Rightmove\'s plans for a scheme that defers payment of Home Information Pack costs until sellers complete on a property means rivals will have to fund HIPs upfront to compete, says Frank Eve
Frank Eve is managing director, Frank Eve Consulting
The development of Home Information Packs is a government-led initiative that should provide greater transparency for the home buying and selling process. It is proposed that HIPs will be mandatory early in 2007 as a result of the Housing Act 2004. As I have explained in previous articles, HIPs are a compilation of various documents that are normally associated with the sale and purchase of a residential property. The contents of a HIP will be defined in regulations being published this year although it is expected that it will include a report on the condition of a property in the shape of a Home Condition Report. From early 2007, a HIP will be needed on a property before marketing begins.
Rightmove, the property portal owned by a consortium of Halifax Property Services, Countrywide and Connells that is believed to be going to an initial public offering for an expected 250m later this year, has decided to build a new business providing HIPs.
The company is making a significant investment in this business. The investment will include enhancements to its existing website application and the building of a new document management and workflow system to support the production of HIPs. In the light of this, it will be expanding its existing field sales force to communicate directly with estate agents and sell the Rightmove HIP service. There will also be new premises to incorporate its customer services and operational staff.
But the big news is that it has agreed a scheme for the sellers to defer the cost of a HIP so they won’t have to pay for it until they complete on the property. This is important and ensures the market has a sustainable option rather than having to pay for a HIP upfront. It also sends a message to competitors that HIPs will also have to be funded upfront by anyone trying to compete with the Rightmove service.
Agents will order the HIP from the website application and will be able to view progress from order to delivery. Rightmove is developing its systems to ensure HIPs are easily accessible and handled by legal advisers once buyers and sellers are ready to proceed. And it has secured a significant number of surveyors who will be trained as home inspectors, ensuring it has access to sufficient capacity in the market.
HIPs will be the single biggest change to the home buying and selling process in England and Wales and have implications for the mortgage industry. The data collected in the HIP process when integrated with other market and house price data could provide the basis for an instant automated valuation that could be used in the mortgage process. If this is combined with the online decision tools of lenders an instant offer can also be provided to buyers at the point-of-sale. This would put a distinct advantage in the hands of those companies that control the point-of-sale. I will be commenting on the progress of the automated valuation service next week. So watch this space.