The true impact of getting rid of HIPs remains to be seen

14 June 2010

The government’s decision to do away with Home Information Packs on May 21 was a victory for common sense.

The packs, which were introduced in England and Wales in 2007, were designed to speed up the process of buying and selling property while preventing speculative selling.

Whether they achieved their purpose is questionable.

The concensus of public opinion seems to be that HIPs actually slowed down the process of buying a home, while from an industry perspective the packs could have prevented desperately needed speculative sellers making a move when market conditions took a turn for the worse.

Some would-be sellers suggested the cost of the pack, which was usually a few hundred pounds and sometimes free through estate agents, stopped them putting their homes on the market.

Indeed, speculative sellers became more or less extinct following the introduction of HIPs - one of the original reasons for introducing them.

But when the housing market crashed and there was a need for more speculation to help stimulate the sector HIPs had a negative impact on recovery.

In a consistently healthy market HIPs might have been viewed differently. By introducing them at the wrong point in the economic cycle they became something of a millstone around the neck of market recovery.

I’m surprised that a few hundred pounds prevented so many potential sellers marketing their homes

Their suspension should speed up the house selling process as properties can now be marketed straight away.

We are already seeing a greater number of speculative sellers entering the market. Indeed, we received around 30% more instructions in the week after the suspension of HIPs than in the previous one.

More properties will create increased choice and therefore a greater number of buyers will hopefully take the plunge. This is great for estate agents and mortgage providers.

But it was intriguing to witness the rush to market following the suspension. The price of a HIP was fairly low in comparison with other costs associated with moving home and many vendors opted to use free ones anyway.

I’m surprised that a few hundred pounds should have prevented so many potential sellers marketing their homes.

But we should remember that many of these new vendors are likely to be speculative sellers so we may have a lower conversion rate than we have seen in recent months.

Scrapping HIPs is certainly a move in the right direction for the housing market, albeit at the cost of many jobs - estimated at as many as 10,000 by the Association of Home Information Pack Providers.

Meanwhile, Energy Performance Certificates will stay on the scene. Although there is an environmental argument for having these in place I don’t believe they will prevent any consumer buying a home they really want.

Only time will tell the true impact of HIPs’ suspension on the housing market.