Out of the rubble

Home Information Packs have been delayed and face an uncertain future, but the market could benefit if lawyers learn their lessons, says Richard Barnett

Not too long ago, the government vowed to fight tooth and nail against all attacks from industry bodies, in-cluding a legal challenge from the Royal Institution of Chartered Surveyors, and push for Home Information Packs to be introduced on June 1.

Then, just days before the deadline, Whitehall rolled over and decided to delay their introduction until August 1. However, the packs that could still be introduced will be a far cry from the original, which dates back to New Labour’s general election manifesto in 1997. That is, if it happens at all.

The House of Lords’ select committee’s report on HIPs stated that it “had rarely seen such widespread opposition” to a statutory instrument from major stakeholders.

It was referring to the lobbying from powerful voices including the Law Society, RICS and the Council of Mortgage Lenders, all of which urged the government to postpone HIPs.

These industry bodies said their introduction on June 1 would slow down the house buying process dramatically because of a shortage of energy assessors – a situation exacerbated by councils being unable to handle the expected surge in demand for local searches.

RICS’ application for a judicial review, the damning condemnation of the select committee, the debates in the Commons and the Lords, plus the criticisms from the Law Society and the CML, all combined to put massive pressure on Whitehall.

And the decision by the courts to suspend HIPs’ Energy Performance Certificate component pending the outcome of RICS’ challenge boxed the government into a corner.

We have all been to presentations held by the Office of the Deputy Prime Minister (as was) and the Department of Communities and Local Government (as it is now) telling us that HIPs would speed up the house buying process.

In particular, the DCLG used to bang on about how the packs’ Home Condition Reports would give prospective buyers essential information to allow them to proceed with confidence.

Then what happened? The government dropped the compulsory requirement for HCRs and replaced it with statutory EPCs. Confusion reigned.

It’s no wonder that so many disparate groups came together and said there must be a better way.

It is curious that a representative of the HIP industry recently referred to the bodies counselling caution as ‘the usual suspects’ – one has this picture of RICS, Law Society and CML as subversives, not the adjective normally used to describe these bodies.

And if seasoned professionals in the industry are confused, what must the public think?

However sceptical we might be about HIPs, the delay at least gives us the opportunity to reflect on our pro-cesses, see what positives we can take and, most importantly, how we can pass any benefits onto clients.

First, you can’t really argue against EPCs. They will be useful to buyers and we must become better at energy conservation. However, whether there will be enough assessors to achieve speedy turnarounds at reasonable prices is another matter.

At this stage, we don’t know if the postponement will deter trainee assessors from continuing with their training. The early signs aren’t goodSecond, I hope that HIPs will be sold to customers in a transparent and cost-effective fashion. But I’m concerned that some providers might try to disguise their costs by offering them for free when they are tied in with other services offered at higher prices, or when ownership rests with HIP originators, not consumers.

This would restrict clients’ ability to change estate agents without having to pay hefty fees for the privilege, and they’d have to commission new HIPs with other agents at the same time.

There are better ways to proceed. For example, before the postponement some law firms were set to offer HIPs direct to the public at an all-inclusive price through their websites. Such a system would have seen transparent pricing.

I think that the public deserves a solution to the packs’ legal conundrum. It makes no sense for HIP providers to produce legal packs, only for the exercise to be repeated when clients get as far as conveyancing. In such circumstances, consumers will have to pay twice.

The Law Society had the right idea years ago when it introduced its transaction protocol.

This called for a procedure whereby sellers’ solicitors would prepare full packs containing searches, contracts, replies to enquiries and details of title as soon as they were instructed, en-abling them to proceed im-mediately when the money was in place.

Fantastic, you might think. The only problem was that the protocol was voluntary and sellers’ solicitors baulked at the idea of having to ask clients to pay upfront fees to cover the costs of the searches, so nothing changed.

If it had been universally adopted, there would have been no need for the HIP legal documentation.

The problem we now face is that buyers will receive legal packs in their HIPs and won’t understand them. They will pass them on to their lawyers, who may not accept the information they contain, depending on who prepared them and how old their data is.

But this offers the opportunity for conveyancing lawyers to agree to adopt the spirit of the Law Society’s trans-action protocol in full, not only mirroring HIPs’ requirements but exceeding them.

Their service could include all documents, searches, replies to enquiries, transfer deeds and full title details. Call it HIPs Plus, if you like.

The approach would enable buyers to proceed to exchange and completion as soon as finances (and the practicalities of moving) were finalised. This could happen immediately.

This improved process, coupled with the soon to be introduced e-conveyancing initiative from the Land Registry, would provide a system fit for the electronic age.

In fact, such an approach has al-ready been adopted and used by some conveyancing firms. We have found that it can slash the time taken to reach exchange, but it’s difficult to offer meaningful statistics on the point be-cause so few firms have followed the procedure to date.

But the Law Society could lead this campaign by relaunching the transaction protocol as a badged initiative, which conveyancing lawyers could sign up to and agree to comply with.

They would then be allowed to brand their literature with a kite mark of compliance, which the public would recognise and choose to support once they saw the benefits.

Once such a scheme was in place and shown to be robust, there would be a strong case for the government to excuse sellers from having to provide the legal pack element in HIPs, if they could provide a letter from their conveyancing lawyers indicating that such information would be readily available upon request.

This would prevent any potential duplication of costs and leave the legal pack precisely where it should be – as part of the conveyancing process.

If the government really wants to speed up and improve the home buying process, this is the way to go.

The HIP concept needed to be robust from inception or risk losing credibility with the public and property professionals alike. And it’s impossible for it to recover after such a disastrous start.

The announced delay seems to have been a result of pressure from all corners – delay by a thousand cuts, if you like.

So where do we go from here? There is speculation that Gordon Brown will dump the project as soon as he becomes Prime Minister and start again from scratch.

Those who have invested in what was intended to be a substantial new industry, whether home inspectors, energy assessors or HIP providers, have cause to feel aggrieved, to say the least.

Many of us have spent a lot of money already, and I can see claims being mount-ed by those who have lost out financially.

But on the positive side, I hope that conveyancing soli-citors can come together and establish a HIPs Plus protocol.

If this side of house buying could be speeded up, there would be less pressure on Whitehall to reintroduce the legal pack element in HIPs if they are rolled out in the future.

One thing is certain though. We haven’t heard the last of EPCs.