The Government has agreed to a major reform of the widely criticised Home Information Packs. From April, HIPs will be made simpler but more comprehensive, and must be available from the first day a property is marketed.
'HIPs will stay'
Despite widespread criticism of HIPs, they will stay, housing minister Margaret Beckett insisted. "Home Information Packs were introduced to give consumers more information from the outset of that transaction, making the process fairer, faster and more transparent," said the minister. She added that the moves she had now announced would help HIPs to be more effective, by expanding their content and ensuring their immediate availability.
From April, HIPs will include a Property Information Questionnaire (PIQ). These are designed for the house seller to complete easily and for which it should be possible to collect all relevant information in three to five days. Estate agents will still be able to advise potential buyers of properties that are not being actively marketed but are about to go onto the market, without the HIP being available.
The PIQ is intended to give potential buyers sufficient information to decide if they wish to view a property and whether to make an offer. But while the new forms have been designed "to be quick, easy and straightforward for sellers to complete", this has not been the case with the initial HIPs - which were introduced in stages at the end of last year.
Failed HIPs
The Government has admitted that in many instances HIPs have failed consumers. Beckett said that the "take-up of home condition reports has been disappointing", that HIPs have been produced so slowly that buyers making a quick decision may never see a HIP, that sellers may end up paying for HIPs that they never see and that some estate agents are alleged to be using the 28 day period of grace before a HIP is required "to avoid complying with the relevant regulations on marketing properties".
A recent investigation by Birmingham Trading Standards officers revealed further problems with HIPs. Evaluation of six HIPs used by sellers and selected randomly found five of them to be of "unsatisfactory" quality, said the officers. Specifically, the HIPs answered questions "not as far as is known", when the answers were readily available from the local authority. Errors were made about the history of planning consents and in one instance a property was wrongly stated to be outside a conservation area.
The investigation led Birmingham City Council's chair of its public protection committee, Councillor Neil Eustace, to say: "These searches are simply not worth the paper they are written on."
Widespread criticism
Similar criticisms have been made from a variety of sources. Which? has argued that HIPs fail consumers, while a group of industry bodies - including the Royal Institution of Chartered Surveyors (RICS), the National Association of Estate Agents and the Council of Mortgage Lenders - joined together to campaign against them. The Conservative Party says it will abandon HIPs if it wins the next election.
But the latest reforms to the HIPs, which also include increasing the amount of information made available on leases, have been met with guarded support. RICS says it "broadly welcomed" signs that the Government had listened to consumers' concerns. Which? said the move was "welcome", but restated its belief that HIPs "are of limited value to consumers in their current form" and that more needs to be done to improve the way in which homes were bought and sold.
Further change to follow
Alongside the reforms to HIPs, the Government announced the setting up of working groups that are intended to improve the process of buying and selling homes. One group will consider how to make property searches simpler and easier to use. A second working group is to look at market-led solutions to provide consumers with better property condition information, given the low take-up of the home condition report.
Further reform of the housing market is likely to flow from the Office of Fair Trading 'market study' of estate agents and the sale of homes, the announcement of which coincided with that of the reforms to HIPs.
HIPs were introduced last year in only England and Wales. But a similar requirement, called the Home Report, has been in place in Scotland since the beginning of December. The Home Report is simpler than the HIP, containing just three documents - the Single Survey, an Energy Report and a Property Questionnaire.