The biggest property waste of time?

by John Fitzsimons on 22 March 2010  |  8 comments
Tweet

Home Information Packs were added to the housebuying process a couple of years ago, promising to make things quicker and more transparent, though debate continues over just what difference they have made.

Today's debate is on home information packs - have they improved the housebuying process, or been an expensive waste of time?

We asked Mike Ockenden, director general of the Association of Home Information Pack Providers, and Eddie Goldsmith, senior partner of solicitor Goldsmith Williams, a pack provider.

Mike Ockenden, director general of the Association of Home Information Pack Providers (AHIPP)

HIPs are working!

The reality is that HIPs are now an integrated part of the home buying and selling process and are working well for consumers and the property industry. HIPs have proved beneficial to buyers, providing information about a property before they incur unnecessary costs. The cost of production is relatively low, on average only costing between £200 and £300 and they have helped force time wasters out of the market, which can only be advantageous for serious buyers, especially in the current climate.

What has helped keep costs low is that HIPs have reduced the cost of property searches by 40%, resulting in an overall saving to the cost of buying and selling! Since April 2009 failed transactions have come down to 9% from the Government’s benchmark of 23%, largely because transactions can now move much more quickly to exchange of contracts.

Data released by Connells in September 2009 showed that vendors with HIPs exchanged contracts on their property on average seven calendar days faster in the pre-HIP regime, and the speed is further dramatically improved when ‘exchange ready’ packs are provided.

‘Exchange Ready’ Packs (ERPs) include in them additional legal documents that allow the conveyancer acting for the buyer to process the transaction with much greater speed. As a result ERPs slash the time to exchange of contracts, giving certainty much earlier in the process and reducing the stress of buying and selling homes for everyone. 

We believe that the future for HIPs lies in moving to ERPs for all transactions.

Another important success of the introduction of HIPs relates to the inclusion of Energy Performance Certificates in the pack. The EPC is designed to inform consumers about the energy efficiency of a home and provides tailored recommendations to improve the efficiency and reduce energy costs.

Research has shown that EPCs in the HIP have led consumers to make the changes recommended and ultimately this results in demonstrable carbon emission reductions. The report highlighted that if consumers implemented the recommendations in their EPC, they could on average reduce their home’s CO2 emissions by 1.2 tonnes and cut fuel bills by £182 a year!

We encourage all home buyers to ask estate agents for the HIP on the properties they are viewing. The information in the pack will be very useful in assessing the suitability of the property as well as providing important information about how much it will cost to maintain it. Indeed some buyers have been able to negotiate price reductions as a result of the information provided in the HIP – a very real and tangible benefit!

Eddie Goldsmith, senior partner of solictor Goldsmith Williams

HIPs have failed

Home Information Packs (HIPs) have never been terribly popular since the day they were first introduced, but does that necessarily make them bad? After all, neither taxation nor dental treatment are popular, but most of us recognise their necessity.

Perhaps the question we should be asking is, are HIPs necessary? When they were first conceived the idea was to help speed up the housebuying process and reduce the cost of housing transactions. As time ticked on and as HIPs neared their launch, another issue came to the fore: the environment. HIPs were lauded by the Labour government as another weapon in the war against global warming and great emphasis was put on the benefits of energy performance certificates (EPCs).

In theory at least, it’s hard to argue against HIPs. After all, they give homebuyers access to information before they make an offer on a home, they provide a basis, via EPCs, for assessing the energy efficiency of a property and they’re not terribly expensive – an average HIP is only about £300.

The problem is that theory and reality is quite different. The truth is that they appear to have done little to help speed up the housebuying process, they have not reduced the cost of house buying but have added to the cost of house selling and, as far as I’m aware, the presence of an EPC makes little or no difference to a person’s choice of a new home.

To make matters worse HIPs have also added another layer of bureaucracy to what is already a reasonably complex transaction and, when shown the contents of a HIP, the average homebuyer is completely bamboozled by the information it contains. The information held within a HIP may be meaningful to a lawyer but means little to an average homeowner.

They have not made a significant impact on the speed of a typical housing transaction - in fact, more efficient conveyancing procedures have done more to reduce transaction times than HIPs. They have not encouraged consumers to make the environmental performance of a property a high priority; the additional information they provide is of little real value to consumers; and they have added another layer of cost to what is already an expensive transaction.

If the Government were brave, which I suspect it is not, then it should abandon what is clearly a failed initiative. However, I’m not holding my breath.

So what do you think? Have you had experience of Home Information Packs? Were they helpful or an expensive addition to the homebuying process? Let us know your views via the comment box below!