The benefits of the pack will be many. By obtaining a HIP and HCR the seller will have the opportunity to address any repairs that might lower the sale price of their property or to adjust their asking price accordingly from the outset – ensuring a faster process and providing increased certainty of a sale once an offer has been accepted.

HIPs will bring a lot of the information involved in housing transactions to the forefront of the process, reducing the time spent in obtaining searches and other legal documents once an offer has been accepted. With the inclusion of the HCR, buyers will be able to gain a comprehensive, accurate picture of a property before putting in an offer, reducing the duplication of both cost and effort.

For the majority of consumers, who will be looking to sell their existing property as well as purchase another, the HIP will prove cost-neutral, as they will not incur charges for searches and surveys on the property they then purchase.

The HCR, if taken up in volume voluntarily, or alternatively through compulsory inclusion, will enable faster mortgage decisions as lenders will have the opportunity to link their valuations to the report rather than commissioning their own survey, and they will help to get broken chains back on track, with sellers able to get another buyer on board faster than ever before.

There has undeniably been a lot of confusion and doubt surrounding HIPs and the HCR over recent months, but they remain very much alive and I still believe firmly in their future success – our roll-out aims to give consumers a choice, to allow them to decide about HIPs for themselves and to experience the packs at first hand.

To help us achieve this important goal – to make lasting improvements to the house buying and selling process – we are now calling on the government to stand strong and deliver on its promises, and for industry to remain proactive and committed.

Paul Broadhead is deputy director general of AHIPP