Whether Home Information Packs (HIPs) will or won’t happen is a subject that has been debated endlessly over the past few months and years. Indeed, half a forest has been sacrificed in printing consultation documents and press coverage on the subject.
So what is there left to talk about? Although there as many different splinter discussions as there are minutes in the day, there appear to be four main areas currently under debate:
- Whether HIPs will actually be implemented on 1 June;
- If they do go ahead, whether they will be in the format currently agreed by the government;
- The effect they will have on the housing market, and;
- What you need to do to prepare your business for their implementation.
The one subject that is not widely under discussion, but is likely to make the biggest difference, is electronic or e-conveyancing. It has run in parallel to the development of HIPs, and beneficially been kept out of the headlines perhaps because there is less political capital invested in it.
Nevertheless, it has made significant progress which could have a dramatic effect on the house buying and selling process and may even usurp HIPs by achieving many of the objectives they set out to achieve.
The Land Registry has been pushing ahead with e-conveyancing in a quiet, but determined manner, but the host of measures being introduced will make the house moving process quicker and more transparent. In fact when the ‘matrix system’ is introduced, it will offer complete transparency of every transaction in the chain. With everyone in the chain being able to see every step of the process online, it will show just how long each transaction has taken; it will also show where any blockage is and who is causing it, increasing the amount of pressure on that individual or organisation to streamline their processes. The mere fact of the transparency of the matrix system is likely to create efficiencies in each part of the chain as there really will be nowhere to hide for any firms causing the hold up; it will be there for everybody to see and if ongoing, future business could be lost as a result. Alternatively, it could prove to be a very successful promotional tool for those shown to consistently be one of the slickest and most efficient in the chain.
The other benefits of e-conveyancing which will impact on the HIP process are electronic communication which will mean that e-mail or messaging software is built into the system. This will be complemented by the creation of a new system to upload contracts and supporting documents, offering a viewable version of the land register to reflect proposed contractual terms.
It is also interesting to note that projects such as electronic signatures and electronic funds transfer that have merely been buzzwords in the past are now becoming a practical reality and will, at a stroke introduce efficiencies into the process. Electronic signatures will be applied to a variety of documents and contracts throughout the process and will be signed electronically by conveyancers. The move towards electronic funds transfer will also facilitate and improve electronic dealing. Money will effectively be ‘digitised’ and with this facility in place it is not beyond the realms of possibility that the physical transfer of funds via the existing CHAPs system will become obsolete.
With a slicker e-conveyancing system at completion, the new title and new mortgage will be instantly registered with the Land Registry, Stamp Duty Land Tax will be settled and old mortgages discharged.
Left in the lurch?
So where does this leave HIPs if e-conveyancing alone will achieve many of the things that HIPs set out to achieve? Looking at the main discussion points one by one, it is a fairly safe bet that HIPs in some form will become law as of the 1 June 2007 as the government has invested a lot of political capital in their success.
The Energy Performance Certificate (EPC) element is now taking a priority and is needed to help the government meet its commitment on the environment that it is bound by the EU to make. In fact, the environmental element of HIPs seems to have taken over from that of speeding up the house buying process, stopping gazumping and making house buying easier and more transparent, which was their original objective. However this is the role that e-conveyancing will step into the breach to fill and to many in the outside world, when it is implemented, it could appear to be as a result of the HIPs process.
No easy ride
Still the government is not going to have an easy ride between now and 1 June. There are few in the industry, outside of HIP providers, who can put hand on heart and say that they feel that HIPs in their continually modified form are a positive step for the housing industry, and while most will just mutter that they don’t feel HIPs will be all the government intended, while still making their plans for implementation, others are more vociferous. There are still some fairly strong opposition movements, not least the one mobilised by the National Association of Estate Agents a couple of weeks ago, aimed at getting every organisation they can to lobby against their implementation.
So despite opposition, it is looking almost certain that HIPs will happen, but this brings me to the next point of whether, come June, a HIP will be in the form currently planned for. With the last government change having come just a week ago, giving properties already on the market before HIP implementation until March 31 2008 before they need to provide a pack, rather than October 31 2007 as originally planned, it is by no means certain that there won’t be other alterations over the next four months. However with the roll out already started, any other changes will be a tinkering at the edges.
The effect on the market is likely to be most marked in the time immediately after the implementation as everyone involved in the house selling process adjusts to having to prepare a pack. It could also mean a flurry of activity in May as estate agents persuade sellers to put their homes on the market before a HIP is necessary.
The success or failure of HIPs won’t depend only on the HIPs themselves but other market conditions. There are many other developments happening in the market which will work to make the process quicker and more efficient. The great strides made to speed up the mortgage process have made a huge difference and if e-conveyancing fulfils its potential, it will have a dramatic effect.
Keeping abreast of the changes is essential. Although there is a lot of uncertainty around HIPs, they are likely to happen and you do need to be prepared. With all the new developments in the market, it is the people and organisations who best understand the changes and use them to their advantage that will benefit.
Advisers are in a prime position to add to their revenue by offering HIPs to their clients. By also being aware of solicitors that can provide a full e-conveyancing service, as an adviser you can gain a competitive advantage, offering your clients a more complete service by keeping them abreast of every step of the process.
Although continual change can be frustrating, it is also because we work in such a vibrant market. By embracing HIPs and e-conveyancing, we can make sure that we are part of the future of the market rather than being one of the minority who will undoubtedly be left behind.
