HIPs’ effectiveness could be decided this month

With the effectiveness of Home Information Packs riding on details expected this month, the pressure is on for the government to stick to its timetable and help the industry assess the likely impact of the implementation of the packs.

Over the next month the government will issue business and tech-nical standards, including on complaints and redress, and finalise regulations on the contents of the packs. Baseline research examining the market will also begin and although the results will not be available until October, the industry can expect more information on this during June.

The Council of Mortgage Lenders, which recently described itself as a “critical friend” of HIPs, says that although the timetable is feasible it is challenging and much will depend on the extent of amendments that emerge in the implementation phase. As more information is made available, lenders may have to adjust their systems and there is some concern that events in June could thwart these changes and force them to make amendments.

Since it was first announced that the government would legislate to introduce HIPs the market has been divided over whether they represent a useful resource for consumers or an unnecessary intervention on the part of the government.

Despite criticism from trade bodies, brokers and lenders not to mention its political opposition, the government refuses to back down and is as adamant as ever that not only will HIPs become mandatory in June 2007 but that they will benefit the housing market, its associated businesses and above all consumers.

Now, with a year to go until HIPs are permanently with us, the question is how best the initiative can be implemented to ensure a smooth transition and minimum disruption to the market.

The CML has highlighted two aspects that it feels the government should be paying particularly close attention to. First, it must ensure the market impact assessment being undertaken is robust and second, there must be clear, unambiguous and widely supported criteria for assessing each of the three phases of the dry run.

These tests should prove useful in helping to provide an objective assessment of the relative costs and benefits of HIPs in a politically sensitive environment and the effects of their implementation on the marketplace.

Michael Coogan, director- general of the CML, says: “The government is determined that HIPs will become compulsory in a year’s time. This timescale may be achievable but it is challenging.

“Over the next month the government is due to publish detailed implementation information. Reaction to this will help determine whether any delays are likely.”

The CML will publish its own research on lenders’ valuation practices and the influence that HIPs – and in particular Home Condition Reports – may have during June.

Coogan adds: “Taken together with the impact assessment that the government has announced it is undertaking, this will help us form a clearer view about how HIPs will influence the market. We only expect the full effect of HIPs on the mortgage lending sector to become clear over time, rather than on day one after implementation.”

Meanwhile, research from PMP and Easier2move shows that although 98% of brokers are aware of HIPs, 45% have made no preparations for their introduction.

Unsurprisingly, considering widespread view that the legislation may never be realised, 31% say they are waiting until nearer the time to ready their businesses.

The research also shows most brokers don’t think HIPs will hit their business. Some 53% don’t believe they will boost competition, compared with 35% who are bracing themselves for a battle.