View more on these topics

Smooth the path to a HIP future

Talk of a property boom and bust around the HIP implementation deadline is wide of the mark – we should instead be trying to smooth the transition for clients, says Chris Rodgers

The stay of execution for Home Information Packs and Energy Performance Certificates on properties put up for sale before June 1 was, I suspect, meant to provide a gentle transition to the new rules.

But the decision will create an artificial spike. The market will see greater activity as home owners try to avoid the June deadline but this will quickly be followed by market depression as prospective sellers face the costs of fixing up their homes and withdraw from the market.

Talk of a property surge is wide of the mark and such a thing is highly unlikely. My experience tells me there will be a slow start with no tidal wave or overnight unmanageable demand peak.

But we should be mindful that slower doesn’t mean slow. On average, two million homes are sold each year so a 10% reduction will still see large volumes of HIPs and EPCs required and the need for a highly trained workforce of inspectors.

The wider effects of EPCs also have to be considered such as on building design and how the UK’s older building stock will fare.

About 90% of the UK’s housing wasn’t built with energy efficiency in mind, so this is another hurdle under the new framework.

The cost of making these homes energy-efficient and consequently marketable could cause further delays as work is undertaken.

Similarly, those properties which are sold without HIPs and EPCs may find themselves categorised as undesirable in a market where buyers will be increasingly energy-focussed.

The debate over how far EPC data will be used in the longer term remains unresolved. Now that energy efficiency will affect achieving the best prices for bricks and mortar, sellers and their estate agents will be looking for lenders that can help.

Green mortgages are already in development and with talk of EPCs influencing Council Tax bandings in the future, financial deals and incentives have never been more timely.

Despite the expected sales slowdown for a few months, there will still be opportunities aplenty for mortgage lenders. Remortgaging, bridging finance and other loan products will all be called upon to unlock capital so home owners can enhance their existing properties, perhaps instead of moving or to prepare them for sale.

Government research reveals that 11% of home owners carry out repairs and improvements to their properties before they sell. So mandating sellers to get EPCs creates an added incentive for environmental and aesthetic improvements. There’s never been more impetus to do this.

With the introduction of EPCs comes the creation of a new job category and a recruitment challenge. It is estimated that from June, between 2,500 and 4,500 energy inspectors will be needed to meet the demand for EPCs – a number which will increase once HIPs and EPCs apply to rented properties too.

Questions have also been raised about how consistency will be ensured and whether energy inspectors will introduce different interpretations of housing standards which could lead to discrepancies when grading homes. Energy inspectors are asked to record, not interpret what they find.

We will be issuing our inspectors with PDAs which provide a series of prompts for them to respond to. For example, inspectors will record key information about the depth of insulation in a roof or the efficiency of a boiler into the PDA, which will then calculate an energy rating.

The result is definitive not interpretive, and this is particularly important to ensure consistency and remove the risk of human error.

The use of technology and newly qualified inspectors will give the industry the tools it needs to deliver consistency and fears of misinterpretation are misplaced.

Consider a job such as being a driving instructor or examiner – there is a lot more scope for misinterpretation and bad judgement than with EPCs. We must have confidence in this framework.

Brokers will be in the frontline for HIPs and EPCs as the first port of call for home owners with queries. There is not enough general awareness of HIPs among home owners and some advisers at present.

This lack of knowledge and understanding makes the forthcoming change even more daunting. A concerted effort is needed to explain why HIPs and EPCs are important, the processes involved and how they affect the selling of properties.

Timely answers will allay the fears of home owners and arm brokers and others in the supply chain with the information they need to ensure this is a positive and efficient change.

We’re already working with many of the country’s main HIPs providers and are in the process of recruiting a national team to meet projected demand. We’ve also met a number of medium to large-sized solicitors’ practices, which are considering inhouse HIP products.

Change is afoot, but with it comes opportunity in terms of growth and revenue. What we know for sure is that months of speculation will soon become reality and we all need to be prepared.

Recommended

Technology to give lenders the edge

In this market, firms need every advantage and communication-enabled business processes can help by reducing errors, speeding up processing and improving service levels, says Frank Eve

Equity release plugged as biggest growth area

Brokers predict equity release will be the biggest specialist growth area in the over the next 10 years, independent research commissioned by BM Solutions reveals.The One Specialist survey asked 200 intermediaries which specialist products they thought had the greatest potential growth for over the next 10 years and 47% of respondents expect this area to […]

Green mortgage hype is a whitewash

Global warming is a worry but government efforts to promote green mortgages are simply going to cause consumers to view financial institutions with cynicism, says Mel Dring

RBS staff held to account

The Royal Bank of Scotland Group has warned its UK staff that they must have their primary bank account with the group or face disciplinary action.

Newsletter

News and expert analysis straight to your inbox

Sign up