HIP row continues

Critics of HIPs are deliberating misleading the public by turning their mandatory introduction next June into a political football - Association of Home Information Pack Providers said.

As the trade body representing HIP providers, it has something of a vested interest. However, it maintains consumers are being subjected to baseless news reports ‘designed to instil doubt and panic in their minds’. The Conservatives, it said, ‘have 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’.

Market forces will dictate the ultimate price but the industry estimates the HIPs will cost £700, and most of the cost 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.

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.

It is also untrue that there will be no checks for subsidence. 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.

Home inspector will also look at the state of the wiring, switches and electrical boards and will recommend more detailed reports as appropriate, said AHIPP.

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.

Mike Ockenden, director general of AHIPP said there has been so much misinformation "put out by various people such as the Tory party". Tory opposition to HIPs flies so much in the face of consumer interests; it is difficult to understand the basis for their opposition - unless it is plain politicking, he alleged.

Scapping HIPs would cost consumers over £300m a year and delay the EU directive on Energy Performance which requires that by 2009 every house that goes on the market must have an Energy Performance Certificate (EPC).

AHIPP was responding to the launch of a Conservatives campaign ‘against Labour's dodgy HIPs’.

The party’s claim is that HIPs will cost potential sellers up to £1,000 and that buyers will still have to pay for valuations and surveys anyway.

There has been no proper pilot scheme to test the controversial scheme, and there is currently a shortage of qualified, properly trained home inspectors. Meanwhile economic experts have warned that the packs will depress the number of housing transactions, reduce labour mobility and depress consumer spending, said Shadow Minister for Housing & Planning Michael Gove.

‘The case for this pricey regulation is unravelling week by week as the small print is revealed. HIPs have not even been launched and they are already on their last legs. ‘If people trust these dodgy HIPs, I fear they will be lulled into a false sense of security. If they don't and commission their own survey, costs will be duplicated. Either way, home buyers and sellers will pay the price for this new Government red tape on the housing market’, he said.

A Commons motion opposing the packs has received 129 signatures from across the political spectrum - including Labour and Liberal Democrat MPs.

Meanwhile the Government has responded to research commissioned by mortgage lender GMAC-RFC and conducted by Oxford Economic Forecasting, calling for comprehensive dry run of the HIPs prior to their introduction.

This report reaches conclusions ‘based on unfounded assumptions’, said the Government. ‘The idea that the introduction of HIPs will increase unemployment by 93,000 is simply nonsense. In Denmark, the number of transactions increased when the packs were introduced, rather than fell in the year after the Packs were introduced. The reality is that the level of sales depends on much wider issues in the housing market and wider economy that change over time, such as interest rates and earnings’.