Home Information Pack trials have started in various areas of the country and these will give the industry feedback on how successful the process will be when it is introduced later this year.
The question for HIP providers is whether consumers will take up the offer of a Home Condition Report even if it’s not mandatory. And for brokers, the question is whether HIPs will affect access to the house purchase market.
Speaking to Peter Ambrose, a director of The Partnership, an independent HIP provider involved in the trials, I learned that he has been pleased by the response but has concerns about the confusion over the packs’ objectives and the geographical spread of the trials.
Although the trials are run independently of the Association of Home Information Pack Providers’ early rollout scheme, to many the two appear to be a single project. So when AHIPP announced an extension to cover new areas it was assumed this included the government’s subsidised scheme, which of course it did not. The areas selected by the government remain limited.
There has been a surprising polarisation when it comes to the sale of HCRs. Some areas have experienced poor uptake but in others it has been 100%. It seems that more than 600 HIPs have been issued with 65% containing HCRs.
This is good news for the industry but is dictated by the fact that the report is free, and firms with interests in making HCRs obligatory are obviously promoting their use.
Ambrose’s main concern is that the government’s area trials are being portrayed as an opportunity to test consumer reaction to HIPs whereas in fact they are purely to test suppliers’ systems. This has provided the anti-HIP lobby with an opportunity to criticise the trials, suggesting that consumers only accept HIPs because they are subsidised. While it is true that subsidies are necessary to generate uptake, as this was not the objective of the trials Ambrose thinks such criticism is unfounded.
Discussions with estate agents reveal that as HCRs are now optional there is less fear about the impact of HIPs on the housing market. Although Strutt & Parker expects the market to be stronger in the first half of the year, overall the impact is less clear.
All the agents Ambrose works with have expressed a desire for documentation to be made available in advance of sales and experienced frustrations with the present system. In that respect, they welcome the introduction of HIPs, albeit with major reservations because a property will not be able to be marketed without one.
The impact on mortgage broking is less clear, although plans to introduce a valuation model for HCRs could mean a shift in responsibility from lenders to home inspectors.
But given that compulsory HCRs are not likely to be introduced for some time, any changes that affect the mortgage broking industry will probably be small. Nevertheless they must be ready.
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