HIP critics are misleading homebuyers

Critics of Home Information Packs (HIPs) were yesterday accused by pack providers of being "irresponsible" and misleading the public by turning their introduction next June into a political football.

The Association of Home Information Pack Providers (AHIPP) said that consumers were being subjected to a "series of factless news reports designed to instil doubt and panic in their minds."

The Association said that an anti-HIP campaign launched by the Conservative party on Wednesday "used vacuous and misinformed celebrities with their own agenda and businesses selling property that would not benefit from a more transparent buying and selling process."

In a press release, AHIPP issued a list of "seven lies" and "seven facts" surrounding the sellers' packs:

AHIPP'S SEVEN LIES PUT AROUND BY THE ANTI LOBBY ABOUT HIPS

1. It will cost at least £1,000 and have to be paid up front by the seller.

Market forces will dictate the ultimate price but the industry estimates the packs will cost £700 - most of this money is already spent by buyers compiling searches and legal documents. The Home Condition Report (HCR) is expected to account for £350 of the total cost and will be paid for by the seller - after the house has been sold. Industry experts have further calculated that packs will be cost neutral across the market.

2. The Home Condition Report (HCR) falls short of a full building survey.

It is not a survey which is subjective and relies on the opinion of the surveyor. This is a condition report which is objective and will rate the condition of a house - from walls, windows, chimney stacks - indeed everything that relates to the state of a property.

3. The HIP will go out of date after six months.

There is no shelf life for packs but the HCR and searches must be no more than three months old when marketing begins. Just as now - sellers might want to refresh their searches if a property fails to sell for any longer period of time.

4. Transactions will fall as a result of the introduction of HIPs in June 2007 by up to 25%.

House sales have fluctuated widely over the last fifteen years, the lowest number being 1.2 million and the highest being 1.8 million, and it hasn’t resulted in high unemployment or a loss in confidence in the market. Industry experts expect transactions to actually increase over time as sellers have more confidence in the homebuying process.

5. HIPs won’t identify risk of natural subsidence.

Untrue. The Home Inspector will check for movement of soil caused by weather conditions or by a tree’s roots. Further, environmental searches are authorised documents and are likely to be provided by many pack providers.

6. There will be no assessment of electrical faults.

Wrong. The Home Inspector will look at the state of the wiring, switches and electrical boards and will recommend more detailed reports as appropriate.

7. Buyers will not trust the Home Condition Report paid for by the seller.

The HCR will be conducted by a fully qualified Home Inspector who has a statuary responsibility to the seller, buyer and mortgage lender alike.

AHIPP'S SEVEN FACTS ABOUT HIPS

FACT 1

First time buyers, the most vulnerable, inexperienced and cash-stretched buyer will benefit greatly from having information on the condition, running costs and local searches supplied free before committing to the purchase. Consumers have clearly indicated in surveys conducted by Which? and Your Move that they welcome the introduction of HIPs.
 
FACT 2

Aborted sales are currently estimated to cost consumers £1million each day. HIPs will serve to massively reduce the very high rates of transactions that fall through, as well as speed up the time it takes to buy and sell homes.

FACT 3

When the price of a pack is offset with current costs already incurred in buying or selling a property, packs prove cost neutral. Currently one third of the cost of a pack is incurred by buyers and will simply be transferred to sellers. One third of the cost of a pack will be offset by reduced costs currently associated with aborted transactions. One third of the cost of a pack is being spent on existing surveys and various processing fees that will reduce in the post HIP environment.
 
FACT 4

The majority of lenders are intending to use the Home Condition Report alongside computer valuation models as well as traditional valuing techniques that will reduce the overall cost of mortgage valuations to the consumer.

FACT 5

Two thirds of lenders support HIPs and intend to provide packs to existing customers who wish to sell their properties and will also use HIPs to attract new custom.

FACT 6

In a recent survey, around 70% of agents including the leading names Countrywide, Spicerhaart, Reeds Rains and Your Move indicated their intention to provide their customers with packs in advance of June 2007. This is an indication of the level of support for packs within the estate agent community and confirms the view that it is the vocal minority with vested interests that get heard the most.

FACT 7

The Energy Performance Certificates (EPC) will quickly lead to reductions in carbon emissions and will save consumers costs in heating and running their homes