Broken HIPs?

 

Is it “Good Riddance” to Bad Legislation?

 

The new coalition government announced the suspension of Home Information Packs (HIP) from the 21^st May onwards, saving any seller who markets their property after this date the estimated extra cost (¬£300-¬£450) for a HIP.

 

The idea behind the move is to encourage more sellers to market their properties with ease.  But could this really help inject life into the already slumping property market and what effect will it have on conveyancing?

 

From June 2007 it was a legal requirement to have a Home Information Pack in order to market a property. Sellers were being billed for yet another expense in the sale process of a property.

 

It was also in that year that a reported 7000 people were trained to assess HIPs (BBC Statistics 2007). These prospective assessors left their existing jobs to train and in what was promised to be a lucrative role as a HIP assessor earning in the region of £25,000 a year. With the compulsory need for the Home Information Packs there grew a demand for HIP publishers who would then in turn compile all this information into presentable packs on behalf of estate agents.

 

There can only be negative effect for these people as a result of this suspension. HIP assessors would need to revaluate their job prospects and publishing companies are likely to lose out on a lot of orders from estate agents.

 

So what is the big fuss about Home Information Packs?

 

A HIP contains key information for example for a freehold property it would contain property information questionnaires, energy performance certificate (Just like buying a fridge), sale statements, evidence of title and standard searches. They could also include recent planning permission or building consents. For a leasehold property a copy of the lease will also be included.

 

Once all this information had been collected it would be compiled together by the estate agents or other publishing source into a hard copy pack. These packs would then be passed onto to any prospective buyer. 

 

The official information in the packs was complied to help aid a quick transaction – avoiding the unnecessary delays a solicitor would face in obtaining the necessary documents and also to give all buyers the opportunity to know exactly what their purchase would entitle from the offset.

 

Well, that’s the “theory” at least¬Ö

 

In practise Estate Agents hated having to charge clients up front. Lawyers complained that since the vast majority of sellers were also buying when they moved, all that a HIP accomplished in practical terms was to “move” the process of paying for searches etc. up the chain one notch. So, sellers provided the information for their buyers and then, when they came to buy themselves, they didn’t have to commission the searches on the property they were buying.

 

It seemed to many like a lot of fuss and hot air over very little in reality.

 

One other practical issue, however, was always whether banks and mortgage companies would accept third party searches and documentation. They would always prefer fresh information from their own solicitors, naturally, and in fact in many cases our firm has had to explain to disgruntled buyers that they would have to pay for new versions of certain documents anyway!

 

So, what is the “prognosis” now the new collation government has suspended these packs?

 

Some estate agents report improvements in the market since the announcement, but in reality the property market is still dragging along slowly – and it will continue, in my opinion, until normal lending conditions resume. One unwelcome side-effect the suspension has had is the doubled pricing of Energy Performance Certificate.

 

Questions remain according to solicitors in Sutton Coldfield¬Ö

 

Will the move really encourage more sellers to market their home? Will it actually help the property market flourish again? Are Nick and “Dave” really one and the same person?

 

We will just have to wait and see¬Ö  

Posted via email from Harvey’s posterous