Home Information Packs (HIPs) have been discussed for many years and when they finally received Royal Assent in November 2004 as part of the Housing Act, it appeared they would be a robust vehicle, which would benefit consumers and the housing market as a whole. Each subsequent announcement on HIPs supplied another building block, which seemed to indicate that the market was taking the needs of the end users seriously.
However, much of this good work was undone when Housing Minister, Yvette Cooper, made her announcement in July 2006 that Home Condition Reports (HCR) would no longer be a mandatory inclusion in HIPS at launch. HCRs could be included in these packs on a voluntary basis and may become mandatory in the future – was the message the Minister gave us.
This was not what the majority of HIP providers wanted to hear. Essentially, with only 11 months to go until launch, the government had removed one of the core aspects of HIPs and had introduced us to ‘home information pack lite’ – the low sugar, low calorie version.
Not best pleased
To say that this had a profound effect on the developing HIP industry is an understatement. You simply had to watch the share price of property portal Rightmove immediately after the announcement to see that the industry was ‘not best pleased’ to say the very least. Or, indeed, you could listen to the grumbles from most HIP providers IT or administrative departments as we all returned to the drawing board and started redesigning our propositions – again.
So what has actually changed? With this move, the government has removed one of the most useful aspects of these packs. The HCR is designed to be an objective report on the condition of the property that can be relied upon by buyers, sellers and mortgage lenders. While it was likely that the industry would be initially sceptical about a report provided by the vendor, if the validity of this documentation was proven over time, it could have replaced existing requirements and proved extremely useful.
But was this u-turn justifiable? Was this a well thought-out move or simply a mistake brought on by lobbying from special interest groups?
Let us look at the arguments.
Weighing up the arguments
Certain pundits claim the basic difficulty with HCRs is that there would not have been enough home inspectors to carry out all these inspections. However, the Energy Performance Certificate (EPC) is still a mandatory inclusion in these packs so the same number of inspectors will be required and therefore this argument simply doesn’t stack up.
The government was also worried that by introducing HIPs containing HCRs they would be following a ‘big bang’ implementation programme, which could be potentially harmful for consumers. The ‘watered’ down version was deemed to hold the same benefits, but provide a ‘lite’ version of the information pack.
This paring down of the HIP offering is interesting in itself as some providers were actually proposing to increase the amount of information in the HIP by including an environmental report. This raises the question – do consumers (who we seem determined to wrap in cotton wool) actually want a watered down version of HIPs? This is certainly something to consider.
The final argument against these packs was that the ‘industry’ is not ready. Well, we’ve had almost 20 months since the Royal Assent to get our houses in order and to be perfectly honest, at Easier2move (and most other providers I’ve spoken to), the team has risen to the challenge. Somehow, I don’t think they would have put ‘A-Day’ or ‘Mortgage-Day’ back if the industry had objected. Why is ‘H-Day’ any different?
Ill-advised
Personally – and I don’t think I’m alone in saying this – I think the u-turn was ill-advised. By changing the contents of these packs with only 11 months to go, the government has sent a signal to all concerned that it lacks confidence in HIPs and doesn’t have the strength to stand up for its convictions against special interest groups. Essentially, Whitehall experienced a case of political panic and is scrabbling to justify itself.
However, looking on the brighter side of life, this u-turn does hold some benefits for the industry. The packs will be cheaper to produce, which means that funding requirements will be reduced – a boon for providers and consumers alike. In addition, by removing these packs, the dire housing market fluctuations foretold by the doom and gloom mongers will never become an issue and this will benefit the overall UK economy.
Will HIPs be the disaster or deliverance of the housing market? This remains to be seen. We simply hope that this u-turn is the final one the government makes and that it leaves us – the industry – alone to get on with the job of actually supplying these packs.
