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The Big Question

Following the Government’s decision to postpone the introduction of home information packs, what effect do you think Hips will have if they are introduced to the market after August 1?

Joshua Miller – economist, Royal Institution of Chartered Surveyors

The shortage of domestic energy assessors is the crucial issue that will determine the effect that Hips have on the housing market.

EPCs and Hips will have some impact on the homebuying process. Whether this will be the impact that the Government intended is not yet clear.

When the Government first mooted Hips 10 years ago, RICS was initially optimistic about their introduction as a means to speed up the home-buying and selling process.

The central reason for RICS’ support was the inclusion of a home condition report, which provided the necessary up-front information to vastly reduce aborted sales.

In July 2006, the Government decided to make HCRs, the central plank of the Hip, voluntary. Without HCRs, Hips cannot achieve the Government’s stated aims of reducing the number of unsuccessful housing transactions and providing more information for homebuyers.

There is a danger that the shortage of energy assessors, combined with an empty Hip (without the HCR) will delay housing transactions.

In a perfect world, with an appropriate number of DEAs for the June 1 launch date, RICS would expect that Hips would have a relatively neutral impact on house prices. As the clock ticks down towards June 1, a lack of DEAs will delay the transaction process . Many in the industry are nervous about the flow-on effects that homebuying delays will have on the wider economy.

Danny Lovey – mortgage broker, The Mortgage Practictioner

I think that Hips, as currently planned, will have a detrimental effect on a free marketplace. Not only is it likely to put people off testing the market but is gifting a tool to an unreg- ulated marketplace of cartels and anti- competitiveness.

Yes, I mean the unregulated marketplace of estate agents. Already, my own research is showing that estate agents are upping the ante by offering free Hips and no sale, no fee Hips.

When I ask estate agents if this means that the prospective buyer can transfer the Hip to another agent or other estate agents, I have received answers varying from, “We are not sure how it will work yet” to a straightforward, honest, “No of course not, they have to stay on sole agency with us until it is sold”.

There is no such thing as a free lunch. You will pay likely an inflated cost at comp- letion or it is all included in the estate agent’s (inflated) fee.

While I am expecting the property market maybe to grind almost to a halt as the year goes on as sellers wait and see how things develop, I do not necessarily take the view that all the proposed measures are wrong.

Why have an energy certificate at the point of marketing?

This is overkill as prospective buyers will not care a jot about having one. The searches could be months out of date by the time the property is sold.

Also, having a Hip at marketing is unnecessary. It would make more sense if the seller had a choice of when to order the Hip.

If the seller was serious and wanted to move quickly, then it is likely that the Hip will be ordered soonest but most people could wait until it was sold subject to contract without causing any big delay.

In most cases now, searches get delayed until the buyer’s solicitor has or is convinced that the client will get a mortgage offer.

Keeping the ordering of the Hip flexible will also stop the unregulated market having clients over a barrel.

Matt Grayson – spokesman, BM Solutions

RICS believes that the consultation process undertaken by the Government was flawed and certainly there is little doubt that the whole affair could have been handled better.

Indeed, had those involved followed the benchmark standards set by the FSA in the way it consulted, informed and collab-orated with the industry when introducing regulation, one wonders if a better outcome could not have been achieved.

While the impact of Hips has been widely debated, numerous views still carry weight. By adding the cost of Hips into the transaction, there is the possibility sellers will simply add this on to the sale price and exacerbate rising property prices.

The move may also stop people putting their property onto the market speculatively and so it will tighten supply. Given the extra costs involved, others may choose not to sell the property they have but extend it. Again, supply is constrained and upward pressure would be put on prices.

It may, however, be that a wave of proper-ties hit the market before the deadline, creating an oversupply that sends prices the other way.

Whatever happens, it would appear that support for a compulsory move to Hips is limited.

In the main, most people accept that there is a need to bring greater certainty and clarity to the housebuying process but not everyone is convinced that compulsory Hips are the best answer.

Introducing the scheme on a voluntary basis would perhaps have been the best option and helped buyers and sellers get used to the idea.

It would have better allowed lenders and brokers to work out how they helped finance the proposition and given Hips inspectors and providers a gentle lead in to the new environment.

Whatever comes out of the judicial review, it seems Hips will come to market in one form or another. We must all then work towards making them as effective and efficient as possible.

Paul Broadhead – deputy director general, Ahipp

It is difficult to understand why RICS has taken this latest step against Hips when they are in the process of training both home inspectors and DEAs and in addition, play a prominent role within the Hips industry as a certification scheme.

It has been suggested by some that Hips have caused a flurry of listing activity in the run-up to June 1, which may have served to increase the number of listed properties.

As a result, this may cool house price inflation until the overhang is cleared over the ensuing months (perhaps not a bad thing) but the market will then normalise as if nothing had happened. The notion that sellers will be put off listing their home for the sake of a cost uplift of 200 (which they do not have to pay upfront) is frankly absurd.
The homebuying and selling process in England and Wales has not been the subject of major review or reform since 1925.

Due to a number of factors, the process has become inefficient, expensive and extremely stressful for homemovers.

One in four transactions fail between an offer being accepted by a seller and completion and this wastes around 1m a day of consumers’ money.

Many appear to have forgotten that Hips are being introduced to help improve the housebuying and selling process for all involved, bringing more information about a property to the front of the process, allowing buyers to make more informed decisions and reducing the number of sales that fall through.

At the end of the day, this should greatly reduce the needless stress associated with buying and selling homes in this country.

Home information packs will help to speed up the process, resulting is less transaction failures, a reduction in wasted costs, a less stressful experience for the consumer in addition to having a significant impact on reducing the carbon emissions of our homes. Hips will prove a valuable reform for the buyer, the seller, the industry and the environment.

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