A vote of no confidence in HIPs

Recent research shows most conveyancers don\'t think Home Information Packs will work in reality, but strong and consistent political support could still turn things around, says Mark Jarvis

An ongoing legal challenge from the Royal Institution of Chartered Surveyors, a delayed and staggered introduction and a continuous stream of negative media coverage confirm the trends seen in our Home Information Pack tracking re-search over the past year, which reveals an ongoing decline in conveyancers’ confidence in HIPs.

Our most recent survey on the subject revealed that 80% of conveyancers disagreed with the contention that HIPs should make the process of buying and selling easier for home owners – up from 71% 12 months ago.

Some 70% of those polled did not think that HIPs will re-duce the number of failed transactions. And 55% thought they were a good idea in principle but won’t work in practice. The survey was taken before the government’s decision to delay the introduction of HIPs, so sentiment isn’t likely to have improved.

Little wonder then that the House of Lords Merit Committee recently said it had rarely seen such widespread opposition to statutory proposals.

A housing industry that feels it hasn’t been consulted about HIPs will hardly be reassured by Whitehall’s belated recognition that there aren’t enough energy assessors in place to cope with the one million-plus homes sold each year in the UK.

Certainly, government inconsistency has contributed to the problems. For example, the scrapping of Home Condition Reports as a mandatory requirement of the packs led to the withdrawal of support by consu-mer watchdog Which?, previously one of the most influential cheerlead-ers for HIPs.

Despite communities secretary Ruth Kelly’s claims to be acting as a consumer champion against entren-ched producer interests, it would be wrong to blame the problems with the packs on an intransigent industry that is resistant to change.

Sensible reform would have been welcomed, but consultation was cursory and valid points made by the in-dustry on the original proposals were ignored.

The pro-HIP communications campaign backed by the government and the Association of Home Information Pack Providers will continue to be swamped by a relentlessly negative media. However, in the longer term confidence could still be restored by strong political commitment and the consistent application of a practical and clear policy on HIPs.

At the moment we have neither and, of course, by August 1 we will have a new Prime Minister in place, Gordon Brown, who has been noticeably silent on the issue.

The situation would be difficult enough if HIPs were a mi-nor change to a healthy market. On the contrary, this is a major change to an industry that is an important driver of economic growth in the UK and already faces serious concerns over interest rates, debt and affordability. Opponents of HIPs will be quick to seize on the first signs of a slowdown in housing activity.

Such a major change is bound to cause bottlenecks while the market settles down and gets used to the new regime. For example, local authorities already vary in terms of their re-sponse times on searches. Coupled with dozens of new HIP providers with little or no experience coming into the market, it doesn’t take a genius to see the potential for chaos.

On a more positive note, assuming HIPs go ahead, the in-dustry will adapt and solve the teething problems – it has no choice. And the dynamics of the housing market remain in place because people will always need or want to move house.

For the conveyancing industry there could even be a mini-boom during the transition period due to an increase in the number of searches as the two systems cross over.

Initial chaos and confusion is likely to give way to consolidation among HIP providers, many of which are new to the conveyancing market and relatively inexperienced. Will their systems work on the day? Are their staff sufficiently trained?

Some have made heavy capital investment in the infrastructure, processes and staff required for HIPs, which imm-ediately increases the risks. Do they have the financial backing needed to ride out the inevitable early problems? This is particularly true of organisations that budgeted for a June launch, as they will now have to wait until August at the earliest to see some returns.

Conveyancers need to think carefully about who they choose as their HIP provider. It is likely that many will try several providers before settling on one or two preferred suppliers, but a lot of heartache could be saved by preliminary investigation of providers’ credentials.

With less than a week to go before the proposed June launch, the government’s own website, www.hcrregister.com, was unable to search and locate a single energy assessor in Birmingham, Liverpool, Manchester, Leeds, Newcastle or Cardiff.

There’s now more time to complete the necessary training, but it remains unclear how many assess-ors will be ready to go by August and, having witnessed events so far, will now commit to the necessary training and spending.

Once the market is established, consumer choice is likely to boil down to factory conveyancers or the traditional high street route offered through estate agents. Both have their advantages.

Many HIP providers will be looking for bulk deals with conveyancers that will enable them to offer the cost advantages that their business models depend on. The service will need to be price-led, highly processed and call centre and web-driven.

But home buying isn’t just a logical or price-driven purchase. There’s a strong emotional element that will help high street suppliers with their existing sales channels. For many consumers, a personalised service supplemented with the lo-cal knowledge that only comes from being on the spot will prove to be a strong draw.

It’s hard to say which firms will come out on top, but it will be fascinating to watch.

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