Broken HIPs. What lies in store for Home Information Packs?

On 18th July 2006 the government announced that Home Condition Reports were no longer to be a mandatory element of the Home Information Pack. Severn Trent Searches’ Owen Davies takes a look at the aftermath of this bombshell in the property industry.

Where do we go from here? That’s the question on the lips of property professionals across the country. The Government’s decision to make the Home Condition Report (HCR) voluntary has caused mixed reactions throughout the industry with opinions divided and emotion running high.

Rightmove almost instantly pulled the plug on their Home Information Pack business, effectively writing off the £7million they had already invested arguing that “HIPs provision will be more suited to smaller scale local solutions involving agents and their existing solicitor contacts”.

Other potential HIP providers have remained more bullish, insisting that voluntary HCRs will prove popular with consumers, the Association of Home Information Pack Providers commenting that “there is a real will to demonstrate that Home Condition Reports can be made to work on a voluntary basis”.

Whatever you think of these arguments, they are for the future. Where do we stand today? What are the facts?
Home Information Packs are still due to come in on June 1st 2007. The ‘required’ elements of the pack remain the same minus the now voluntary HCR. These elements still need to be available at the point of marketing (although the 14 day period before a property could be marketed without a HIP will not be enforced in the dry run, with many assuming this will continue to be the case come June 1st). One of these elements is the much talked about Energy Performance Certificate (EPC).

Sceptics have long claimed that the concept of HIPs was only ever introduced as a means by which the government could comply with EU environmental legislation, shadow Housing Minister Michael Gove going so far as to compare the government’s insistence on the importance of EPCs to a fig leaf. “It is very small and very green but can’t really cover the minister’s embarrassment”.

Who, then, will conduct these EPCs? Baroness Andrews, in the House of Lords, stated that there would be a significant employment opportunity for Home Inspectors because “properly trained inspectors will be needed to produce energy performance certificates”. The DCLG is estimating that between 2500 and 4500 ‘properly trained inspectors’ will be needed to produce EPCs. The omission of the word ‘home’ from both of these statements implies that this will be an opportunity for the likes of big utility companies to enter the foray. One thing is clear; the potential salaries of Home Inspectors touted about a couple of months ago cannot be matched in the production of EPCs. This may well put off, for example, those Chartered Surveyors whose heads were turned by figures such as £80,000 a year.

So, what of the other ‘required’ elements? Now the HCR is voluntary focus will shift significantly towards the searches industry. In terms of what’s required from search providers very little has changed. The customer will still require fast, accurate, low cost searches. For some local authorities this will raise a number of challenges to be met prior to implementation, not least in the ramifications of the OFT report into the searches industry. Exactly how the government is going to enforce the OFT’s recommendations remains to be seen but with the personal search industry baying for blood, enforce it they will. Ironically this could bring unintended consequences for the personal search industry with the possibility of lower over the counter fees for searches ordered directly from local authorities.

Clearly the Government will be busy amending the Home Information Pack regulations over the next couple of months but during this period they will also be under a lot of pressure to make good on their promise to “invest resources in promoting and developing voluntary take up” of HCRs. There is already talk of pump priming funding to pay for HCRs to be included in the HIP during the dry run this autumn. There are too many large firms with a vested interest in the success of HCRs for them to disappear without a fight. For now though, we must concentrate on what we know, not on speculation. We must take Ruth Kelly at her word that “HIPs are going ahead next June” and assume that this moment on her lips is a lifeline for the HIPs.

If you would like to find out more about Home Information Packs or would like to find out what Severn Trent Searches could offer your firm, just call 0115 9627269 or visit us at www.severntrentsearches.com.

<< Back to Press Releases