Customer Area

Back to the future

There have been some industry comments over recent weeks that we should turn the clocks back and re-introduce Home Information Packs. So let’s have a reasoned debate about this issue and call out some of the vested interests both for and against.

First of all let us not forget that HIPS was scrapped in 2011. That was 12 years ago so it fair to assume that any estate agent or conveyancer younger than say 35 (and thus only 23 and therefore at best in a junior position) will not be well informed on the issue as they did not experience the 2 years of compulsion or the trial period that preceded that.

I apologise now if there are some “Hip experts” younger than 35 but I am sure you will take my point that you are in a small minority. Many of the business leaders of  12-15 years ago have also now retired and thus the actual real understanding of what the pros and cons were is somewhat limited.

THE FACTS

Hips were introduced to achieve the following :-

  1. Help reduce gazumping that had been prevalent prior to the Housing crash of 2008
  2. Provide buyers with upfront information that would make their decisions better informed.
  3. Introduce EPCs for all Vendors so that buyers could understand the energy performance of their home
  4. Reduce the time required to undertake conveyancing which was slow by international standards.

There was the concept of introducing a Home Condition Report but this was dropped because a format could not be agreed and there would not be enough inspectors/surveyors to undertake them.

Some additional benefits came to light as they became established. These were :-

  1. Only serious vendors came to market. Thus saving agents time and money on marketing properties with unmotivated vendors.
  2. The Hip was often produced by conveyancers and this helped speed up the process by ensuring they were engaged at an early point.
  3. Delays caused by slow local authorities were removed as searches were ordered well in advance of a sale

However, there were also a few downsides which ultimately led them to being scrapped in 2011. These were :-

1. A whole new HIP industry was created and this was unregulated meaning the “quality” of the packs varied enormously.
2. These new HIP “middlemen” were often panel managers who simply (excuse the pun) wanted to squeeze every last pound of the suppliers of the component parts and take a hefty referral fee for the conveyancing lead it generated.
3. The EPC was at the time derided as useless and unwanted. Today they are far more relevant and have become a significant issue for many people.
4. Some unscrupulous agents were making a significant profit buying cheap and selling high often using buy now pay later loans. (Sound familiar? Perhaps they should have been called Purple HIPS)

Many law firms lobbied against them because they saw them as a way for agents to exert more control (which was correct) and also because they were forced to accept regulated (personal) searches rather than council searches. This has. and still is a bone of contention for many lawyers despite the fact that today over 80 of firms use a regulated search rather than a council one.

On their demise, many HIP companies went bust leaving search companies, Energy Inspectors and law firms out of pocket but was it the right decision?

Today you can’t help but read articles about the need to speed up the process (which by the way is now 19 weeks compared to around 10 weeks) during the HIP era.

There is a push by all sorts of parties for upfront information but no one can agree what format this should take. The Law Society wants to protect their licensing of the TA6 form. Property Mark suggests the PIQ and trading standards are about to introduce Key Material Facts  (KMF) under consumer protection legislation.  All are very similar and the poor vendor has to complete this information multiple times. Unless of course, the unregulated estate agent decided they are unnecessary and can’t be bothered getting the forms completed.

So do I think they should be brought back?  YES with caveats.

We cannot return to the Wild West of HIP companies springing up and ripping people off with substandard products. There needs to be regulation.

So this is best achieved using the existing regulation of the SRA and CLC.

Law Firms should provide agents with a HIP or a seller Pack or whatever you want to call it. They should be instructed by the seller when the house comes to market and have 14 days to ensure the pack is in place.

This way, law firms will be instructed earlier, obtain the correct information, and maybe even check it for issues.

Estate Agents won’t have to worry about compliance with KMF and can use the services of the law firms to assist with Money Laundering and KYC issues rather than rely on those middlemen always hovering to make a fast buck by interjecting between agent and lawyer.

Most importantly time scales will drop significantly, buyers will be better informed, agents’ time won’t be wasted and conveyancers will remain at the heart of the process.

If you agree please comment and perhaps we will start a new movement or a petition….

If you don’t then feel free to comment too but keep it civil

Here is the Govt research that covered the whole HIP period – https://researchbriefings.files.parliament.uk/documents/RP10-69/RP10-69.pdf

Here are some images to remind those old enough to remember of what was.

Home Information Pack Logo Home Information Pack HIP