HIP's required for all properties from 14th December

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 Searches, for example, are quickly out of date.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