HIPS – The debate goes on

Home Information Packs are proving to be one of the most talked about changes in the conveyancing market for decades. Solicitor, Angela Hesketh, from legal firm Lees Lloyd Whitley advises.

What was designed to improve and build on an outdated process and introduce energy performance certificates to residential properties has become a political battlefield.

There are many burning issues surrounding why this change is occurring and what the fall out will be post 1 June 2007 when it becomes mandatory to have a HIP if you are marketing your property for sale.

So is it time for a change?

Yes. Our present conveyancing process is an antiquated, stressful and often inefficient process.

The emphasis is on the buyer to dig out information which the seller is often reluctant to provide and pay substantial amounts of money in doing so.

At a time when it is more or less impossible for first time buyers to get onto the housing ladder is it not sensible and appropriate to change the balance of power a little.

The HIP places more emphasis on the seller at the start of the transaction requiring them to commit to the sale by providing a pack giving the buyer useful information to enable them to make an informed decision on whether to buy.

This pack will include an energy performance certificate, legal title information, standard searches and simple sale statement.

Often the only information available to a buyer under the present system is the estate agents sales particulars which can give little more than the dimensions of the rooms and location of the property.

Is energy efficiency really that important?

Again yes. We are all becoming more aware of our carbon foot print and it is acknowledged that 27% of the carbon emissions each year are emitted from our homes.

Surely receiving practical information on what the present emissions of a property are and how that could be improved to reduce the effect on the environment whilst reducing the cost to the home owner of fuel bills etc again must be welcomed.

Is there going to be sufficient energy assessors to deal with the assessments?

The opportunity to grab a new and worthwhile career has not been lost on the nation as a whole.

The Government have announced that there are over 3800 people now in training with an additional 1000 home inspectors already qualified.

Many of the courses are over subscribed with waiting lists for people to start the courses.

Any shortage is likely to be very short lived and taking place during a seasonal dip in the housing market in any event.

Is the HIP likely to reduce the time taken to complete a transaction?

It will certainly assist to highlight any issues which cause delays at a much earlier stage. Under the present system it is often the case that no title investigation has been carried out on the property until such time as a sale is agreed.

Once the sale is agreed many events can be uncovered which then cause delay at a time when all parties are anxious to move quickly causing additional pressure within the chain. Some of the issues that can arise under the present system are lost title deeds, discrepancies on plans to the title deeds, the sellers differing from the registered owners, difficult or unknown freeholders/managing agents. All of these issues under the new system will be identified much earlier in the process.

Is the cost likely to prevent the property from being placed on the market?

In 2006 the government price index shows an average purchase price for property at a sum of £192648. At the same time the average estate agent commission continues to be based on a percentage of purchase price of between 1-3% or £1926 - £5779. This cost has not prevented sellers from marketing their properties.

It would stand to reason a cost of around £400 - £500 for a HIP would appear highly unlikely to rock the housing market as has been suggested. In any event there will be many options available in relation to payment for the HIP.

Is the cost of a HIP going to be pushed up further by unscrupulous freeholders looking to charge more for providing responses to enquiries?

The reality is that some freeholders charge high fees to produce information to respond to enquiries within conveyancing transactions. These fees can be disproportionate to the costs of supplying this information.

The fact that this information will now be required for the HIP merely changes the time at which they will produce the information.

Those freeholders who use this as a mechanism to increase their revenue will continue to do so.

So where do we go from here?

The Home Information Pack is the first stage in an improvement in what is a difficult and often bewildering process for buyers and sellers alike.

Despite what has often been publicised it is not a regulation that has been followed blindly. There has been consultation throughout with those already in the industry and committed to a change for the better.

It is a procedure which will lead to much better regulation for those within the industry with codes of conduct for the companies providing HIPS and a central redress scheme for consumers dealing with estate agents providing HIPS.

The organisations and individuals who have used their initiative and invested in time and money in systems and training to make HIPS a success should not be prejudiced by those who are looking to score political points.

It will ultimately be the consumer who will benefit when this regulation becomes mandatory in June. It will provide more certainty within the housing market with committed sellers and more informed buyers, surely that is for the better.