Despite the Government dropping the main plank of its controversial Home Information Packs this week, it still intends to press ahead with the remainder of the scheme. So will HIPs still be the future of the property market? Emma Pinch investigates
The facts and myths surrounding the Government's controversial Home Information Packs are about as frayed and tangled as the wiring in a neglected pre-war prefab.
The one thing for certain is this that they will no longer have to contain a Home Condition Report.
Under the original proposals, as of June 1 next year, anybody selling a property would have to provide a HIP for prospective purchasers which would have contained a home condition check, searches, lease details, a valuation report, terms of sale and an energy efficiency report - all investigations usually performed once an offer is made.
It would have been paid for by the vendor and the house could theoretically be put on the market before it was completed - estimated at 14 days. For every day it was marketed without a HIP pack the vendor would be fined £250.
Currently, the vendor has no legal requirement at all to provide any information or service to the buyer, so the legislation, with or without a Home Condition Report, represents a dramatic shift in responsibility in proving the building sound.
Ever since the HIPs were muted almost a decade ago there has been an avalanche of protest, from home owners to estate agents, surveyors to economists, warning of a housing market meltdown if HIPs in their current form went ahead as planned next summer.
The main concern being that sellers would would think twice about putting their property on the market if they had to fork out at least £1,000 before they even started.
Indeed, a survey by the Warwick-based National Association of Estate Agents found that 73 per cent of respondents would have second thoughts about marketing their property if they had to pay for a HIP. That figure rose to 80 per cent in poorer areas.
However, according to Housing Minister Yvette Cooper - who announced on Tuesday that the Home Condition Report element of the HIP would no longer be mandatory - the real problem was not the potential cost to the vendor and the implications it may have on the housing market, but the reaction of mortgage lenders who said they would not issue mortgages on the strength of a Home Condition Report.
She also added that it was unlikely that enough Home Inspectors would have been sufficiently trained up by the implementation date to meet demand.
Fairly cut and dried then. Well not quite, as HIPs will still come into force next June and vendors will still be legally obliged to provide all the information within them, some of which, including the Energy Efficiency Report, will still need to be assessed by a Home Inspector.
So while the Government has taken the decision to drop the mandatory necessity for a Home Condition Report (HCR), there is a belief in some quarters that in time those selling a house will get one anyway and those doing the buying will demand one.
Mike Ockenden, director general of the Association of Home Information Pack Providers (AHIPP), said: "The fact that HIPs will still happen on June 1 is good news for the consumer.
"It is AHIPP's intention to undertake an early roll-out of HIPs from quarter four this year, including an HCR. It is our firm belief that there will be consumer demand for the HCR and it will become mandatory."
Pack provider Spring Move, whose share price dipped by 20 per cent following Ms Cooper's announcement on Tuesday, said the Government's decision could pave the way for a more competitive industry.
Stephen Foden, chief executive of Spring Move, said: "We believe a market-led roll-out of Home Condition Reports may lead to a much more thriving and competitive marketplace with greater choice for the consumer.
"HIP providers who can provide easy-to-understand Home Condition Reports that significantly affect the time it takes to sell a property will have a unique selling point that should strengthen their proposition.
"It is our belief that specialist HIP providers who offer independent, robust Home Condition Reports, and who can legitimately claim to reduce the time it takes to sell a property, will thrive in the future."
However, according to estate agents, who, lets face it, were going to be the biggest losers if the Government had pushed ahead with its original plans, HIPs are not the answer to the problems of buying and selling houses and HIPs without Home Condition Reports are barely worth the paper they're written on.
Daniel Thomas, who owns The Property Shop in Brierley Hill, Dudley, said: "I am very much in favour of a change in the market as there are fundamental problems but I don't think HIPs are the answer and they have been weakened by the removal of the Home Condition Reports."
He believes that the Government ought to scrap the the whole idea of Home Information Packs, much of the information in which can now be sourced online, and look across the Atlantic for inspiration.
"I would like to see us follow something like the US procedure where a seller makes a statement of disclosure stating what knowledge they have on any defects, bad neighbours, rights of way issues and so on," he explained.
"If a buyer is happy with that then they can make an offer at which point a lock-out period is agreed where the seller promises not to consider further offers and a small deposit, say £1,000, is deposited with a solicitor by both sides.
"It is then that a HIP could come into play with the Energy Efficient Report and so on with much less onus being put on the seller.
"Our main concern was that many people, probably about 20 per cent of the properties we put on, are from people who aren't sure if they want to sell or not. If they had to pay £1,000 up front for HIP then they just wouldn't put their property on the market.
"Now they would just have to pay for the EER which will be anything from £70-120 but nowhere near £1,000. I respect the Government for trying to change things but HIPs are not the answer."
The real problem though, according to Harvey Williams, regional and national housing spokesman for the Royal Institution of Chartered Surveyors, is that most purchasers actually want a good deal more information than is going to be provided in a Home Condition Report anyway.
"What the RICS has supported from day one is a method that speeds up the the length of time between shaking hands and the sale being legally binding because it is during this time that the sale is vulnerable to gazumping or gazundering," he said.
"Even without the Home Condition Report, the HIP will still include various new elements that will be useful to the purchaser but the reality is that nobody ever said that the purchaser couldn't get their own survey even if the Home Condition Report was still part of the HIP.
"And that really is the crux of the issue here when it comes to the Home Condition Reports. While there will be buyers who are happy to proceed with the information in a HCR, there will be very many, particularly on the more expensive properties, who are going to want their own surveyor to carry out a full inspection and that is unlikely to change whether these Home Condition Reports are mandatory or not."
So in the end, according to Chris Bovey, residential conveyancing lawyer at MGF Solicitors in Bromsgrove, it was another good idea that has been over complicated by Whitehall, although he feels there could be some positives to come from the debacle.
"If we treat all house sales as though going to auction, we would have most of the relevant documents such as deeds, searches and planning permission to hand, and this would greatly speed the process," he said. "So some good may come from another proposal never clearly thought through and which saw millions wasted since the Government floated the idea."
Whatever happens, as of June, selling will never be the same again.
QUESTIONS AND ANSWERS
How do I go about getting a HIP?
In the beginning estate agents will guide you though the process and it will probably be procured through them.
I'm a vendor, how much can I expect to pay?
HIPs are expected to vary in price according to the size of the property and to some extent geographical location.
An HIP for a three bedroom detached house in middle England was expected to cost £750-1,000 before the Home Condition Report element was dropped but could still cost up to £600.
When the pack is produced the buyer's solicitor or conveyancer may see gaps and may then commission further searches. In the majority of cases the vendor will pay for these.
I'm a buyer, what must I pay?
You still have to pay the solicitor or conveyancer's fees, stamp duty and the lender's valuation, although the cost would be reduced because part of that is done in the condition check.
How can I be confident a HIP is accurate?
The provider of pack has to make sure it is accurate. Searches are a matter of public record. If the seller chooses to have a Home Condition Report, the home inspector is responsible to the buyer, seller and mortgage lender and if they don't do their job properly the regulatory regime put in place to oversee him or her will withdraw their license if they are not doing their job correctly.
If my house is on the market but hasn't sold by June 1 2007, will I still need to get a HIP?
If it is on the market without a HIP on June 1 you have until October 31 to get one.
If I take my house off the market for a few months, can I use the same HIP when I put it back on?
No, you must pay for a new one.
If my house is on the market for a long time, will I need to get a new HIP done?
You don't have to do another one but if it is quite old a prospective purchaser may ask for it to be updated.