Managing director Andrew Frankish said: "Like them or loathe them, HIPs - also known as Home Information Packs - will be compulsory in January 2007. This wholesale adoption will be preceded by a dry run next year, requiring estate agents or sellers to have key information available and in place before being able to market a property.
"The public at large, as well as the majority of the mortgage industry, has expressed mixed feelings about the wisdom of HIPs. Among the arguments already aired is the requirement to keep the packs regularly updated, even though a sale might not be imminent, in addition to the question of exactly whose responsibility it is to put the pack together?
"The theory is that the existence of the HIP will significantly reduce the time taken for the average house transaction to complete, as the pack will contain the majority of the information required by the prospective buyers, their mortgage provider and their solicitor.
"In essence, every HIP will include the following information: -
- Terms of sale
- Evidence of title (Land Registry documentation, etc)
- Replies to standard searches (proposed local land charges, listed
status, etc)
- Planning consents, agreements and directions, and building control
certificates
- Seller's property information form (information on boundaries,
disputes, notices, services, sharing with neighbours, etc)
- Warranties and guarantees (ie NHBC)
- A Home Condition Report, including an energy efficiency assessment
- Additional information for leasehold properties is also required
such as the lease, recent service charge accounts and receipts
"One of the most onerous requirements in the pack will be the production of the Home Condition Report. This is a form of basic survey which will provide essential details about the state and condition of the property and, like the remainder of the HIP, will be paid for by the seller.
"Currently, the Government believes that an 'open access' scheme will allow a range of individuals, including surveyors, to compile the Home Condition Report, with certification being used to regulate the market. Lenders are already indicating that they will move towards reliance on the Home Condition Report rather than a valuation when underwriting mortgage
business. There will therefore be a significant reduction in valuation work in the future.
"According to the Government, the overall cost of HIPs is currently estimated to be in the region of £600, although some industry pundits reckon that £1000 is closer to the mark. As a marketing initiative, some lenders are even now suggesting that they will provide assistance to sellers in the form of free or subsidised HIPs, as part of an overall package or mortgage product.
"The question for brokers therefore is: what are they doing to leverage this opportunity? At the moment, mortgage brokers predominantly deal with purchasers; their involvement with sellers is limited. This new market dynamic gives brokers a perfect opportunity to target their customers who are also vendors, as well as offering something to sellers in general, and therefore maximising the opportunities for cross-selling financial services.
"My belief is that the majority of brokers will allow HIPs to be introduced without any attempt to enter the market. This may well prove to be a mistake from a marketing perspective, as well as in relation to attracting and retaining new customers.
"Look at it this way. Compiling HIPs is a significant business in itself, and a number of institutions will be looking to occupy the market. Banks, building societies, insurance companies - they will all seek to provide HIPs, either as a service to end users or as third party suppliers to estate
agents. The larger corporate estate agencies will, no doubt, expect to offer them, as part of their service to their sellers, perhaps in conjunction with a mortgage on the customer's property purchase.
"Even more alarming, it will only be a matter of time before the major supermarket chains recognise the profit potential and decide to launch their own incentivised HIP schemes. After all, who would have predicted them offering car insurance and personal loans ten years ago?
"So, brokers need to be aware of the business opportunity that they could well be missing out on. They need to switch on to the fact that there are tremendous marketing opportunities open to those brave enough to take the plunge.
"And, even though 2007 seems a long time away, with the general election now firmly out of the way, the Government will be pressing ahead once again - determined to make sure that this policy gets off to a flying start."
