Uncertainty over the UK’s economy and the impact of the credit crunch has meant that the introduction of Home Information Packs (HIPs) across the whole of the UK housing stock was delayed indefinitely.
Officially, the government said that it would be continuing to monitor the market but would not be pushed into making a decision that could have a detrimental effect on home buyers in England and Wales.
However, in an unexpected u-turn last week, it announced that the full roll-out of HIPs for all properties would occur on 14 December.
But just how successful has the roll-out of HIPs been so far? What issues can be identified as potential problems and do these issues have the potential to hamper the imminent roll-out of HIPs across the whole market?
Market slowdown
It does seem that the slowdown in the housing market that many critics predicted would be a consequence of the introduction of HIPs is quickly becoming apparent.
A survey of members conducted by the National Association of Estate Agents (NAEA) showed that 83 per cent of agents have found that requests for market appraisals have dropped since the introduction of HIPs.
According to the survey, when asked about the change in the number of instructions for three or more bedroom properties, 76 per cent stated that they had seen decreases in excess of 10 per cent.
This compares with a much smaller reduction for one or two-bedroom properties with 37 per cent of respondents reporting a drop of more than 10 per cent.
Although these figures do show a clear reduction in the number of houses going on to the market, it would be wrong to suggest that this has been caused by the introduction of HIPs alone.
There are, of course, other financial and economic factors, which have caused the market to slow down. However, the impact of HIPs on an already slowing market could not have come at a worse time
Inspector shortage
There is also a real worry about the shortage of home inspectors in some areas, especially domestic energy assessors. In London, for example, figures indicate that each assessor in the capital will have to visit at least 50 properties a month which does not seem a great deal until you factor in preparation, travel and the filing of the report.
However, the Communities and Local Government insists that it has enough energy assessors on its books. As of 22 August, 3,441 were accredited, and a further 4,561 had passed their exams.
It is crucial that the government works hard to ensure that there are enough fully trained assessors on the road because the success of the Energy Performance Certificate (EPC) could be a key to the HIP’s overall success.
Initially, the introduction of the EPC was seen as merely an add-on to the pack without much substance. Now, with more home owners showing an interest in how to be more energy efficient, and wanting to know more about the energy efficiency of their own home, the EPC is the one part of the HIP which looks to be truly effective.
But the truth is that the EPC is not enough in itself to encourage home owners that HIPs are worthwhile. What is evident is a real lack of interest from home owners about the pack’s content and how it can help the home buying process. This is largely because of the dilution of the contents of the pack.
Previously, the homebuyer’s report was to be a feature of a HIP and although there were concerns about the cost to the home owner, many welcomed the clarity that this type of valuation would provide. What is worrying is that this lack of interest is evident among experienced home owners so is likely to also be felt among those first-time buyers purchasing smaller properties.
Search concern
Another concern is what can be seen as a lack of co-operation from other participants in the HIP process. One provider of HIPs has said that some councils in the UK are imposing restrictions on how many local authority searches they are allowed to do each day.
Local authority searches are, of course, a crucial component of the packs. Most of the searches done by HIP providers are personal searches, rather than the more expensive full searches provided directly by the local authorities.
The HIP provider says that some in the industry suspect councils are worried about the loss of income and are therefore encouraging people to take the full local authority search.
This is a worrying trend and one that needs to be completely eradicated before HIPs are fully rolled out. If the packs are to be successful then all parties need to embrace the changes.
The ‘credit crunch’ really could not have come at a worse time for the implementation of HIPs. However, what the subsequent delay has done is to give the industry time to identify any problems that have emerged since the partial roll-out of HIPs and work to eradicate them before full implementation takes place.
It is disappointing that the government is making the decision to roll out the packs before fully assessing the impact that HIPs have had on the market, so far. Are the packs achieving what the government initially set out to do? If not, then now is the time to ditch them completely, not to roll them out to the entire UK housing market.
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