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Home Information Packs - are They Worth the Paper They are Written On?

Home Information Packs were first mentioned as part of the Labour party manifesto back in 1997 and were originally deemed to be the solution to the then common problem of gazumping. In the eight years that have followed, the reason for existence of HIPS is that they can speed up and simplify the current housebuying process. HIPs were finally introduced last August in a bid to simplify the home-buying process, but have received some very negative press since.

One of the main aims of the HIP legislation is to reduce the current high percentage of agreed sales (reportedly more than one in four) that do not make it as far as an exchange of contracts.  HIPS were intended to deliver this aspiration by providing key information at the beginning of the house buying process.

Recent survey has revealed that the majority of house buyers think Home Information Packs are a waste of time, with fifty-seven per cent of those questioned saying it is time to scrap HIPs and many blaming the cost of providing them as a contributing factor to the significant decline in the number properties being offered for sale in the UK.

A YouGov poll found that only 5 per cent believed the packs had delivered benefits, while 68 per cent said they had failed to make a positive difference.  The results of the survey are another blow to the controversial packs, which cost sellers anything from £200 - £400 and contain title deeds, searches and an energy performance certificate.

The scheme was opposed by estate agent trade bodies, solicitors and the Council of Mortgage Lenders.   Critics of HIPS say that some buyers have been forced to seek independent advice after finding the content of the packs unreliable.

A Conservative party housing spokesman Grant Shapps said HIPs had undermined the housing market.  “One year on, the public don't trust the paper these packs are written on”, he said.   Mr Shapps went on to say that “the only people who want to keep these broken HIPs are the vested interests who are peddling them, and the Government ministers who are falsely using the green fig leaf of the environment to justify this latest public policy disaster.”

A Spokesperson from the National Association of Estate Agents, said: 'Since their conception, the packs have been surrounded by a catalogue of disasters.  'And, so far, rather than helping to improve the home buying and selling process, they have served as a hindrance and nothing more than a purposeless piece of red tape.'

Confusion over the implementation of the packs forced former Communities Secretary Ruth Kelly to delay their implementation and exclude smaller homes from the initial phase of the scheme last year.

The troubled introduction of the HIPS scheme does not appear to have dampened the Government’s appetite for HIPS, as they have recently announced plans to increase the amount of information required to go into Home Information Packs.  This move will likely increase the cost of producing each HIP.

Government now wants to include a Property Information Questionnaire (PIQ) in the packs to give people more information about a property up front.  It hopes the move will reduce the likelihood of issues coming to light further on in the process and causing delays or sales to fall through.  The questionnaires would include information on any building work that has been carried out on the property, details on parking arrangements, council tax banding and information on the utilities connected to the property.  The Government aim to implement this extra requirement as a mandatory part of the packs on January 1, 2009.

Housing Minister Caroline Flint said: "Having the right information about a property at the beginning of the home-buying process is essential if we are to reduce delays and cut down on wasted costs for both buyers and sellers.  "Hips are an important first step in achieving greater efficiency and the Property Information Questionnaire will only improve on this, ensuring the buying and selling process is simpler for all."

The Government is also considering increasing the quality of leasehold information that is included in the packs.  New information on leaseholds would include details on ground rent, services charges, the cost of buildings insurance and any major works that are planned, as well as a copy of the lease itself.  There is currently only a temporary provision requiring a copy of a lease to be included in the packs.

Conservative Shadow  Housing Minister Grant Shapps, said: "Home Information Packs have already strangled the housing market by discouraging sellers. Given its fragile state, the property market needs more bureaucratic red tape like a hole in the head.  "Behind the smokescreen of HIPs, Labour's real agenda is to build up a property database of every home. Property Information Questionnaires are most likely just another way of conducting Labour’s controversial council tax revaluation and re-banding by the backdoor.  "The public will be clobbered  twice - once for a costly Home Information Pack and then again in the form of higher council tax bills for home improvements and their parking spaces."

There is evidence that the controversial Home Information Pack (HIP) scheme has failed to speed up the house selling process, new figures suggest.

The packs, introduced a year ago despite huge opposition, are failing to be compiled in under a week – as the Government hoped would be possible – because local authorities are far slower at retrieving local searches than a year ago.   Searches are one of the key documents contained within a pack. They flag up any potential road schemes or developments that might scare off a home buyer from moving to the area.

The average time taken by councils to hand over searches has increased by a third, from 5.3 days to 7 days.  Some councils are taking more than 20 days to process a request, with the London Borough of Hillingdon taking 44 days on average.

Local councils increasingly poor performance in regard to providing search data is impacting negatively on HIPs in two ways.   Firstly, virtually all HIP providers now subcontract their searches to personal search companies to get the search component for the HIP completed as soon as possible.  This means that the search information contained in the HIP will usually not contain most of the relevant information as would be revealed by an official Council search.  Secondly, with more and more councils levying higher level of charges for official searches and length of time taken to deliver, there is a direct impact on HIP providers and, consequently, on the price paid by the consumer.

Sir Bryan Carsberg earlier this month, after spending a year investigating the housing market, recommended that HIPs should be scrapped, arguing that, "they don't make a useful contribution to the house buying process. They don't speed up transactions and they are in danger of becoming out of date too quickly.  "It seems to me to impose a cost, without bringing any benefit."

Shadow Housing Minister, Grant Shapps, said the slowness of the Local Authorities was proof that HIPs were not working.  "This shatters one of Labour's last remaining arguments about the benefits of Hips and adds to the mounting dossier of evidence against them.  "The industry doesn't want them and neither do the buyers and sellers - they are strangling the market at a time when it needs kickstarting," he said.

Conversely, a spokesman for the Department of Communities and Local Government said: "As a result of the increased transparency brought about by HIPs, we are already seeing a drop in cost for sellers commissioning searches – more than 160 local authorities have cut their prices by an average of £20.  "We have issued guidance to councils to ensure they are giving access to private search companies, to increase competition and provide the consumer with cheaper and faster searches."

However, as charges for official searches are between two to three times more expensive than the personal search option, it is doubtful whether any HIP provider will utilise the option of the more expensive official search in a highly competetive HIPs market.

Buyers of property may well find that the search information included within the HIP for the property they are buying is out of date or too vague to pass the scrutiny of the lender.  This situation will of course delay the selling process and defeat the object of HIPS.

For more information about HIPS go to http://www.hip-hips.co.uk

About the Author

Bill Bailey is freelance writer living in the east of England. Bill specialises in finance, shopping, car, computer and travel articles.

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