With the full launch of HIPs only 100 days away from tomorrow, Stephen Smith, director of housing at Legal & General, commented:
“The government has been conducting area trials of HIPs since November last year and the packs will become mandatory from 1 June 2007. However, since a change in policy in July last year, the mandatory content of the HIP has been reduced, so that sellers will no longer need to include a Home Condition Report (HCR).
“We are predicting that the take-up of ‘optional’ items within the packs will vary greatly across the country. This may lead to consumer confusion and will not have the desired effect of combating the common delays and failures in the home buying and selling process.
“The HCR was seen by many as a crucial element of the HIPs 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 potentially withdrawing or stalling. Now that this report will be optional, it will be interesting to see how many sellers are prepared to pay for one.
“Some packs will have an HCR in them simply because the seller believes that it will make the sale of their property go more smoothly. However, cost will be an important factor, and as a proportion of the total cost of the house move, will vary on a regional basis. Some people, particularly in areas of low house prices, may want to get away with the bare minimum expenditure.
“From a buyer’s point of view, house-hunters may feel that a pack without an HCR is ‘incomplete’ or that the seller has something to hide.
“They therefore may wish to commission their own report - either a full building survey or some form of homebuyers report.
“The increased use by lenders of Automated Valuation Models (which give an indication of property value without having to send a valuer to assess the property) may also prompt buyers to seek independent advice for their peace of mind.
“HIP providers across the country must now finalise their propositions and get ready for launch. They will have only two months to sell their propositions to the market after the publication of the Final Regulations, due on 29 March 2007. This is not a great deal of time, and we can foresee a raft of information being targeted at estate agents and mortgage brokers as the live date approaches.
“Estate agents mustn't underestimate the time and effort needed to train up their staff on HIPs and how to sell the benefits of them. It’s vitally important because those that manage to convince the public on the merits of the packs will be the ones that get the sales. This will be even more challenging given that HIPs are being introduced bang in the middle of the estate agent’s busiest season.
“Legal & General has already carried out a very long and detailed process to select a panel of providers to offer HIPs to its estate agency business partners. Any mortgage firm wishing to choose a HIP provider to service its clients will also need to go through a similar process. We now have a panel of firms we feel will be capable of providing excellent service to our estate agency business partner firms from June this year. Many of our business partner firms and estate agency introducers have already signed up to our HIP proposition – ‘HIP Focus’.”
