What impact are HIPs having on the property market?

After a decade of debate, this week Home Information Packs (HIPs) finally hit the property market and the phased introduction of the controversial legislation began in England and Wales.

But the only people jumping for joy seemed to be a few government ministers trying to dodge media bullets states Tony Booth, writer for Property Secrets.

There have been many opposing views from property experts regarding HIPS and whether they are worthwhile.

Housing Minister, Yvette Cooper said: “The first thing they do is just bring together the information that you have to get away and you have to pay for anyway, but at the beginning of the process, weather than at the end, so it speeds the process up and makes it clearer.”

“The second thing they do, which I think is really important, is that they provide an energy rating – it is like a fridge rating for your home, you get it on a washing machine, all the white goods. Given the amount of money we all put into our homes, it is right that we should have this kind of rating on our home as well. It will tell you how to cut your fuel bills for the future.”

But after so many changes to the mandatory requirements of HIPs and the chaos caused by its phased introduction, members of the public are confused and apathetic.

Shadow housing minister Grant Shapps said: “Home Information Packs threaten to bring the whole rule of law into disrepute, by opening the door to widespread avoidance and evasion. It is clear that individual homeowners could end up breaking the rules out of genuine confusion or by exploiting the numerous loopholes in the ever-more convoluted and complex regulations.”

Tony comments: “One of the main reasons for the series of 'on-off-on-off-and-on-again' delays for this carbuncle of a law has been the acute shortage of home inspectors.”

“These are required to rate properties for the energy-rating certificate, which is a mandatory element of the new pack. Despite government repeatedly denying there was any shortage of inspectors (but still deciding to delay HIP introduction from 1st June to 1st August) - on the eve of HIPs becoming law, London was named a 'pressure point' over the availability of domestic energy assessors.”

Many believe some property sellers will simply be unable to comply with the law, because they won't be able to find an inspector to undertake the required energy-rating assessment.

In May, only about 25 per cent of the number of qualified and approved assessors were known to be available, so government made a last-minute dash to push more through the certification door.

Although as of July there were 2,224 accredited inspectors, London only has 170 to cover the entire capital. Botched preparation for this major shift in property selling legislation has caused HIPs to stumble, creak and groan into the public domain.

Even major news carriers and the press only gave it a passing mention on its first day.

Tony adds: “The regulations have been so diluted and so criticised that major organisations involved in the property industry are anticipating yet more problems in the future, particularly once the 'phased' introduction extends to all properties.”

“The watered-down version of HIPs that came in on 1st August is a far cry from the original 'Sellers' Pack' first suggested 10 years ago. Gone is the mandatory home condition report (a mini-survey, to me and you) and the long-planned national rollout of the scheme.”

The commencement of compulsory HIPs from 1st August 2007 will affect some sellers of residential properties with four bedrooms or more throughout England and Wales.

During this first phase, only those who begin marketing their properties on or after the introduction date need to comply with the legislation.

Owners can put their homes on the market until 31st December 2007 without all documents required by a HIP being readily available - but they must have been ordered (in other words, the seller must have commissioned them and be awaiting their arrival).

Once the Energy Performance Certificate (EPC) has been received, a HIP must be provided to potential buyers. A HIP can be provided in electronic or paper format and although estate agents are expected to be the go-between service-providers, there is nothing to prevent sellers commissioning and arranging their own documents independently.

It is currently expected that a HIP will become compulsory for three bedroomed properties from 1st September, when phase 2 commences.

Government plan all residential properties for sale throughout England and Wales will require a full HIP from the first day of marketing by 1st January 2008, at phase 3, regardless of when they were put onto market.

Direct sellers and estate agents that fail to comply can be fined a fixed civil penalty of £200 for each day a property is marketed without a HIP or without one being commissioned (up until the end of the year).

Local authority Trading Standard officers have been empowered to enforce the regulations. The Office of Fair Trading (OFT) has already taken the unprecedented step of forewarning estate agents about more serious repercussions for any breach of the HIP regulations.

They have told agents that any failure on their part could result in them being banned from operating. Under the Estate Agents Act and HIP regulations, the OFT has the power to assess whether an agent is fit to practice - and it seems they are fully prepared to use their muscle, if required.

Tony adds: “Smug investors north of the border might want to hold back that sigh of relief...Scotland is to get its own version of HIPs (called PIPs of all things) in 2008.”