Hips one year on
Thursday, 31 July 2008 12:00 AM
This week sees the first anniversary of the implementation of the government's controversial home information pack (Hip) scheme, but has it been a success?
Many industry insiders see the pack as an unnecessary burden on an already struggling industry, but the government and consumer groups see hips as a valuable weapon in the fight for the protection of consumer rights.
So who is right?
In the beginning.
The launch of home information packs was far from smooth.
The idea was initially mooted Labour's 1997 election manifesto; designed to be a method of increasing speed, transparency and consumer friendliness in the property market.
Following consultation it was confirmed the packs would contain an energy performance certificate (EPC), a sale statement and a copy of the title documents for the property, as well as Local Authority (LA) and drainage search certificates.
However, the so-called home condition report (HCR) was not included in the final Hip. This caused one of the earlier controversies with the scheme, with many claiming the removal of this key plank fatally wounded the scheme.
All the eventually included documents were designed to speed up the process of buying a house, and reduce the number of property transactions falling thorough at the last moment. It was hoped incidents of gazundering and gazumping would also be reduced.
Hips were originally scheduled to be inaugurated on June 1st 2007, but just days before the launch the policy was delayed - with the then communities secretary Ruth Kelly announcing the programme would instead be phased in over the coming months.
Eventually, Hips were made compulsory for four-bedroom properties on August 1st 2007, with a gradual rollout making the documents compulsory for all properties from December 14th.
However, it is important to note the document is still only required at the end of the sale process, not the beginning.
While the so-called 'First Day Marketing' of Hips - requiring the document be complete when a property is placed on the market - was scheduled to come into force on June 1st 2008, this has now been delayed until "late in the year" by housing secretary Caroline Flint.
Brave new world
Reaction to the scheme was at best mixed following the launch.
Initially - wile the scheme covered just four-bedroom homes - it appeared Hips were at least partially unworkable.
Research from Abbey released at the time found 4.5 million homeowners would lie to avoid a Hip - for example saying their homes had only three bedrooms, instead of four, claiming the other room as a study or games room for example.
There were also concerns over the number of inspectors qualified to assess the EPC element of the document, with the National Association of Estate Agents (NAEA) saying: "The NAEA has consistently expressed concerns regarding the implementation of Hips as there still remains a shortfall of qualified energy assessors taking the exams."
Interestingly there was also scepticism the policy would survive at all.
"The watered-down launch of Hips covering just four-bedroom properties gave no cause for greater confidence," said Peter Williams of the Intermediary Mortgage Lenders Association (IMLA) in August 2007.
"Even with the announced extension to three bedrooms, there remains little certainty among the lending community that Hips are here to stay."
Furthermore, the Royal Institution of Chartered Surveyors (Rics) heaped on further doubt, blaming Hips for a decline in sales, asserting: "Hips have reduced the number of four bedroom family properties coming onto the market, making family homes even more difficult to purchase."
London & County also found 78 per cent of people thought the typical cost of £300 to £350 for a Hip did not represent good value for money when marketing a property.
In October of last year the Conservative party also pledged to scrap home information packs should they win the next election - a position reiterated on numerous occasions since.
Indeed earlier this month shadow housing minister Grant Shapps added: "Given a Conservative government will scrap this red tape, investing in home information pack companies should now carry a health warning.
"Sensible investors should consider the high risk involved in this business, and companies would do well to diversify. The days of Hips are numbered, and the housing market will be better when they go."
The country's largest estate agency Spicerhaart also found only ten per cent of buyers actually read a Hip, following the rollout to all properties.
One year on
Given this wave of scepticism following the launch of the scheme, it can be considered a success the policy has survived thus far.
With the political climate presently in flux it is hard to imagine other Labour flagship policies - including the eco-town proposals - coming to full fruition.
However, even amid all the dissenting voices, there has been one which has constantly championed the Hips policy.
The Association of Home Information Pack Providers (AHIPP) - who or course have a vested interest in the survival of Hips - have consistently championed the policy, defending the scheme against a barrage of criticism.
Just last week in a rebuttal to Mr Shapps, the AHIPP issued a statement saying: "I find it astonishing that the Tories feel it is their place to give investment advice to businesses, particularly in such volatile market conditions.
"Companies that have invested in Hips have done so because the Hip industry will make them work to the benefit of home buyers and sellers."
The AHIPP asserts that should the Tory party come to power, in 2010 for example, Hips will already be an ingrained part of the property selling process - one which proves difficult to reverse.
However, this could prove to be positive thinking on their part.
Following an announcement earlier this week from the government the home information pack scheme was to be extended to include a property information questionnaire (PIQ) - giving buyers a better idea of the home in which they were interested - there was uproar.
Lembit Opik of the Liberal Democrats was typical, saying: "Instead of admitting Hips have been a complex and expensive mistake, the government is continuing to tinker at the edges.
"Hips have been a monumental misjudgement and their introduction has been plagued by error after error. It's time for ministers to hold their hands up, admit Hips have been a disaster and scrap them once and for all."
The future
It appears then, the government while initially conceiving of a good idea has hamstrung itself with delays and a plethora of failures.
Key among them was a failure to instill confidence in the scheme from the start; allowing it to be reviewed and unnecessary and even insignificant.
As a result few inspectors trained and received the accreditation necessary to assess home information packs. Delays waiting for sufficient inspectors to be trained further undermined confidence in the scheme, as the rollout was repeatedly pushed back.
The scheme is still not fully in operation, a year after its launch and nearly a decade after its conception.
The failure to include a home condition report - the most difficult to produce, but also most useful elements of a Hip - also caused severe damage to the credibility of the scheme.
With time running out it is important it is important the government works to build the confidence in the scheme, making it integral to the market before any potential change of government.
Chris O'Toole
