Posted on 01/12/07, filed under News | No Comments
Home Information Packs currently the dirtiest words in the English language. But how could such a small legislative change create such a huge furore? And could the so-called Hips really cause the collapse of the property market in the UK?
Hips will be compulsory for all residential sales in England and Wales from 14th December. The packs cost about £300-£350 and contain information about the property, including, searches, title deeds and an energy performance certificate (EPC). The EPC rates a home’s green credentials on a scale from A to G, rather like the ratings on a fridge or washing machine.
Estate agents, solicitors and some specialist firms can compile a Hip, usually within 10 days. Alternatively, you can put together your own pack dealing direct with a search agent and “home inspector”.
Most sellers are expected to ask their estate agent to do the legwork. You might be able to negotiate a “no-sale, no-fee deal”, or agree to pay for the Hip at completion so you don’t have to pay out too much up front. The agent might even offer to compile the Hip for “free” in return for sole agency rights.
Why the fuss?
So far, so straightforward. So why have the packs created such controversy? The government and its supporters claim that Hips will make the sale process quicker and more transparent. Hips also shift a number of existing costs from the buyer to the seller, cutting the expense for stuggling first-time buyers.
Then there are the green credentials. Yvette Cooper, the housing minister, says: “Hips and EPCs are already helping consumers to save hundreds of pounds off their fuel bills and are cutting search costs too. All home buyers will be able to benefit from energy efficiency advice, with those receiving low green ratings of ‘F’ and ‘G’ especially targeted for support and grants to make improvements to cut their costs and carbon emissions.”
Critics are not convinced - and have mounted a co-ordinated campaign against the packs.
They argue that the information in a Hip is anything but useful. Searches, for example, are quickly out of date. Some lenders also insist that buyers order their own searches, so duplicating the effort and expense.
Are Hips really green?
And what of the energy performance certificates? Are they going to turn the UK green?
I doubt it - at least not in the near future. There are more than 20 million residential properties in the UK, but only about 1.25million are bought and sold every year. So we will have to wait a while before every home is issued with a certificate.
Remember, too, that a poor rating does not necessarily mean a green upgrade. How many people will go to the trouble and expense of fitting solar panels or a new boiler, even if they get a grant, just because of a low rating?
The integrity of the rating is not even guaranteed. There are tales of different ratings by different inspectors on the same property. And one angry reader recently wrote to the Daily Telegraph after an energy assessor recommended he install solar panels in the roof of his thatched cottage.
Expensive bureaucracy?
No wonder some people dismiss the certificates as an exercise in box ticking - and no wonder many buyers seem uninterested in Hips.
A recent survey of prospective buyers at 230 estate agencies found that nine out of 10 ignore the packs, leading them to be branded irrelevant and pointless. Peter Bolton King, chief executive of the National Association of Estate Agents, said: “There is nothing in the packs that helps people make a more informed choice about buying a house.”
In other words, sellers are forking out £300 for information that nobody wants, nobody needs and nobody trusts. Peter Hogan of the Royal Institution of Chartered Surveyors (Rics) said: “The most important factors when you are buying a house are the location and the condition of the property. You don’t need a Hip to tell you the location and the government ripped out the guts of the packs when it dropped the home condition report.”
The HCR kerfuffle
Ah, the home condition report (HRC). Labour originally wanted the packs to include an HRC, which is a bit like a basic survey.
But it was forced to drop the plans in the face of fierce opposition from lenders, who argued that they could not rely on a survey commissioned by the seller.
Some experts also pointed out that the home condition report was basic, so of limited value - and not to be confused with a full structural survey.
The government was in no mood to back down completely. So now we have the diluted version of the Hip.
Other problems
The packs were also introduced in phases. The first phase started in August, with homes with four or more bedrooms. It was the turn of three-bedroom houses in September. Hips will become mandatory for one and two-bedroom properties on December 14.
It’s easy to see why some people view Hips as just another layer of bureaucracy - or worse, another tax. But it’s harder to believe that the extra cost will seriously slow down the housing market by strangling supply. Or is it?
Will Hips hit house prices?
The arrival of Hips almost certainly distorted the market. A review carried out by Europe Economics, an independent source quoted by the government, concluded that Hips “may have had an additional modest-but-material effect on listings activity”.
Sellers, for example, rushed to put their properties on the market ahead of compulsion in the summer. Housing statistics also indicate that a number of vendors were then put off when the packs became compulsory.
A survey by Rics in October, after the scheme was introduced for homes with three or more bedrooms, found that the supply of larger homes had fallen by 75% in the southwest and by 72% in the West Midlands. Such distortions could be dismissed as temporary. Surely people won’t continue to refuse to move for the sake of a £300 Hip?
But Rics reckons that 300,000 properties a year are advertised speculatively by homeowners testing the water. Of course, nobody will pay £300 just to test the water, so this property source could dry up.
You might think it irrelevant. If they aren’t serious sellers, they can’t have a serious effect on the market. But half of those properties are actually sold - and they make up an important 10% of the market.
It doesn’t mean you can blame Hips for the slowdown in the property market. But if they put off speculative sellers, then they certainly aren’t helping.
Are they worth it?
We might not mind a bit of a squeeze on supply if Hips were valuable to buyers. But the contents of the packs have been dictated more by politics than by common sense.
Miles Shipside, commercial director of property website Rightmove, said: “Without a compulsory home condition report, the packs are of no real consumer benefit, but they add several hundred pounds to the cost of marketing a property.”
The government had the chance to reform the sale of residential property in this country, but it messed up. Hips might not bring the housing market to its knees, but they won’t put a spring in its step, either.
Should you require any additional information on HIP’s, then call us on 01903 777687 or e-mail us pki@bennett-griffin.co.uk
Posted on 15/11/07, filed under News | No Comments
Full roll out of HIPs
First time homebuyers will see their upfront costs drop and all home buyers will, for the first time, receive A-G green ratings for their properties which will help cut fuel bills and carbon emissions, with the roll out of Home Information Packs (HIPs) and Energy Performance Certificates (EPCs) announced today.
Buyers whose homes score poor energy ratings of F or G (currently around one-fifth of all homes) will receive an offer of a discount or free help with energy efficiency measures from the Green Homes Service which will be established, helping to save hundreds of pounds off fuel bills, as announced by the Prime Minister this week.
Sixty per cent of the market is already covered by HIPs. The Government has announced the rollout of HIPs and EPCs to the rest of the market from December 14 this year, as the criteria set out for roll out on 11 June have now been met.
House hunters will get detailed information about the energy efficiency of their home with a green rating of A-G, similar to consumer friendly fridge ratings, in an EPC.
The final stage of the roll out follows careful analysis of how HIPs and EPCs have been working in order to maintain their smooth introduction into the housing market.
The extension of HIPs to all properties will particularly benefit first time buyers through a reduction in their upfront costs by not having to pay for a pack, helping them in getting a foot on the housing ladder.
The packs are already beginning to bring benefits to consumers with average property search costs starting to fall with the new competition from HIPs - 85 local authorities have already reduced their charges by £30 on average.
Housing Minister Yvette Cooper said:
“HIPs and EPCs are already helping consumers to save hundreds of pounds off their fuel bills and are cutting search costs too. All home buyers will be able to benefit from energy efficiency advice, with those receiving low green ratings of ‘F’ and ‘G’ especially targeted for support and grants to make improvements to cut their costs and carbon emissions.”
Early monitoring of the scheme shows the roll out has gone smoothly.
- HIPs are taking on average 7 to 10 days to prepare
- The majority of property, and drainage and water searches, are being delivered promptly within 5 days
- EPCs are being prepared on average within 2 to 4 days
- The average cost of a pack is £300 to £350 - costs which apart from the new information included in the EPC are already part of the home buying and selling process.
The Government has also today published an independent report by Europe Economics on the impact of HIPs on the market. Their report finds no evidence of any impact on transactions or prices, although there is a predicted short term impact on new listings as sellers change the timings of their listings. The report concludes that the impact on listings is short lived and the impact on the market is marginal compared to the wider factors.
The Government also asked Europe Economics and Peter Williams of the National Housing and Planning Advice Unit (NHPAU) to consider whether changing housing market conditions meant we should change the approach to completing the roll out. They concluded that there are strong arguments for rolling out as planned, and further delay could cause greater market difficulties and uncertainties.
The implementation of HIPs so far and the work of the Stakeholder Panel have also highlighted further improvements needed to benefit consumers.
Early monitoring of HIPs has highlighted stakeholder concerns that for some consumers leasehold documents are proving hard to obtain quickly and, in some cases, disproportionate charges are being requested. In the majority of cases we would expect leasehold documents to be readily and easily available as part of HIPs. However, given the higher number of leasehold properties amongst one and two bedroom homes, to ensure a continued smooth roll out we will phase the introduction of leasehold information.
The Government will temporarily amend the HIP regulations so the lease document itself must be included, but other leasehold information will be introduced as a requirement in six months’ time.
The Government will also set out other consumer-first measures and will:
- Ask Ted Beardsall, Deputy Chief Executive of the Land Registry - and member of our Home Buying and Selling Stakeholder Panel - to advise on what else could be done to improve the provision of leasehold information and the search process.
- Publish guidance on access and charging in December for local authorities and personal searchers with the aim of speeding up searches and delivering a fairer deal for consumers.
- Extend the temporary first day marketing provisions for an additional 6 months to allow for full flexibility - from 1 January to 1 June, to ensure continued smooth implementation of HIPs.
The introduction of HIPs is part of a wider programme of reforms to home buying and selling including e-conveyancing and better redress, which aims to provide consumers with a clearer, more transparent and effective service, with better value for money, benefiting all potential homebuyers and helping in tackling climate change.
For information on HIPs, please telephone us on 01903 777687
or e-mail HIPS@bennett-griffin.co.uk.
Posted on 01/11/07, filed under Fresh News | No Comments
The implementation of Home Information Packs ? or HIPs as they are more commonly known ? appears to be in a state of limbo.
Lauded as the best thing since sliced bread when they were first announced, their future seems certain one minute and hanging in the balance the next.
The latest confusion surrounds the fact that HIPs are only mandatory when selling a home with three bedrooms or more, and that no date for their introduction for all homes has been set.
So just what is going on?
The story began back in 2002, when the EU passed European Union Directive 2002/91/EC, which set rules on the energy performance of buildings, one of which was the introduction of Energy Performance Certificates (EPCs).
The UK Government introduced EPCs as part of the Housing Act 2004 and originally planned to introduce them on 1 June this year.
In addition to the EPC, the Labour Government also saw fit to introduce the HIP; designed to give homebuyers additional information about a property and make the home buying process easier.
Prior to the official launch of HIPs, Westminster argued extensively about their introduction - due to opposition from the Conservative Party - but the Government seemed determined to make HIPs a reality and also had the Association of Home Information Pack Providers (AHIPP) to back them up.
The whole thing seemed to be going well but, of course, the best laid plans of mice and ministers often go awry and, in May 2007, disaster struck the HIPs community.
On the 22nd of that month, the then housing minister Ruth Kelly, told the House of Commons that Hips were to be delayed until 1 August due to a lack of trained energy assessors.
As if this news wasn’t bad enough, the shortage of available energy assessors was thought to be so severe that HIPs would be introduced in stages, starting with homes of four bedrooms or more.
The weeks that followed were filled with one-upmanship as the Tories told Labour to simply drop the policy, while AHIPP turned against the Government demanding they speed up implementation. In addition, the Association also claimed there were enough assessors to cope with demand.
The 1 August launch was quickly pounced on by the scheme?s critics, with Abbey saying most people were reclassifying their home to avoid the packs, while the National Association of Estate Agents (NAEA) said HIPs would damage the UK housing market.
On 10 September, HIPs were introduced for all three bedroom properties, the bulk of UK housing stock, and the full rollout of the scheme was expected before the end of 2007.
However (this is getting tiresome now, isn’t it?) a smooth rollout wouldn?t have been in keeping with the epic story of the HIP and, in mid-September, one of the UK?s largest mortgage lenders - who needs no introduction - almost collapsed as banks around the world became worried about bad mortgage loans.
Following the “credit crunch”, ministers felt it prudent to delay the introduction of HIPs for all homes until financial markets had calmed down, much to the dismay of AHIPP.
So the tale of the Home Information Pack has gone full circle, with current argument again surrounding whether the scheme should simply be abandoned or rolled out in full, just as was seen in early 2007.
The debate over HIPs continues and just today, a HIP service provider has slammed the Royal Institute of Chartered Surveyors (RICS) for suggesting the rollout of HIPs on smaller properties would price first time buyers out of the market.
Each side in this saga has its own reasons for liking or disliking HIPs and the arguments are likely to continue long after HIPs become a reality for all homes.
However, the sides do share one sentiment: the half-hearted implementation of HIPs is not doing anyone any good.
For further information on HIPs, please contact the HIPs Team on 01903 777687 or e-mail HIPS@bennett-griffin.co.uk
