25/07/2006

HIPs Climb-down by Government

Government ministers have abandoned plans for a key section of Home Information Packs (HIPS). The requirement for sellers to produce a home condition report will not now be compulsory when HIPs come into force on June 1 of next year. Housing minister Yvette Cooper has said that, instead, home condition reports would be introduced on a, “market-led basis”, meaning that estate agents will need to persuade clients to pay for the reports. She warned, however, that the report could become mandatory if the market fails to achieve this. According to The Daily Telegraph, despite the fact that thousands of people have already paid for training as home inspectors in order to produce the reports, there were growing fears in Government that there would not be enough qualified professionals to meet the demand next year.

Says Richard Atkins, relocation partner at Taylor Walton Solicitors, "The Government changes are generally good news for the relocation industry as it will significantly reduce the cost of HIPs. The Law Society has consistently opposed compulsory Home Condition Reports on the grounds that they would disrupt the house buying process, because buyers could not sensibly rely on a survey commissioned and paid for by the seller. Half the cost of the HIP would have been the cost of the HCR. What remains are the legal elements of the pack, which can be gathered quickly and cost effectively by the seller's solicitor as part of the conveyancing process. In cases where employers operate guaranteed sale price schemes, the pre-packaging of title and search information already takes place, so there need be little change in procedures.

Employers should now find that the cost of HIPs should be reduced by at least 50%. Although an Energy Efficiency Certificate is still required, this can be obtained through a qualified person and it is not required for a home inspector to carry out this function. The rest of the pack is now exclusively legal in content and much of the information is readily available online."

Barry Hall, Consultant, Ekins Surveyors adds, “The Government has said that one of the components of the Home Condition Report [HCR], the Home Energy Report, will still be a requirement of the HIP, but have yet to explain who exactly will deliver it. The task was to be undertaken by the new Home Inspectors but, with the Home Condition Report now no longer mandatory, that workforce will not be there. My feeling is that the Government will relent to some degree and will allow the Energy Report to be available at any time up to exchange of contracts. This will enable providers of mortgages to include them in the property valuation inspection for the borrower. Some lenders, like The Woolwich for example, have been providing Home Energy Reports with mortgage valuations for the last 10 years, so it's not something new after all. Will the property industry introduce the HCR (or something like it) on a voluntary basis? The question is, who will willingly pay for it if it is discretionary? The HIP will only work if it is a mandatory requirement - a concept that's now been cast to the wind. It does make you wonder, after six years of gestation, whether there is anything sensible to salvage in the Government's mandate to improve the home selling and buying process.”

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