The mortgage industry has welcomed plans laid down by the office of the Deputy Prime Minister (ODPM) to implement Home Information Packs (HIPs) into the marketplace. After months of uncertainty as to the exact function and content of HIPs, the government has published its agenda, detailing a timeline of action running up to the launch, set for June 2007.
Designed to increase buyer and seller confidence in the housing transaction process and improve transaction times, in addition to bringing an end to property sales falling through, the packs have come under scrutiny from a number of sources worried about their impact on the mortgage market. A number of commentators have argued the packs will provide estate agents an opportunity to enter the mortgage market, while others argue the end-user, the consumer, is being neglected. Individual HIP costs are estimated at between £600 to £1000.
Strategy
However, despite industry concern, following reports that over £1 million a day is wasted on buying and selling homes, Yvette Cooper, Housing Minister argues the introduction of a scheduled HIPs plan will allow intermediaries, lenders and others involved in the housing process to develop a strategy for incorporating the packs into their business model. She says: “By providing key information at the beginning of the process, Home Information Packs will prevent waste and significantly cut the number of sales that fall through. That is why consumers groups have been calling for them for years.”
Larry Banda, head of mortgages at Nationwide, welcomes the detailed plans of the implementation, and argues the market could now fully prepare for the launch. He says: “In setting out this timetable, the government has confirmed that it is committed to introducing HIPs from 1 June 2007. Nationwide can now prepare for the impact it is likely to have on our members and we welcome the clarity that this announcement gives us.”
Richard Sexton, business development director at e.surv, agrees the timeline will help to clear up any confusion, and argues the publication removes any doubt over government intentions. He says: “The latest information from the ODPM should remove all trace of doubt that the government will push through HIPs in some form or other.
“It is clear that some in the industry have been using the lack of clarity either as evidence of a lack of commitment or as a defence for not taking action to solidify their HIPs position. e.surv is acting in a consultative capacity to many industry players and to the current client base – the good news is that it is certainly not too late to take positive steps on this. Lender, brokers estate agents and pack providers should now be giving the initiative the attention it deserves in order to ensure that the introduction of HIPs will not disrupt their businesses, but also so that they can take full advantage of any opportunities that arise.”
Timeline
With the HIPs launch date less than 18 months away, the ODPM has produced a structured, detailed plan, with the first steps set for March. During March the government will be pushing though applications for people and organisations interested in becoming Home Inspectors, or certification schemes and during April, it will provide details of a three-phased product launch, in addition to a publicity campaign to improve industry knowledge of the packs.
In June 2006, a year before the official HIPs launch date, the government will provide draft regulations on the packs, detailing the availability and enforcement arrangements for HIPs, and by September the government hopes to approve the first Certification Schemes, overseeing the work of Home Inspectors. A Home Condition Report Register contract will also be initiated, with a fully operational register to follow soon after. Between November 2006 to June 2007, the government will continue product testing, with lenders given the opportunity to use Home Condition Report information for valuation purposes, in an effort to reduce on site valuations as well as cutting consumer costs.
Following the three-phase product test conducted between June 2006 and 2007 the ODPM will review the market reaction of HIPs, before its official ‘go live’ date.
However, the government has indicated that, following industry partnerships, the timeline may be revised, prompting a number of people to suggest the launch date may be adjusted. Peter Williams, deputy director-general at the Council of Mortgage Lenders (CML), has warned the industry that it has many more changes to adapt to, if HIPs are to suit consumer and market needs. He says: “No one should underestimate the scale of the task ahead. It is quite clear that, even when HIPs go live, it will take some considerable time for the market to gain experience and confidence in the new environment, and only then will its full benefits to consumers be realised.”
With a number of organisations expressing their concern over HIPs, the timeline goes some way to ease market fears. However, as Williams says, the market still has much work to do if it is to reach government objectives in time and if the proposals are to have the desired impact.
