Gold plating is a costly indulgence

The Council of Mortgage Lenders\' historically neutral attitude towards Home Information Packs, by which it has positioned itself as a \"critical friend\" of the initiative, has taken a backward step in recent weeks.

At a recent industry forum CML director-general Michael Coogan described HIPs as a “costly indulgence” and a clear example of “gold plating”, referring to the infrastructure being put in place to support HIPs. So strongly does the CML feel about the way this initiative is going that it has written to the Better Regulation Commission drawing its attention to what it believes is an example of poor implementation of European legislative requirements.

The CML is starting to question if HIPs will improve the home buying process for the average person. It rightly praises other housing initiatives such as e-conveyancing and shared equity schemes but is turning on HIPs for imposing the same sort of blight on the housing market as Stamp Duty. Coogan believes HIPs are being driven only by the need to implement Energy Performance Certificates and, as such, no longer make sense. His plea is for the government to think again.

Many in the industry agree with Coogan and, when you consider the fundamental reforms being made to the conveyancing system by the Land Registry, there are questions about the added benefits HIPs will deliver.

HIPs comprise of three components. The first is a pack of legal documents such as searches and reports on title. Most people simply want their solicitors to vet this paperwork and tell them if there are any problems with the property. The reforms to the conveyancing system will deliver this and more.

The second element of a HIP pack is the EPC. The government has to introduce EPCs before 2009 to comply with European regulation. But EPCs don’t need to be part of HIPs and could be introduced separately.

The third element of HIPs is the now optional Home Condition Report (HCR). HCRs were the contentious part of the original proposals and the government hoped that by making them optional, it would stifle much of the resistance to the packs. How wrong it was.

The optional HCR is one of the most interesting parts of a HIP. If you have a house you want to sell quickly and know there are no problems with it, doesn’t it make sense to spend a few hundred pounds to provide prospective buyers with evidence that they can put an offer in with confidence? Ironically, the one bit of HIPs the government has ditched was their greatest strength.

It will be interesting to follow the debate on HIPs over the coming months. If you’re going to the Mortgage Expo this week, why not come along and join in the debate?