Tuesday, 6 March 2007Home Information Packs will become obligatory on June 1, yet opinion about them is still divided, discovers Jon Neale
In less than 90 days, everyone selling a house in England and Wales will be required to prepare a Home Information Pack (Hip) — and spend about £500 on compiling one in the process.
But trials of Hips, which are designed to speed up sales, are already highlighting the potential problems, as well as some of the advantages, of having a wealth of information instantly available to would-be buyers. It also seems that, even in areas where the packs have been piloted, the public is still largely blissfully unaware that, as of June 1, it will be illegal to put your house up for sale without one: agents face a £200 fine if they market a home without it.
The packs continue to attract intense criticism, despite the government’s decision last year to make the “home condition report” — the most useful, expensive and contentiously onerous part of the pack — optional.
A fortnight ago, the Council of Mortgage Lenders (CML) and the National Association of Estate Agents (NAEA) again warned the government that making Hips compulsory will dissuade people from putting their houses on the market, thus reducing supply and driving up prices.
“The housing market, and thus the UK economy, is in grave danger of being adversely affected by Hips, and their impact on the market will be to the detriment of consumers,” says Peter Bolton King, the NAEA’s chief executive. “We believe that this view is also held by many of the other main sectors of the property business.”
The CML believes there are too many unknowns about the impact of Hips and wants their introduction postponed until the results of the three-phase trial have been properly assessed. Bizarrely, the Department of Communities and Local Government says it has no timeframe for the trial, despite setting a date for the packs’ introduction.
Charles Orlebar, who runs an eponymous estate agency in Northampton, says: “We are educating the public, and that in itself is a huge obstacle. Everyone we’ve spoken to was aware that Hips were coming — but they thought they had been cancelled last year when home condition reports were made optional.”
The town is one of six — Bath, Cambridge, Huddersfield, Newcastle upon Tyne and Southampton are the others — in which Hips have been given a trial run since November. Last month, they were joined by pilot schemes in northwest Wales and the London borough of Southwark.
The “dry runs”, are designed to prove that Hips are workable. But they differ in one crucial way from the real thing: £4m in government funding means the initial trial packs are free.
Simon Bond, of O’Riordan Bond, another Northampton agency, says: “The trial is a bit of a misnomer. It’s not difficult to sell something that is free. Our perception is that customers think it is nice to have it for free, but we would [even] struggle to sell them on a voluntary basis, so people may begrudge being forced to buy them. To be honest, there is a distinct lack of interest and awareness.”
Elaine Welsh, a 40-year-old care assistant in South Shields, has had an offer accepted on her home but is still waiting for the sale to conclude. Her experience with using a Hip — which took “about two to three weeks” to arrive from the provider concerned — was positive, but her case seems to back up Bond’s comments.
“For someone wanting to buy, it saves a lot of awkward questions and cuts down the time required and the calls to and fro, mainly because the searches have already been done,” Welsh says. But if she had to pay for the pack, she admits she would feel differently. “That might put people off selling,” she says. “I think you would feel unsure about the extra expense.”
One of the main criticisms of Hips is that the cost is constant regardless of the value of the house, so it is more of a deterrent to those considering selling cheaper houses, as it represents a bigger chunk of the cost of their move.
Bettina Sawbridge, 33, though, is far more positive about the packs. The family is moving from Northampton to Chippenham, and their offer on a house in the Wiltshire town has just been accepted. “We only have a Hip on our property, not the one we’re buying, so we haven’t really benefited from it,” she says. “But I could see how it would be useful to a buyer. I’d be extremely happy to have searches and flood-risk information at hand.”
Sawbridge believes the cost would be a problem only for a seller who was not also buying — say, an elderly person moving into a retirement home. She adds: “It wouldn’t bother me, as the seller of your new home is also paying for the same information. To be honest, £500 is a small amount when you’re forking out £300,000 for a house.”
There seems little definite sign so far that Hips will have as disastrous an effect on the market as Splinta, the antiHips lobby group, is claiming, although few seem enthusiastic about the energy performance certificate, now the central document in the pack.
Some agencies have been converted by trial feedback: Winkworth has revealed that it will be an “early adopter”, introducing the option of the pack in 31 of its 71 offices.
Dominic Agace, the agency’s managing director, said: “We have been encouraged by the results of trials, where some agents reported a substantially lower withdrawal rate and a significant reduction in the length of time from an offer being agreed to the exchange of contracts.”
But not all are so optimistic. There are rumours that one London-based agent is on the verge of launching an advertising campaign urging sellers to register their homes before the June 1 deadline, to avoid paying for a Hip.
More worrying is the extra paperwork required for leasehold sales. Sellers must provide details of the service charge account history and building insurance. If a managing agent has to become involved, some estimate that the cost of a leasehold Hip could be more than £1,000.
Lee Richards, a director at Richards Gray, a Hip provider, says: “We have found leaseholds to be far more complicated and have recommended that a solicitor gets involved. The concern is getting information from management companies.”
It remains difficult to conclude much from the Hips trials, given that they are free and that the main barrier for most people from June 1 will be their cost.
Whatever happens after that date, the introduction of the packs remains a massive gamble for the housing market, particularly for sellers of flats and cheaper homes.
What’s in a Hip?
All Home Information Packs must contain:
-Terms of sale
- Evidence of title
- Replies to standard preliminary inquiries made on behalf of potential buyers
- Copies of any planning, listed building and building regulation consents and approvals nFor new properties, copies of warranties and guarantees
- Any guarantees for work carried out on the property
- Standard searches (that is, local authority inquiries, plus a drainage and water search)
- An energy performance certificate
Leaseholders must also provide:
- A copy of the lease
-Their most recent service charge accounts and receipts
- Building insurance policy details and payment receipts
- Copies of any regulations made by the landlord or management company
-The memorandum and articles of association of the landlord or management company
- Where appropriate for leasehold properties, a new home warranty will also be required
The following documents may be included in the Hip but are optional:
- A home condition report, based on a professional survey of the property
- Other guarantees and warranties
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