Bournemouth Energy News

HIPs are history: Pickles suspends Home Information Packs with immediate effect

In an important step at a point of fragile recovery in the housing market, Communities Secretary Eric Pickles and Housing Minister Grant Shapps today announced that with immediate effect, they are suspending the requirement for homeowners to provide a Home Information Pack (HIP) when selling their homes.

Mr Pickles today laid an Order suspending HIPs with immediate effect, pending primary legislation for a permanent abolition. The Secretary of State has taken this swift action in order to avoid uncertainty and prevent a slump in an already fragile housing market. Today’s announcement sends a clear message of encouragement to people thinking of selling their home that they can put it on the market with less cost and hassle.

HIPs are currently holding back the housing market because sellers are having to fork-out extra cash, sometimes hundreds of pounds, just to be able to put their home up for sale. Suspending HIPs will reduce the cost of selling a home, remove a layer of regulation from the process and provide a welcome help to the housing market during the recovery. It will also mean a saving for consumers to the tune of £870m over ten years, giving sellers more money in their pocket to spend in the wider economy.

Mr Pickles and Mr Shapps also said that the Government is determined to help people reduce their energy bills, improve our energy security and tackle climate change by increasing the energy efficiency of their homes. Sellers will therefore still be required to commission, but won’t need to have received, an EPC before marketing their property, and the Government will consider how the EPC can play its part in the new drive for a low carbon and eco-friendly economy.

Eric Pickles said:

“The expensive and unnecessary Home Information Pack has increased the cost and hassle of selling homes and is stifling a fragile housing market.

“That’s why I am taking emergency action to suspend the HIP, bringing down the cost of selling a home and removing unnecessary regulation from the home buying process.

“This swift and decisive action will send a strong message to the fragile housing market and prevent uncertainty for both home sellers and buyers.

“HIPs are history. This action will encourage sellers back into the market, and help the market as a whole and the economy recover.”

Today’s move is part of delivering a key manifesto comment made by both parties in the new coalition Government. It will mean that sellers will no longer be told they have to buy a HIP before putting their home on the market, but they will now have the choice to provide one if they want to.

Housing Minister Grant Shapps said:

“This is a great example of how this new Government is getting straight down to work by cutting away pointless red-tape that is strangling the market. Rather than shelling out hundreds of pounds for nothing in return we’re stripping away bureaucracy and letting home owners sell their properties.

“But we’re also showing our commitment to a greener housing market by keeping Energy Performance Certificates and making them more relevant in helping buyers make informed decisions on the energy costs of their new home.”

Notes to editors

1. Photos and video footage of the announcement will be available at: www.communities.gov.uk/newsroom/

2. Home Information Packs (HIPs) put sellers of residential properties in England and Wales under a duty to provide a pack of standard information to potential buyers when marketing the property for sale.

3. The duty was introduced in three phases, depending on the size of the property, starting in August 2007 and ending in December 2007.

4. The duties relating to HIPs are set out in Part 5 of the Housing Act (sections 155 to 159). The Government has decided to suspend the HIP duties with immediate effect pending their outright abolition at the earliest opportunity.

5. The effect of this is to provide that sellers and estate agents are no longer required to have or to provide copies of HIPs with effect from 21 May 2010.

6. In order to ensure that people selling their homes continue to make an Energy Performance Certificate available to prospective buyers, we have also laid before Parliament the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2010 which introduce a number of new requirements including:

• a new duty on the seller to secure that an energy performance certificate (EPC) has been commissioned before marketing of the property commences where no such certificate is already available
• an EPC has been commissioned when a Domestic Energy Assessor has been instructed to prepare the EPC and the EPC has either been paid for or has given a clear undertaking to pay for it
• a new duty on the person acting on behalf of the seller to be satisfied that an EPC has been commissioned before commencing marketing
• a new duty on both the seller and a person acting on their behalf to make reasonable efforts to secure an EPC within 28 days
• all of the new duties carry fixed penalties where somebody fails in the duty conferred on them by the new regulations

Abolishing Home Information Packs (HIPs) – Facts & Fiction

Despite recent rumours and ill informed articles to the contrary, it is still ‘business as usual’ in the HIP industry – for now at least. Since the new Government confirmed that they planned to scrap HIPs whilst retaining the Energy Performance Certificate (they have no choice in this – it’s required by European Directive), there has been constant talk about if and when the requirement for a Home Information Pack will be abolished.

Elements of the press have been particularly irresponsible, claiming, in The Independent, that ‘HIPs have been scrapped’ whilst ‘Voice of the Industry’ Estate Agent Today have prematurely claimed that an order to suspend HIPs has already been signed.

Whatever the reason for publishing these erroneous articles, the result has been to cause confusion amongst both the property industry and the consumer. The Department for Communities and Local Government (CLG) have confirmed yesterday that a HIP suspension order has NOT been signed, yet the rumours have encouraged some home owners to put off selling their properties and, in some cases, ask their estate agents to break the law by marketing their homes without ordering a HIP.

What is clear, once fact has been separated from fiction, is that until CLG say otherwise, a HIP is still required before the marketing of a property can begin. The Housing Minister, Grant Shapps, has previously explained that the new Government will scrap HIPs after a consultation period, which he expected to take around 100 days. Whether it’s possible to suspend the requirement during this consultation period is not completely clear. The Housing Act 2004 does seem to allow the option, but it is accepted that the clause was included in order to provide an ‘emergency escape’ if HIPs proved to dramatically stall the housing market in the early days after their introduction.

As a recent Office of Fair Trading (OFT) report, (OFT report Home buying and selling – A market study) published in February this year, concludes,

‘it could be argued that HIPs in their current form have a positive impact’ and ‘We do not, therefore, recommend any intervention on this issue at the present time.’

So the OFT, no less, would seem to prevent the use of the suspension clause in the Act, or at least provide the basis for a legal challenge were it used at this late stage.

The HIP industry must accept that the new Government has been consistent, whilst in opposition, in its intention to abolish our livelihoods, and that they will now take steps to carry out their plans. Some of us have planned for this eventuality and started to develop alternative solutions to the current HIP, that offer the real improvements to home buying & selling process that the previous Government failed to realise were achievable. Given the opportunity, we will provide the market driven solutions that the Conservatives claim to support, but any move by the Con/Lib coalition to invoke an immediate suspension will not only stall these entrepreneurially driven improvements, but also cause massive and very real problems for HIP providers and well beyond.

A planned removal of the requirement for a HIP, as reasonably expected given the 100 day consultation we’ve been promised, will allow businesses to wind down or shift the focus of their operations in a structured manner. An immediate suspension, on the other hand, will lead almost instantly to mass redundancy (with its inevitable financial effect on both individuals and the State) and an inability to meet creditor’s payments. Energy Assessors, Search Providers and software firms will be amongst those to find themselves deeply out of pocket, frustratingly at no fault of themselves or even their clients.

It is, of course, just a rumour that an immediate suspension is imminent, and it is surely inconceivable that a new Government would create this type of widespread catastrophe as one of its first acts. Grant Shapps and his colleagues now have an easy decision to make – they can either ruin the lives of thousands of members of our industry, or provide the time and support that will allow us to deliver the market led solutions they accept are required.

Written by Simon Thomas, Managing Director of HIP Matters Ltd and Vice Chairman of the Independent Pack Providers Association.

Scrapping Home Information Packs

The Conservative and Liberal Democrats have published their initial coalition agreement which will be followed in due course by a final coalition agreement.

The Lib-Con Coalition Agreement published makes reference to Energy Performance Certificates and Home Information Packs under section 11 on the environment.

The agreement states;

“Retention of energy performance certificates while scrapping HIPs.”

So what does that mean for Home Information Packs (HIPs) future?

For now it indicates uncertainty and as has been made abundantly clear during the election campaign; uncertainty is rarely good for anyone.

It is of interest that the Home Information Pack reference is not ‘grouped’ together in the agreement with civil liberties and points regarding a repeal bill in section 10. David Cameron mentioned in a pre-election interview that he would put forward a “great repeal bill” soon after being elected.

This would scrap ID cards, home information packs and dozens of rarely enforced criminal offences introduced by Labour over 13 years.

Does this still apply with the new arrangement with the Lib Dems or has its priority and impact been re-evaluated?

The HIPs’ reference is there but its significance, the intention and immediacy to act upon is far from clear.

The past and problems faced by Home Information Packs (HIPs)

Unfortunately, it is a story of vested interests where those opposed have vested interest in the demise and those in favour vested interests in their success. (Yes, we supply HIPs direct, we are not a re-seller so have an interest in their success.)

Those who are anti-HIPs soon gained or already had a good relationship with the Conservatives and this translated into wide spread media dislike for the packs from the outset. The media (uneducated on the subject; the BBC election channel even made factual errors yesterday) ran with the anti-HIP hype which rubbed off on the general public.

From our experience the publics’ initial opposition has massively weakened as they have slowly learned and gained the benefits of the HIP to the point where they are generally widely accepted. With a little explanation most can see the concept is sound even if the implementation has left a lot to be desired.

Whilst ‘people’ have undoubtedly learned about certain aspects of the HIP; the main concept still appears to have been lost and this has got to be acknowledged as a failure by those in support of and promoting the HIP.

The HIP is a vehicle to supply upfront information about a property for sale.

Both pro and anti HIP groups can argue regarding the validity and value of certain documents within a HIP. However, it is hard to disagree that the concept of having information about the biggest purchase of our lives before we are expect to commit to purchase, is ultimately sound.

To suggest we would remove upfront information about other purchases or activities would be deemed an outrage to the rights of consumers.

Imagine…

The food industry saying, ‘Yes, we will provide nutritional information regarding food, but only once you have bought it, or even better once you have eaten it.’

The car industry saying, ‘Of course we will tell you what tax band the vehicle is in and the MPG you can anticipate, but we need you to commit to buying first.’

The local school saying, ‘Yes, there was an OfSted report recently carried out on our school, but before you can read it we need you to enrol your child in our school.’

An appliance retailer saying, ‘Yes, we have the energy rating of this fridge. We will give you details once you have paid at the till.’

The impact if they scrap HIPs

It is likely that property conveyancing costs will rise to pre-HIP levels and the fees that are currently being paid to HIP providers will simply revert to being paid to conveyancers.

We have previously looked at detailed issues relating to scrapping HIPs of which we have yet to see any strategy being put into place to tackle.

Whilst those blinded by the anti-HIP hype and those with vested interests revel in the home information pack being abolished, spare a thought for the thousands who will lose their jobs. It is estimated there are approximately 10,000 directly or indirectly involved in the industry.

It will most likely give rise to companies and individuals who have invested large amounts of time and money to seek compensation from the government.

So should I still buy a HIP?

We discussed whether the Conservative Home Information Pack policy would stall the property market? back in December 2009 and gained a response from the then shadow housing minister Grant Shapps on how he would consult on Home Information Pack Policy. However, the response was far from conclusive and further answers were not forth coming.

All we can say is at present, a home information pack is still legally required to market your home for sale. Whether this will be the case tomorrow, a months time, six months time or in four years time it is hard to say.

Should I wait to sell my house and save the HIP costs?

That really is a decision you will need to make yourself though you should consider…

… by not selling now when I want to and saving HIP fees …

• will I pay more for conveyancing ?
• will VAT go up ?
• will the cost of the house I would like to buy have increased therefore the cost to change will have increased?
• will stamp duty fees rise?

Waiting to enter the property market until the government scrap HIPs  may prove to be a false economy. You could also question putting your life on hold for a few hundred pounds when you consider other related costs in the buying and selling process.

If Lib-Con coalition scrap Home Information Packs what next?

Again, there is no answer at present though the home buying and selling process has never been deemed ‘acceptable’ and is likely to receive another review if HIPs are completely scrapped and not adapted.

If this is the case expect the anti-HIP parties to step forward again to protect and promote their vested interests and a ‘new sellers pack’ to come to the forefront.

It has been rumoured TV star Kirsty Allsopp will be prominent as an adviser to the new government though it is yet to be confirmed if Nick Clegg would actually prefer Phil Spencer.

How quickly can they scrap HIPs?

Unfortunately for everyone involved in the industry or considering buying or selling it is unclear. There is lot of  speculation in regard to what is legally possible and what process is required to suspend or scrap the HIP.

The speculation ranges from immediate suspension to previous statements that the intention would be to hold a consultation before any changes would be made.

With the country in an apparent reported state of financial and economic fragility and the challenges which are undoubtedly ahead; it does raise the question of whether those closely monitoring the HIP’s future are being too insular. Would the Home Information Pack be a high priority if you were the new Prime Minister?

Time will tell, though indecision and uncertainty on the issue does not seem a good environment which would be allowed to form and foster.

Non HIP Compliant Local Authority Searches

IPSA have today released a list of Local Authorities that they are advising members NOT to buy official searches from, to ensure Home Information Pack compliance.

The following statement has been made and supplied to us by IPSA:

IPSA is in receipt of a number of Local Authority Searches compiled and sold by the following Local Authorities and Water Companies to consumers which contain elements which are not HIP compliant under Schedule 6 of the Home Information Pack Regulations. Members producing HIPs should not include searches in a HIP, from any supplier named on the following list:

Wakefield
Leeds
Hambleton
Wirral
Wiltshire
Cheshire West and Chester
North West Leicestershire
Birmingham
Leicester
Brent
Warwick
Coventry
Redbridge
Harrow
Knowsley
Greenwich
Kensington & Chelsea
Welsh Water

Each of the Local Authorities has also received a Freedom of Information request.

The requests are all the same.

“How many searches have been completed since the introduction of the Home Information Pack regulations to the date of this request?”

The figures plus the uninsured figures from yesterday’s release will start to give a clearer picture of how little the consumer has been protected.

IPSA members comply with the law and conduct business activities inline with our strong code of ethics.

For our members’ clients the IPSA Code logo delivers piece of mind.

We will be following this development closely and will update you as and when we receive more information.

Mike Ockenden (AHIPP) interview – the future of HIPs

Welcome to Mike Ockenden, Chairman of the Association of Home Information Pack Providers (AHIPP) who has kindly agreed to spread a bit of light on how he sees the past and future of all things HIP related.

Q 1. – What one area has the Home Information Pack positively changed and which area do wish had been different and/or improved?

A. – HIPs have positively changed a number of areas of the homebuying and selling process, but if I had to pick one it would be the improved speed at which transactions get to exchange of contracts because of the pack. Data released by Connells in September 2009 showed that vendors with HIPs exchanged contracts on their property on average seven calendar days faster than those without a Home Information Pack.

Q 2. – It is quite widely read that Grant Shapps has pledged; time and time again to scrap HIPs, if as it appears is likely that the Conservatives win the next election. Do you think the Tories will definitely scrap hips or in reality alter and re-brand them?

A. – There is a great opportunity to create a genuinely sustainable alternative to HIPs that will not require the complete unraveling of the existing legislation and industry infrastructure but will rather be built on enabling the British public to have a faster and more efficient house-buying process. AHIPP hopes to work with the Conservatives to re-package HIPs and thus achieve this goal.

Q 3. – AHIPP seems to have softened their stance towards Grant Shapps, is that because he is listening to you now?

A. – AHIPP values the relationship with Grant Shapps and his office which we have always seen as positive and constructive. We wish to continue the dialogue over the coming weeks and months and hope to work with the Conservatives to create a genuinely sustainable alternative to HIPs.

Q 4. – If the Tories carry out their promise to scrap HIPs, what timescale will this involve, are they able to suspend them first with legislation already in place? If so, how long will that take and would suspension need to go through the House of Lords where the Tories would be in the minority?

A. – Whilst the power exists for the Secretary of State to suspend the HIP duties the recast of the EPBD, that will be signed off in December 2009 by the European Council of Ministers, complicates matters. As previously mentioned, AHIPP hopes to work with the Conservatives to create a sustainable alternative to HIPs that will not require a complete unravelling of the existing legislation. To move to a situation where no replacement or alternative is in place would be a retrograde and unacceptable step in efforts to reform the process of buying and selling homes.

Q 5. – With rising un-employment figures, scrapping HIPs would no doubt increase that number, do you have an estimate of the number of people involved in the established Home Information Pack industry?

A. – The UK HIP industry is worth over £300 million and employs over 10,000 people either directly or through the provision of the constituent parts. Clearly a lot of jobs would be at risk.

Q 6. – With Grant Shapps’ pledge to scrap HIPs how many of those at risk of un-employment due to this pledge can you see voting conservative?

A. – I can’t comment on individual cases but it is worth noting that scrapping HIPs will not only affect HIP providers, but all those organisations which currently provide services and products to HIP providers. The destruction of the HIP industry will impact on solicitors, estate agents, printers, IT services suppliers, and marketing companies, in addition to those who directly provide HIP elements such as search agents and energy assessors.

Q 7. – Are HIPs the ‘perfect’ solution to the system prior to HIPs being introduced. What do you see being the best way forward for HIPs, what changes do you see improving the HIP if any?

A. – We must be open and honest about the introduction of Home Information Packs and recognise that they have not achieved everything they set out to do. Their introduction was far from perfect and they have not delivered everything that was hoped. Lessons need to be learned from our experiences, both positive and negative, to inform the next stage of reform.

Going forward, AHIPP would like to work with the Conservatives to develop a viable way forward that is to the benefit of consumers, building on exchange ready HIPs and Energy Performance Certificates, and to ensure providers adhere to the highest standards in providing services to consumers.

Q 8. – Most know about the historic U-turn in regard to the Home Condition Report (HCR), can you ever see a day when this exact product is included in the HIP or is it more likely we will follow Scotland and use a ‘RICS type’ survey if introduced?

A. – The u-turn over HCRs was one of the biggest disappointments about the bungled introduction of HIPs. There might come a time where the issue is revisited but for the moment we are focused on ensuring that the home buying and selling process is a faster and more certain process for consumers and professionals. We believe that the exchange ready HIP provides the framework for this.

Q 9. – It is widely recognised that there is a massive oversupply of Domestic Energy Assessors (DEA) and Home Inspectors (HI). How do you feel about training providers continuing to train people as Domestic Energy Assessors (DEA)s and Home Inspectors (HI) when some Home Inspectors (HI) have never carried out one Home Condition Report (HCR)?

Domestic Energy Assessors and Home Inspectors are part of an open and free market and as such it is inevitable that access to the necessary training should remain available. Over time we can expect market forces to take effect, leading to a balance of supply and demand with regards to these roles and their place in the wider market. That said there will always be demand for good people.

Q 10. – Should Domestic Energy Assessors (DEA) carrying out EPCs directly for AHIPP members be worried about future payments as HIP providers could be very quickly be in financial distress if HIPs are scrapped?

The abolition of HIPs would clearly have significant and immediate financial consequences for HIP providers. I am however confident that an alternative sustainable product, building on the benefits of the existing HIP, can be developed and will ensure the future of the industry in the UK. It should also be noted that the EPBD recast will require an EPC to be in place prior to marketing a property for sale or rent. HIPs currently provide the only framework to deliver the EPC.

Q 11. – Can you tell us a little about PEPA; some have said possibly quite cynically that PEPA is a way forward for AHIPP members who are going to lose their main income stream and an exit strategy for AHIPP?

The Federation of Property Information Providers (FPIP) brings together the Association of Home Information Pack Providers (AHIPP) and the Council of Property Search Organisations (CoPSO) under one umbrella, recognising the increasing prominence of the role of these industries in serving consumers. The Property and Energy Professionals Association (PEPA) which has recently been formed is focused on the future of energy and condition reporting in the widest sense across both domestic and commercial properties. Its agenda is distinctly different to that of AHIPP. While the member organisations of FPIP will retain their independence and individual management structures, the Federation’s objective will be to strengthen the constituent bodies’ ability to drive forward positive reform and to act as a compelling, effective voice for the sector with Government.

Q 12. -  Looking back it seems to have been quite a rollercoaster for the life so far of the Home Information Pack, did you imagine at the inception it would have been as it has?

A. There is cross industry recognition that HIPs have not achieved everything they set out to do and clearly this is disappointing. What is important now is how we develop the many benefits contained in a HIP and create a new sustainable product that delivers more fully for the consumer going forward.

Q 13. – Mike as Chairman of AHIPP, you have had some very strong opposition to your Pro-HIP beliefs, thoughts and actions; however, whether others agree with your views or not, most people almost universally recognise the good work you have done towards promoting Home Information Packs. What has your biggest achievement been in this regard so far?

A. – I hope that my biggest achievement is yet to come and that my legacy for AHIPP will be to have worked with the Conservatives to create a genuinely sustainable alternative to HIPs.

Q 14. – This time next year will we still have Home Information Packs and what will they look like?

Yes, I believe we will, in the form of a mandatory legal pack (containing an EPC) to be in place prior to marketing. It just might not be called a HIP!