I was asked to attend a Power Debate the other day at Rooftop Mortgages and, in anticipation of the prospect of being grilled by the illustrious mortgage industry press (and being the good lawyer I am(!)) I spent some considerable time over the weekend before researching Home Information Packs (HIPs) online (over 38 million references) and then snooping around the various government HIPs websites. If any of you have any lingering doubt about whether the government is serious about the implementation of HIPs then I would urge you to spend 30 minutes looking at the sites – you will be left in no doubt that it is committed to bringing them in. A good place to start is www.homeinformationpacks.gov.uk.
Propaganda machine?
What I found most interesting was the government’s propaganda machine in full swing about how awful the present system is and how much better life will be post-June 2007, when HIPs are compulsory.
There is a beautiful brochure on the site with a number of ‘home truths’ stated as fact – the first being that nine out of 10 people interviewed were dissatisfied with the present system, and continuing with the ‘home truth’ that the current process of buying and selling costs consumers and the industry £1m a day in wasted costs. This is pretty compelling stuff, stated particularly and setout as factual and unarguable.
You will find the government backs up all these truths by detailed published research and all its reasoning is set out in the impressive Regulatory Impact Assessment which sits behind the HIP Regulations issued in June. Please take time to read at least the initial few pages of the Assessment.
Page nine of the Assessment sets out the governments stance on HIPS – it says, very neatly, ‘
the aim of the HIP programme is to make buying and selling a home simpler, quicker and less stressful for consumers. By ensuring the key information is provided at the outset, the process should be more transparent, fewer transactions should fail and wasted costs should be reduced. Including Energy Performance Certificates should encourage buyers and sellers to improve the energy efficiency of their homes, reducing carbon emissions’.
Left out of the equation
Doesn’t all that sound good?
I will take the opportunity in my next article to look at some of the figures and research behind this bold government statement, but in the meantime, while you are still having a look around yourself, have a look at pages 40,41 and 42 of the Assessment – fascinating stuff. The government, in accordance with good governmental practice, consulted the Small Business Service of the Department of Trade and Industry (DTI) and was ‘content that the potential impact of the proposals on small businesses has been fully considered. Research has been undertaken with a number of estate agents, conveyancers and surveyors to test the potential impact on small businesses of the proposed housing market reforms’.
Did you spot something missing? There is no mention of the intermediary market – no mention of the fact that brokers are an integral, and increasingly important, part of the house transfer market.
Drawing conclusions
Why? The only conclusion that can be drawn from the omission is that the government does not consider the introduction of HIPs will impact at all on the broker market. Presumably because the broker is only involved in representing the buyer in arranging their mortgage and not the seller.
This rather naïve view of the housing transfer market is rather like the simplistic thinking behind the introduction of regulation of mortgages, where the government, quite frankly, couldn’t grasp the position of packagers in the mortgage process and therefore took the view that it was simpler to just leave them out altogether (and then partially changed its mind later down the line).
We, of course, actually working within the industry, know better and there has been a huge amount of column space given over by writers extolling the broker industry to wake up and at least consider whether the introduction of HIPs will be a threat to their livelihoods.
As I mentioned at the Powerhouse debate, everyone in the industry needs to look carefully at their own position and decide what to do about HIPs – it will be a threat to some, an opportunity to others and will pass the rest by as not having any real impact. What is absolutely clear is that the likelihood of HIPs not being implemented is like asking Wayne Rooney and Zinedine Zidane to jointly deliver a treatise to FIFA on the need for the restraint of violence on the football field.
