After several weeks of rumours, debates and speculation, the government has announced plans to delay the introduction of Home Information Packs (HIPs). Implementation of the packs will now be on 1 August, rather than1 June.
It was a humiliating turnaround. Only last Wednesday a motion by the Conservatives to scrap HIPs failed after the government defeated the motion by 306 votes to 234 – a majority of 72.
But in an embarrassing climbdown earlier this week, communities secretary Ruth Kelly told the Commons that a judicial review of the Energy Performance Certificates (EPCs) in the packs – called for by the Royal Institution of Chartered Surveyors (RICS) – meant the government had decided not to introduce the packs for all properties on the date planned.
Instead, beginning on 1 August, it will phase in the packs starting with homes with four-bedrooms or more. According to the Council of Mortgage Lenders (CML), this accounts for about 17 per cent of homes in the UK.
Mixed reactions
The statement came hours before the House of Lords was due to take part in a last-ditch vote aimed at halting HIPs and hours after an initial ruling by Mr Justice Collins on the judicial review by the RICS asserted that there ‘was a persuasive case’ that the EPC could be introduced separately from the HIP.
Following the government’s statement, Shadow Housing Minister, Michael Grove, said HIPs were a ‘mess’ caused by the government’s incompetence. “The government’s plans for HIPs are unravelling. Ministers must now acknowledge that it has botched this from beginning to end,” he said.
Elsewhere the announcement met with mixed reactions. The Association of Home Information Pack Providers (AHIPP) announced its ‘utter disappointment’, saying the decision was at the detriment of the consumer and the environment. It laid the blame firmly at RICS’ door.
“Consumers will have to endure the existing, broken house buying and selling process for at least a further two months, costing them time, money and unnecessary stress. In addition, our homes will continue to release the millions of tons of carbon emissions, which were set to be significantly reduced as a result of the energy performance certificates,” says AHIPP director-general, Mike Ockenden. “It is difficult to understand how RICS can claim that it is acting in the public’s interest by denying them this much needed reform, and the benefits of reduced carbon emissions as a result of
the EPC.”
Ockenden maintains that the industry was – and is – ready for the introduction of HIPs on 1 June and says ‘propaganda spread about by those opposing the packs for their own vested interests’ has ultimately led to the delay.
Meanwhile HIP pack provider Spring welcomed the move, although saying the introduction of the sellers’ packs had been ‘appallingly handled’.
Spring chief executive, Stephen Foden, says: “The HIPs that were going to be introduced on 1 June were ill-conceived and would have achieved nothing.
“At least the government has finally listened and taken the chance to think again. It should now attempt to make a proper job of HIPs. The aim should be to make it easier to sell and buy homes and the government needs to focus on that.”
The Council of Mortgage Lenders (CML) welcomed the eleventh-hour announcement but it continued to urge the government to consider the best way of moving forward.
Too many uncertainties
The CML – along with other industry organisations – repeatedly warned the government that there were too many uncertainties to be able to introduce HIPs with any confidence on 1 June.
The government conceded in dribs and drabs, initially by announcing a u-turn last Summer on compulsory Home Condition Reports, and followed earlier this year by concessions relating to the compulsory inclusion of search information at the outset of
marketing.
David Hollingworth, head of communications at London & Country, says the HIPs debacle is another embarrassing climbdown for the Government after last minute u-turns on Self Invested Personal Pensions and Pension Term Assurance. “It seems that the big benefit of HIPs is now being pinned to the environmental benefits of property having an EPC and this the justification for the initial launch to only apply to larger properties,” he says. “This is a far cry from the intended function of reducing the number of transactions that break down due to the snail-paced nature of home buying.”
He added: “The companies that have invested millions in time and effort to be ready for HIPs will surely be furious at what they will see as yet another letdown from the
government.”
Hollingworth is not wrong. Law firm Matthew Arnold and Baldwin is a medium-sized firm of solicitors that followed government guidance to be prepared for the introduction of HIPs on 1 June. It has employed more staff, trained existing staff, had dozens of meetings with local estate agents and surveyors and invested in IT specific to HIPs.
“We have literally spent thousands of pounds on the HIPs project. This is a lot of money for a business our size,” says David Marsden, partner and head of property department at Matthew Arnold and Baldwin. “To have them delayed at the last minute is ridiculous. There have been many opportunities over the last year when the government could have done this, which would have enabled businesses to plan much better.
What we now need is a clear lead from someone we can trust. Will this postponement be followed by another, or are they to be scrapped for good?”
Too little too late?
It is true to say that the government’s decision might well be the right one, but has come along far too late. Just last week the government maintained it was committed to the 1 June start date and dismissed concerns that there were not enough energy assessors trained and ready and accredited to produce EPCs.
In the Commons debate, Housing Minister, Yvette Cooper, strongly defended HIPs and the importance of including EPCs, saying they were vital in helping to tackle climate change while the packs would give house-buyers more information upfront about their new home and cut costs for first-time buyers.
At the time it was thought that the minister’s vote meant the government’s proposal to bring HIPs into force on 1 June would go ahead and plans to overturn it at the eleventh hour had been foiled.
Despite a non-fatal motion in the House of Lords being timetabled for this week, and RICS announcing judicial review proceedings against the Communities and Local Government (CLG), it seemed certain next month would see every property placed on the market needing a HIP.
AHIPP said the industry was ready to deliver HIPs and there would be enough energy assessors. It said its latest survey identified that over 3,500 home inspectors and domestic energy assessors would be ready to produce EPCs as of June this year. However, Cooper admitted only 520 assessors had been fully accredited and 2,000 would have needed to reach the accreditation stage for implementation on 1 June.
Stephen Callaghan, director of domestic energy assessor provider energy-assessors.com, said consumers and the industry must not panic. He assured those that had trained to be energy assessors that their skills will be needed in August when they will be required to carry out EPCs on all homes for sale with four or more bedrooms, soon to be followed by the rest of the UK’s housing stock.
“This is not the end of the road for those who have undertaken training to become energy assessors,” he says. “As the government is convinced that the 1 June deadline cannot be met, it is logical to defer the launch date and introduce transitional measures. This will then make the transition more achievable for the industry and consumers alike. The newly introduced timetable will provide the opportunity for an even greater number of domestic energy assessors to qualify and be ready for implementation on 1 August.”
Definitely, maybe
Whether you agree with the concept and contents of HIPs or not, there is no doubt that it has been a case of ‘definitely, maybe’ for too long.
HIPs or ‘sellers’ packs’ began life as a mention in the Labour Party’s 1997 manifesto, although it wasn’t until after the third Labour election victory in 2005 that the plans gathered momentum. The overriding intention at the beginning was to switch the responsibility for compiling and paying for surveys and searches from buyers to sellers which would help cash-strapped first-timers most of all.
In March 2006, the government published a timeline establishing clear guidelines of the path towards implementation. In June last year it set out draft regulations detailing the contents of a HIP but, only a month later, did a u-turn about the inclusion of a Home Condition Report in the pack and it became voluntary rather than compulsory.
The Home Condition Report was seen by many as a crucial element of the HIP because buyers had the chance to see, up front, the state of the property before they made an offer, rather than finding out further down the track and either being forced to withdraw due to structural problems or having the transaction delayed while problems were rectified. However critics argued that many buyers would not rely on a survey commissioned by the seller and would also get their own survey done.
Ever since the concept of a HIP was first discussed, many mortgage and housing industry groups have had concerns about the packs and the timescale for their implementation and, in general, the packs have not been welcomed in their current format.
In March this year the National Association of Estate Agents (NAEA), RICS, the CML and The Law Society, wrote to the Housing Minister requesting a meeting to discuss their collective concerns over the proposed implementation of HIPs next month. The Housing Minister responded to the detailed letter but refused a group discussion on the matter with leading industry experts.
Although the NAEA supported the government in the introduction of the EPCs, and is acting as an awarding body for the qualification of domestic energy assessors, it – and many others – remained concerned as to the likely shortage of assessors in many parts of the UK by 1 June.
Following Tuesday’s announcement, the NAEA branded HIPs ‘total chaos’ and said the proposed phased implantation confuses things even further.
Chief executive of the NAEA, Peter Bolton King, says: “All properties with four bedrooms or more will require an EPC and HIP from 1 August. Smaller properties will be required to follow suit as soon as there are enough domestic energy inspectors available. We believe it is nonsensical to bring in EPCs for four bedroom houses and larger only. We urge the government to take EPCs out of HIPs and implement them as a separate entity for all properties.”
Previously the government said that some parts of a HIP, such as the leasehold information and searches, can be sought in 28 days from the house being marketed for sale, although an EPC must be included upfront. Now – until the end of the year at least – it is going to allow people to market their properties as soon as they have commissioned a pack, rather than making them wait until they have received them. And, as a temporary measure, it will allow EPCs to be up to 12 months old when the property is put up
for sale.
Ray Boulger, senior technical manager at John Charcol, reckons the solution to the HIPs problem is simple. He suggests making all aspects of the HIP voluntary, except the EPC – for example, go one step further than ministers did last year when they made the Home Condition Report voluntary.
“Those vendors who believe that the cost of including some or all of the voluntary information in the HIP will be worth incurring to help sell their property will be free to do so and those who don’t can just include the EPC,” he says. “If enough people believe the full blown HIP is such a good idea, the market will start demanding it. If not, sellers who think it will give them a competitive advantage will be free to offer their home with the full HIP. What could be fairer than that if you believe in a free country?”
