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Hip hope

Helen Pow canvasses industry figures over their expectations for home information packs and finds that many are sceptical that Hips will prove relevant in the absence of a home condition report.

Home information packs become mandatory from June 1 but many mortgage advisers believe the watered-down package, which contains the new energy performance certificate but not the home condition report provides little value to buyers or sellers and will not speed up the buying process.

The Government announced on January 25 that to promote energy efficiency, all Hips must include EPCs.

Communities and Local Government Secretary Ruth Kelly says: “This is an important opportunity to improve the buying and selling process for consumers. We want to promote a greener housing market for consumers and energy performance certificates can play a key part in this.

“By providing more information on the energy efficiency of homes, we can help consumers make more informed choices about the homes they buy and their impact on climate change.”

London & Country mortgage specialist James Cotton believes the EPC is a good addition but says that including a mandatory home condition report would make Hips a much more complete package.

It is thought that the Government relegated the HCR to being a voluntary document because of concerns that there would not be enough qualified home inspectors.

Park Row Mortgages national sales director Kevin Paterson claims the Government’s decision has made Hips irrelevant.

He says: “The Government diluted the pack by delaying its entry and then removed the HCR which was a big chunk of it. The HCR was very useful and would have helped to speed things up and without that I do not know what Hips will provide.”

There are several petitions pushing for the Government to restore mandatory HCRs as part of Hips but Savills associate director Melanie Bien is sceptical this will happen.

She says: “The Government has not ruled out making HCRs mandatory but I would be very surprised if it happened. It would cost too much money and there would be too much competition.”

Bien believes Hips should be scrapped completely and the EPC should remain on a stand-alone basis. She says: “I think there is a lot of confusion about Hips. The Government’s behaviour has been damaging to the whole process and the package provides very little infor-mation. I think they should scrap the whole thing.”

Accord Mortgages managing director Linda Will is unconvinced that Hips will see the light of day due to the Government’s continued delays.

Paterson believes that Hips will contribute to a slowing housing market this year. He says: “I do not think they will add any value. In fact, I think Hips will probably have an adverse effect by slowing down the market and making people hesitant to put their properties on the market. A cynic would think the Government wanted to slow down the housing market and thought this would be a way to do it.”

Cotton says the market is set to slow, perhaps due to three base rate rises in the past six months, but he doubts that Hips will be responsible for any ongoing market downturn.

Bien says developments such as automated valuation models and e-conveyancing have helped make the home-buying process faster and he is dubious over whether Hips will have the effect of speeding up the process.

Hips should, in theory, make buying a property more simple but Will claims most buyers will still have to hire a conveyancer to ensure the information is accurate. She says: “The idea is that Hips will make the process much easier and cheaper for the buyer but it is a huge transaction and the buyer is liable, so I would not be taking the seller’s word for it. This is oversimplification on the Government’s part.”

She does not believe the packs will cause severe delays to the process, provided they can be produced relatively quickly, but suggests that a three-tier pricing model may emerge, depending on how quickly the customer needs a Hip.

Cotton predicts that many people will rush to put their properties on the market before Hips are introduced, particularly as the Government has extended the time a house on the market at June 1 can be marketed without a Hip until March 31, 2008.

But Paterson says the rush will be agent-led. He says: “I do not think there will be big a stampede by the public but estate agents will market it in a ‘while stocks last’ way so I think we will see a surge before Hips come in because of marketing by estate agents. But then the market will calm down for at least a quarter while people get used to them.”

Will does not believe Hips will make people rush to sell but she thinks the potential revenue stream means estate agents will embrace Hips and claims that many will decide to offer Hips.

Cotton says: “Estate agents see the introduction of Hips as an opportunity and an extra service. But there is concern about the extra work and manpower needed to get the packages up to scratch so I think there will be agents looking forward to Hips and people dreading them in equal measure.”



Mike Wilson

The chairman of St James’s Place has a long career in building financial services companies by working in partnership with Sir Mark Weinberg. He says the secret of his success is in concentrating on strengths and now he spends half of his working week coaching advisers to increase their business. Interview by Gregor Watt.

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