Sunday Mail Article Supports the Retention of the Home Information Pack

It was refreshing to read in the Sunday Mail an article by their Property Correspondent Mark Anstead - ‘HIPs don’t need replacing’ that supports the retention of the Home Information Pack.

In the article Mr Anstead asks the question that in dumping the HIP but retaining the energy performance certificate, is the Conservative Party keeping the ‘best bit’. He argues that it is the EPC that costs most of the money and takes up most of the time.

He adds that the other information in the HIP in contrast to that contained within the EPC is ‘extremely useful’ pointing to the content that helps the seller actually know whether the seller owns the house and where the boundaries lie.

He ends the article by concluding ‘HIPs would be a good idea but for the farce that is an Energy Performance Certificate’

Though I do not agree with what he says about the EPC, it is good to see an article of this type appearing in a paper that has for some time taken great delight on knocking the HIP and supporting the misguided intentions of Grant Shapps.

Is Grant Shapps advocating the abolition of the principle of 'Buyer Beware'?

The latest nonsense to emerge on Home Information Packs comes in an article in today’s Daily Star.

This time Mr Shapps is wheeled out and asked to comment on the fact there is no obligation on a seller to disclose within a Home Information Pack whether the property to be sold is haunted!

He is quoted to have branded the HIP as “utterly untrustworthy”.

He said: “Home Information Packs aren’t worth the paper they’re written on’’.

“If buyers trust these dodgy dossiers I fear they will be lulled into a false sense of security about the true state of the local neighbourhood and the property.

“Sellers have no incentive to include many types of vital information about a home, making these expensive packs utterly untrustworthy and misleading. The word ‘buyer beware’ should be branded on the front of every Home Information Pack.”

Mr Shapps is at it again! As usual the unsuspecting public is only getting half the story. The HIP can only be as good as the legal framework within which it has to operate. The English system is based on a long and well established legal obligation requiring the buyer, and not the seller, of a property to make all necessary legal and structural checks before committing to buy. It is down to the buyer, and not the seller, to make sure the property is free of legal and structural problems. If the buyer fails to make these checks and ask the right questions then generally the buyer is unable to hold the seller responsible. This principle is known as ‘caveat emptor’.

Indeed this is the very reason why those selling and buying property engage solicitors to advise on these matters.

If Mr Shapps considers HIPs are a waste of time because of this legal requirement then he should stop rattling on about how bad the HIP is and instead concentrate on coming up with measures designed to reform our antiquated home buying and selling process.

Retain and Improve Home Information Packs to Deliver Information on Flood Risks

In a week where we saw Grant Shapps taking central stage in announcing the ‘recycled’ policy of energy refit loans, it was perhaps unfortunate that the real ‘Green’ story of the dreadful floods  that hit Cockermouth and other parts of Cumbria was overshadowed.

It is of course important that we all pull together and do as much as we can to reduce carbon emissions, but we must not forget the importance of making sure that information on the impact of existing climate changes and the prevention of the consequences of those changes are not overlooked.

Floods can not only cause substantial damage to property and land, but they can also as was seen in Cumbria lead to death.

Are we doing enough to inform the public of the risk of flooding and are enough preventative measures being taken to reduce the devastation they cause?

People can check the Environmental Agency Website to see if their property is in a flood plane and can get advice on available preventative measures. If moving home the seller is required to disclose within the Property Information Questionnaire within the Home Information Pack details of any flooding that may have affected the property during the Seller’s occupation and to confirm whether the seller has checked the Environmental Agency Website.

Unfortunately is does not in my view go far enough. Rather than record information on the Seller’s experience, details of this importance should play a far more prominent role in the delivery of information and documents within the Home Information Pack.

The Conservative Party has vowed to ‘bin’ the Home Information Pack. They say (without foundation) it is stalling the property market. They rely, it seems, on information and feedback not from the public, but from estate agents. It’s a shame this short sighted view of Home Information Packs exist as the consumer, as always seems to be the case in these situations, is being deprived of an excellent and ‘ready made’ vehicle for the delivery of upfront environmental information and documents .

The Conservative Party claims to be a ‘green’ minded Party. Well if it is why is it not looking at requiring a seller to include within the Home Information Pack any information it knows about the property relating to flood history, as well as insurance documentation showing that the property is insurable. In the same way as the energy performance certificate is to be used by Grant Shapps’ Party to trigger the ’refit’ loans perhaps the inclusion of this flood information and documents could trigger a similar type loan scheme loan to help the new owner to fund preventative measures.

The energy performance certificate could also be reviewed to include flood data and the threatened energy assessor profession could be deployed to provide information and advice on flooding when carrying out their assessments.

This should all sound like a common sense approach. The problem is that it is difficult to see that an idea of this sort would be welcomed by estate agents as they have it their minds that a property with a flood history written over it before it is placed on the market will be more difficult to sell. I can see the logic of this but the point is missed. Upfront legal and environmental information on a property helps and not hinders sales. If a buyer only finds about the flooding risk after making an offer and getting half way down the legal road to buying and then pulls out, the seller and agent will have not only lost time but also wasted costs.

Including information of this type delivered upfront in a Home Information Pack allows the seller to be totally transparent and to say that although the property has been flooded or could be flooded, it is insurable and better still has preventative measures in place.

Grant Shapps obsession with the Home Information Pack is obstructing and limiting his vision. This combined with heavy reliance on feedback and advice from estate agents only all amounts to bad news for the consumer and could perhaps even begin to influence voting decisions.

Grant Shapps 'Refit' Policy Leaves Energy Assessors Out in the Cold

Grant Shapps’ travelling circus continues to tour and amuse with the announcement today (http://bit.ly/7WH2Bk) of a move to improve the home efficiency of 25 million homes with the view to provide consumers with the benefits of long term energy savings. 

He will say he has agreements in place with Utility companies and high street retailers ( apparently Tesco and Marks and Spencer have already signed up ) who will arrange the so called re-fit of homes calculated at around £6,500 per property.  Under the arrangement the consumer will be able to repay this loan over a 25 year period. The refit will include energy efficient lighting, modern boilers and cavity and loft insulation.

Shapps will add that the scheme would create 70,000 new jobs and a 2.5 billion marketplace. Unfortunately he does not mention the market and the people he intends to destroy in the making of this ill thought out scheme.

Apart from repeating he will be ‘scrapping’ the HIP (as if we do not already know this) there is no mention of the 13,000 domestic energy assessors and home inspectors, nor of how exactly the energy performance certificate fits in, though the detail will no doubt follow later.

More alarmingly the introduction of the energy retailers and the likes of Marks and Spencer must raise serious doubt as to whether responsibility for delivering EPCs will remain with the energy assessors.  It seems logical that the delivery of the EPC will vest with the supplier of the ‘refit’ meaning that the DEA/HI once again with either find employment by one of these companies or be out of work.

It also suggests that if the scheme is successful the need  and market place for future energy performance certificates will reduce.

Strange that in a time when we are all being encouraged to save and not borrow we have a Conservative Party pushing us all down the road of committing to the ‘never, never’.  This just re-enforces my belief that this Party simply can not be trusted .

Consumer Beware of the Dangers of Grant Shapps' Policy on Home Information Packs

Grant Shapps has a habit of only giving the public half the story.  His Party – the Conservatives profess to act in the interests of the consumer and believe that by removing the requirement for a home information pack this will help the consumer to market their home without more quickly and bring about other benefits.

The question is would this actually help the consumer or is it more designed to assist the estate agent who is complaining that the HIP is holding the property market back. I try hard to think of where the consumer will benefit from the removal of the HIP. I agree it will mean that the seller does not have to pay the £200 HIP fee before they place their property on the market, but is there a real saving here or is just a case of changing the stage at which payment is made.

Before the HIP was introduced most consumers once they had marketed their home and received an offer would upon engaging a solicitor be asked to pay an upfront fee to cover what are known as ‘disbursements’.  These include, for instance, the cost of property searches.  It was not uncommon for the seller to be asked for up to £200 as a down payment.  Unlike the post HIP regime, there were no schemes available to defer this upfront cost until completion, meaning the seller was required to find this money and make payment before any work could be undertaken. As this was often a struggle for some no work was undertaken for some time and this led to delay within the chain of transactions. It should also be noted that if the transaction failed this upfront payment would not be refunded.

The other problem that also led to delay and consequential stress was the time it took some solicitors to gather information and documents from the seller that are put into what are known as Solicitor Information Forms.  Sellers are like the majority of us busy people and often struggle to find time to respond to letters and calls from the solicitor. One advantage of the HIP is that all of this time consuming and administrative work is undertaken by the HIP supplier, leaving the solicitor to do what he or she does best - that is to advise on the legal aspects.

The consumer before taking a view on the benefits or otherwise of the HIP needs to know that the cost of the HIP represents no additional expense to the selling and buying process other than the cost of the energy performance certificate of around £40.  In other words the seller and buyer are paying no more to move than they did before the HIP arrived.

In fact the cost of moving since the HIP was introduced has come down meaning that if the Conservatives are elected and the HIP goes we will all be paying more to move home as well as experiencing more delay and stress. From information I have obtained from one national search provider it seems that under a Conservative Government a consumer could be looking at paying £100  to £150 more to move home.

According to Alan Thorogood, Chief Executive of STL Group plc, the average cost of the property searches that we all need to move home has come down by 42% since the introduction of home information packs.  These figures have been obtained by analyzing audits undertaken by the industry trade bodies COPSO and AHIPP and in discussion with a number of local authorities. 

He explains the reason for this:

“The c 40% price reduction since HIPs is largely due to lower fees charged by personal search companies due to a smaller amount of specialist HIP providers commanding high market share.  Lately, competition due to lower transaction volumes and the effect of the April 2009 Charging Regulations have played a significant factor re pricing.  The Charging Regulations introduced the concept of ‘cost recovery’ of local authority data. This has reduced the cost of many council searches and, whilst the cost of local authority data for personal searches has actually increased, personal search prices have not increased significantly due to increased competition pressures’. 

So to recap under Conservative Government the Consumer will, following the abolition of the home information pack, and in the absence of synchronised reform, face the following:

     Increased cost of around £100 to £150 on legal work associated with moving home

·       Delay caused by difficulty in finding the upfront expense solicitors require to progress the transaction, as well as the delay associated with obtaining information and documents from some sellers. 

In addition to this the consumer will also as a result of the delay face once again the risk of having to meet the wasted cost associated with the collapse of a transaction as result of, for example, ‘gazumping’.

I also question whether it is in the best interests of the consumer to let back into the market mainly for the benefit of the estate agent those speculative sellers.  Not only does it increase the risk of the honest and genuine seller having to pick up the expense of a time waster, but it also fuels price increases and leads to the very problem that has got the property market into the fix it currently faces.

So Mr Shapps when will you and your Party come clean and make the public know the downside of your anti-HIP policy?  If you don’t then it will be down to those 10,000 or so people involved in the HIP industry to spread the word and to encourage people to take this into account when casting their vote at the next election.  

Grant Shapps - It's the Same Old Song..........

It’s the same old song! The ‘Mr. Shapps’ policy’ to ‘scrap’ Home Information Packs is once again the headline statement within a Times Online article that appeared yesterday.  Ahead I should add of other Conservative Party housing policy statements on stamp duty and planning!  Clearly according to Mr Shapps less important subjects! 

Should we be surprised?  Probably not as for some reason Mr Shapps has it in his head that this is a vote winner. Concerned that his Party is failing to increase its lead in the Polls, and has actually for the first time lost ground to the Labour Party, he has once gain gone public with a familiar but fast becoming tedious policy statement.

Trotting out that well known and completely unfounded statement that the HIP is fettering the recovery of the housing market, he reports (as if it was he first time he has made mention of it) that estate agents ( the ‘thinking tank’ behind Conservative housing policy ) are telling him that people are being put off from putting their homes on the market by having to pay £300 to £400 for a HIP.

When will this man learn to be honest with the public?  To begin with he should disclose the research that he bases this nonsense upon, as all right minded estate agents and other property professionals know that this is not by any stretch of the imagination the true reason for the slow recovery. Why does he not talk about the lack of credit and the fear of unemployment?  Does he really believe that by getting rid of the HIP he will cure the problem?  If this was the case why Mr Shapps is there not a stronger property market in Northern Ireland where there is no HIP? It does raise quite an important question of does this man really have any understanding of what is actually happening within the property industry and the economy in general?  Has he actually spoken to anybody other than the small group of anti-HIP estate agents?  

If you have nothing new to say on the subject and are not prepared to look beyond a piece of legislation that has helped to reduce the cost of moving home and has laid the basis for reducing further the stress of moving home, please, please could we ask you to refrain from making these unhelpful and misleading statements.

Please could I also ask Mr. Shapps to check with his advisors before he makes statements on the subject of making use of what he refers to as ‘emergency powers’ to get rid of home information packs within ‘weeks’ of being elected.  To begin with there is no statutory provision that will allow him to ‘scrap’  the HIP this quickly and without primary legislation.  He knows this, but seems to be determined to cause havoc within the property market by making statements to this effect.  Surely he must know that by making misleading remarks like this it will actually cause the damage he says his decision is designed to remedy. By hoodwinking the public he could stall the property market at a time when it is becoming stronger by the day.

Perhaps the truth is Mr. Shapps really does not care about the housing market as deep down he knows that this will not be his concern for too long as there is strong speculation that he is destined to be moved over into health. The sooner the better I say!  

Energy Recast Agreed

Agreement on the EPBD recast was reached this week between the EU Commission, Parliament and Council of Ministers. Though not clear, the publication of the recast is expected in December. It is understood that the headline aspects of the agreement are:

• Inclusion of information from the EPC in agents marketing materials;

• Strengthening of standards relating to new build and refurbishment;

• Display requirements for public and private buildings over 500m2 that are frequently visited by the public;

The requirement for EPC details to be included in marketing materials is extremely good news for the HIP industry and perhaps bad news for the Conservative Party given the complications this will cause if Government decides ( and has the time) to implement the agreement before the next election. See my previous article of this subject: http://bit.ly/16IHTx

Once published, Member States will have 2 years within which to incorporate the agreed changes/enhancements.

David Pett: Energy: Home Information Packs: Conservative Party

Home Information Pack - Non Compliance Risk for Solicitors

Are some estate agents exposing conveyancers to the risk of facing a professional negligence claim?

At present, and despite the unfounded perception in certain quarters that Home Information Packs (HIP) are a waste of time, the good news is that most estate agents around the country are adhering too, and complying with the requirements of the Home Information Pack Regulations 2007.

A number of pro-active Trading Standards Departments have upon recent investigation found that overall estate agents are following the law, and that an acceptable percentage of the properties on the market have a home information pack attached. There was however a handful of agents who were found in breach and who were issued with an ‘on the spot’ fine, as well as a warning that they could face OFT investigation and ultimate closure.

The big question however, is whether this level of compliance can be maintained in the light of the political uncertainty hanging over the Home Information Pack. The Conservative Party headed by the Shadow Housing Minister, Grant Shapps, has vowed to make the HIP a number one target if his part is elected Government in May or June of next year. As to why this should be top of the Party’s shopping list given other far more important issues, such as Europe, health and the economy, to name a few, is beside the point, and is perhaps a topic for discussion on another occasion.

The real danger here is that some estate agents may in spring of 2010 decide in the light of the Conservative stance on HIPs, to turn a blind eye to marketing without a HIP believing that as the HIP is close to extinction no one will really care. Could we see the start of a widespread epidemic of non-compliance?

Some say Mr. Shapps unhealthy obsession with the removal of the HIP, may also have the effect of once again stalling the property market. This is a point that has not escaped the eye of one of the major players in the estate agency market, Rightmove. In a recent press release Rightmove was quick to point this out, arguing that the political uncertainty needs to be addressed, and for this to be done sooner rather than later.

As lawyers do we really care? As a lawyer with a conveyancing practice that has thrived on the back of the HIP, I must confess I do. However even though you may not have embraced with open arms the HIP, and the many marketing opportunities it presents, you could still find yourself and your practice affected by non – compliance. Your pockets could be hit with litigation and perhaps also a sharp increase in the already crippling indemnity insurance premium.

It is one thing for a small minority of estate agents to act irresponsibly by taking a risk at flouting the law, but is completely unacceptable for a Conveyancer, and indeed the partners of a law practice, to ignore the requirement upon a seller, and the implications of that requirement, under Section 5 of Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007(2) (EPC Regulations). Regulation 5 sets out a duty on the seller where a building is to be sold, to make available free of charge a valid energy performance certificate to any prospective buyer (a) at the earliest opportunity and (b) in any event before entering into a contract to sell the building…’ There is a further duty in Regulation 5(5) of the EPC Regulations on the seller to ensure that a valid certificate has been given free of charge to the person who ultimately becomes the buyer. Given the majority of all residential EPCs are delivered in a HIP, how many of you or your conveyancing colleagues actually ask the seller’s Conveyancer for the HIP to be produced, and to check to make sure the EPC is available? How may report to the buyer on the results of the EPC? More to the point how many conveyancers have exchanged contracts without first checking that their client has seen the EPC?

Failure to do so, and exchanging without inquiring about an EPC, and ensuring the buyer has seen it, could present grounds for a negligence action. Putting it very simply, and not getting embroiled in the ins and outs of the criteria for a successful professional negligence claim, how would a buyer’s solicitor stand if a client purchased a property without an EPC only to later to find that the energy efficiency rating was so low that if known before exchange this would have led to either a downward re-negotiation of the selling price, or even a decision to withdraw from the purchase?

I consider we should all be checking our filing cabinets just to make sure we have been undertaking this due diligence on behalf of our buyer clients. I just wonder how many potential claims exist and could exist if we do not begin to make sure the seller is complying with the requirements of the EPC Regulations. We should all be speaking to our ‘friendly’ estate agents to make sure they are not marketing without a HIP, and to ensure the HIP including the EPC is produced promptly on an offer being received so that is can checked and a report given on its results to the seller. If they are not then the buyer should be advised to report the failing of the seller and if engaged estate agent to Trading Standards Departments for investigation.

Incidentally, by doing this your client will also be helping to make a significant contribution to the worldwide effort to reduce the level of carbon emissions. A ‘win, win’ situation all round!

David Pett

Solicitor; estate agent; Home Information Packs; Lawyer; legal;Hip2go

Northern Ireland is in need of a HIP

The Conservative Party has in recent weeks made strong representation on the merits of changing the delivery of the Energy Performance Certificate to mirror the Northern Ireland model. In the same set of representations the Conservative Party has sought to justify its obsessive desire to ‘scrap’ the Home Information Pack on the basis of its view that the HIP is limiting the flow of property onto the property market. In this Article I examine the basis of these representations in context of the Northern Ireland experience with the Energy Performance Certificate and how property transactions are fairing in the absence of the Home Information Pack.

Energy Performance Certificates

In a recent communication from Grant Shapps’ Office commenting on the Conservative Party’s latest policy on Energy Performance Certificate, it was stated:

‘Grant recently restated the party’s commitment to retaining Energy Performance Certificates. Under a Conservative government, EPCs would be the only aspect of the Home Information Pack which is retained.

With over a quarter of the country’s carbon emissions deriving from residential housing, Grant and his colleagues are wholeheartedly committed to ensuring a reduction in the environmental impact of our homes and believe that better use of EPCs could help in that regard.

Embroiled as they are in the current HIP regime, EPCs are too often overlooked. Liberating EPCs will mean that a home’s energy efficiency should become a more important aspect of the home buying process.

Under Conservative plans, Energy Performance Certificates would last up to ten years. It is inconsistent that currently an EPC is valid for up to ten years for a rented property, but only three years for a residential sale. We will also allow homes to be advertised and put on the market once an EPC has been commissioned. These rules operate in Northern Ireland and such “first day marketing” provisions were in place in England and Wales before the Government changed the regulations in April 2009; the market has been harmed by Ministers fiddling with the rules yet again’.

The reference to Northern Ireland is interesting and telling as it seems to have been made without any detailed understanding (or indeed research) into the problems Domestic Energy Assessors are facing in obtaining work in a Country where non-compliance in this residential sector is running at level where any environmental benefit is being totally lost.

In a recent survey conducted by the OFT as part of their home buying and selling review there is evidence that suggests non-compliance in Northern Ireland is running at around 45%!

This is a shocking statistic and one that clearly supports the argument advanced by the Pro-HIP lobbyists that without the framework of a HIP or other mandatory information pack there would be a high level of non-compliance in respect of EPCs in England and Wales – in fact about the same level as homes listed for rent.

As recent surveys have demonstrated that approximately 30% of consumers claim to have implemented recommendations in EPCs as part of HIPs, any action that could result in the diminution of their effectiveness would be scandalous in terms of carbon emission reductions.

Property Transactions

The Northern Ireland market, now you mention it Mr Shapps, is also helpful to the likes of the Association of Home Information Pack Providers, and other supporters of the objective behind the Home Information Pack, as if the HIP is as the Conservatives claim is one of the major reasons for the stalling of the housing market, why in a Country where there is no HIP,  does the same problem still exist?

At the beginning of 2009 he volume of transactions in Northern Ireland remained low, with just 692 sales during January, February and March. In May 2009 The Housing Executive's Head of Research, Joe Frey wrote: "Difficulties in obtaining mortgage finance continue and, more importantly, rising unemployment and growing economic uncertainty would indicate that first-time buyers will continue to face challenging times’’

The latest University of Ulster Quarterly House Price Index as reported this week showed the average house price in Northern Ireland was £164,017 (€184,339) in the third quarter, a rise on the figure of £158,886 (€178,572) for the second quarter.

The report's authors said: "The recovery in the housing market is still piecemeal’, and commenting on transactions added ‘’... sale transactions, at best, are only a third of the volume expected under normal conditions, suggesting that the market still has some distance to go."

The University research, produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive, is branded as the most authoritative.

Conclusion

The Northern Ireland experience clearly shows that the EPC on its own and without being part of a HIP or some other compulsory delivery of upfront legal documents/information will just not work, and will not just have catastrophic personal consequences for the 13,000 or so Domestic Energy Assessors in this country, but will also be seen as a pathetic attempt by the Conservative Party to address the major problem we face as a country with increasing carbon emissions. Green lobbyists and supporters kindly take note.

Northern Ireland’s property market also tells us what we all know ( well everybody other those within the Conservative Party) that the true reason behind people deciding not to put their property on the market is not the Home Information Pack, but is rather to do with negative equity, the lack of credit, and the fear of unemployment. The anti-HIP lobbyists should stop using the HIP as scapegoat and focus on supporting measures and policies to address these far more serious and fundamental issues.

David Pett


Home information Packs: Energy Performance Certificates: Conservative Party: Grant Shapps: Property: Estate Agents: Domestic Energy Assessors: DEAs: Solicitors

Latest Conservative's Statement of Intent on Home Information Packs and EPCs

Thank you to one of our colleagues for forwarding the latest statement of intent from the Conservative Party on Home Information Packs and EPCs.

As has been case throughout, the information imparted is full of political rhetoric but devoid of much substance.

The note opens with the familiar party political line on HIPS:

‘Conservatives opposed the introduction of Home Information Packs and have maintained a view that HIPs are an unnecessary level of bureaucracy which are failing to make the home buying and selling process easier’.

The question should be asked of where is the evidence on which it can be claimed that the HIP is not making the ‘home buying and selling process easier’? All the evidence I have seen shows the contrary. The principle of upfront information, the same principle of upfront information on which Grant Shapps formulated his Home Buying Review (http://bit.ly/2e6MZn). Surely we must be asking the Conservative Party that despite the evidence to the contrary (some of which comes from the consumers themselves), how do they propose to make the process easier. So easy to knock and criticise, but far more difficult to come up with concrete proposals for reform. Where is the back bone to the Conservative Party’s policy on housing reform?

Mr Shapps’ office then moves on to the old chestnut of the HIP, yes the £199 bundle of legal documents that every seller and buyer required and had to pay for as part of the century old conveyancing system before the HIP was ever conceived, let along introduced, claiming it is acting as a barrier that is preventing speculative sellers from placing their property on the market. He says:

‘Speculative sellers are being put off from putting their homes on the market and those that did go so far as to order a HIP were charged more than £320 million last year with no guarantee that their property would sell’.

This strikes me as a sign of desperation as we now for the first time have a figure attached to the statement. So Mr Shapps how much of that £320 million pounds has actually been lost? Not much I guess. Furthermore, how much of that sum represents a cost saving on the conveyancing charges on the properties sold. As I say above apart from the £40 for the EPC, all of the documents paid for by a seller are documents that the seller would require in any event to proceed with a sale. The Ipso Mori Poll commissioned in the summer showed that 85% of those home sellers surveyed did not see the HIP as a barrier and the 15% who did, still nonetheless paid for a HIP and placed their properties on the market.

This is a highly misleading statement and one that masks the true economic factors that are restricting the flow of property. I am talking here of the fear of unemployment and the lack of credit. Perhaps Mr Shapps would be better off addressing these more fundamental issues rather than picking on what can only be seen as an easy target.

Another question for Mr Shapps is how much money has the consumer saved since the HIP was introduced in terms of conveyancing fees. Does he realise that the HIP has brought the cost of searches down by one third that has had the effect of reducing quite substantially the cost of selling and buying. By withdrawing the HIP consumers will be required to pay more. A massive ‘own goal’ as I see it.

Mr Shapps then says in a slightly contradictory way that if they are good as we all say then HIPs could continue but as a voluntary pack:

‘Grant’s fully aware of the need to be honest with people whose livelihoods are affected by our decision to scrap HIPs and for that reason I must inform you that a ‘repackaging’ or renaming of HIPs will not be considered. However if, as you say, HIPs are desired by consumers, a voluntary pack could succeed on a market-driven basis’.

So Mr Shapps you are taking away the HIP and despite indications given to the industry of your support for a ready to exchange solution you are now saying that this is also a ‘no goer’ Not sure this can be regarded as ‘honest’. We should all be asking Mr Shapps why he would wish for the Country to return to the pre-HIP system, a system that was last changed back in 1925, when he knows that the system is flawed – it takes too long, it’s too expensive and as recognised in his Home Buyer’s Review it is very stressful. He prides himself, as does his Party, on being a progressive party – not sure how a backward step of this type fits that label.

As for voluntary continuation, he knows full well that will not work. It has not worked with the Law Society’s National Conveyancing Protocol and it will not work with HIPs. To put this in as an option is an insult to the intelligence of professional people.

The response then moves onto EPCs.

His Office says:

‘Grant recently restated the party’s commitment to retaining Energy Performance Certificates. Under a Conservative government, EPCs would be the only aspect of the Home Information Pack which is retained.

With over a quarter of the country’s carbon emissions deriving from residential housing, Grant and his colleagues are wholeheartedly committed to ensuring a reduction in the environmental impact of our homes and believe that better use of EPCs could help in that regard.

Embroiled as they are in the current HIP regime, EPCs are too often overlooked. Liberating EPCs will mean that a home’s energy efficiency should become a more important aspect of the home buying process.

Under Conservative plans, Energy Performance Certificates would last up to ten years. It is inconsistent that currently an EPC is valid for up to ten years for a rented property, but only three years for a residential sale. We will also allow homes to be advertised and put on the market once an EPC has been commissioned. These rules operate in Northern Ireland and such “first day marketing” provisions were in place in England and Wales before the Government changed the regulations in April 2009; the market has been harmed by Ministers fiddling with the rules yet again’.

Well at the very least we seem to have some definitive thinking on how the EPC will operate, thinking that seems to be driven by the recasting of the Energy Directive. So the EPC will need to be ordered before the property is marketed. Interestingly Mr Shapps, in one breath talks about bureaucracy and how this should not be allowed to be a barrier to marketing, and in the next breath, he says a seller will have to order and pay for an EPC before placing a property on the market. So what you are really saying that bureaucracy is oaky when there is an environmental issue involved (and yes it would be bad policy to upset the Green Lobby), but when it comes to adding legal documents that would with or without the HIP be required, it is a different story. As I say this is not about what is best for the consumer, it is about politics and allowing policy formation to be led by the likes of some estate agents who have a vested interest in keeping the existing and antiquated self serving system in place.

Increasing the length of the EPC for domestic to 10 years will clearly have an adverse impact on availability of work and though he says: ‘As part of the Party’s comprehensive energy policy, we have pledged a ‘Green Plan’ scheme to retrofit energy efficiency measures in homes. Domestic Energy Assessors will have an important role in helping deliver these policies’, can we trust a man who’s views on the role of the EPC has changed so much in recent times?

We all need to contact Mr Shapps at collinsti@parliament.uk and ask the questions:

1. Why dismantle an industry and unnecessarily put people out of jobs when it would not take too much for a party that should be supporting businesses to return HIPs to the pre-April transitional rules, allowing a property to placed on the market (in the same way as he is proposing with the EPC) providing the HIP is ordered, and to leave the HIP in place until such times as he and his Party have come up with, and implemented proposals for reform to the home buying and selling process. Tell him that this would address his concern about speculative sellers. Remind him also of David Cameron’s speech at the Party Conference (http://bit.ly/2hrOd8) when he said entrepreneurs would be required to help mend broken Britain.

2. Ask him to see the results of his Home Buyer’s Review that have never been released – point out that if he wishes to be honest and transparent then this should not present a problem.

3. Ask him to produce and publish figures on how much money the HIP has raised for the Public Purse and how will this hole is to be filled when he withdraws the HIP?

4. Ask him to produce and publish figures on the impact of the HIP on the costs of property searches and conveyancing fees.

5. Ask him about how the DEA industry will survive between the withdrawal of the HIP and the introduction of any measures that will provide them with work? This could take years to introduce. Surely by leaving the HIP in place until such time as other revenue streams can be put in place this would be a helpful solution.

David Pett

Speculative Selling and Home Information Packs

One of the arguments advanced by the Anti-HIP lobbyists and the Conservative Party is the Home Information Pack, or rather the cost of the HIP, is preventing the speculative seller from entering the market. Why pay £350 if purchasing your HIP from an estate agent, or under £200 if purchasing from a reputable HIP supplier, when you do not know if you are in fact going to sell?

Personally I believe it is good for the stability and absence of ‘boom and bust’ trends for the speculative seller to be excluded. Furthermore, I do not believe the cost of the HIP is the main reason for a seller deciding not to market. Surely the fear of job loss and the ongoing difficulty of getting a mortgage are far more rational explanations for this purported problem.

Leaving to one side however these political issues, there remains a lack of consumer education on some basic and fundamental aspects of the HIP Regulations. This is mainly down to the failure of front end sellers, such as estate agents.

How many estate agents have taken the bother of reading through the Regulations and Explanatory Notes? How many agents are actually interested in understanding the ‘ins and outs’ of the Regulations? Don’t get me wrong there are a high number of professional agents around who have embraced HIPs and who take the time to speak with the seller and to explain the HIP and its purpose.

In the main however the failure to take the seller through the process and to explain for example how long a HIP is valid for and the instances when a new HIP will be required has led to a cloud of misunderstanding that continues to provide the anti-HIP lobbyists with ammunition.

So let’s try and make it clear. A Home Information Pack is valid for 12 months from the date the seller’s property is first offered for sale. This means the speculative seller can have the reassurance of knowing that if they purchase a HIP, say for £199.00, this expenditure will not be wasted if within a month or two a decision is made to take it off the market providing it is put back, again perhaps to test the market at a later date, within that 12 month period. The property can come on and off as many times as the seller likes providing it is placed back on the market (if it remains the intent to continue marketing) within that 12 month period.

Anti-HIP propaganda gives the impression that it would be necessary to update the content of the HIP such as searches. This is nonsense. Once the HIP is created the content remains valid for so long as the HIP is valid. The searches may become out of date by the time they come into the hands of the buyer, but this is of no consequence to the seller as it will be the buyer who will be required to update. Sellers who are advised to update searches in these circumstances are being given wrong and perhaps negligent advice.

Don’t lose a tear for the buyer as the cost of updating the searches is minimal. In fact some search providers will update for FREE. The Buyer can also take out insurance to extend the life of the existing searches at a cost of £10 or £12.

So the speculative purchaser decides to take the property off the market but later within the 12 months puts it back on. Providing the property remains on the market beyond the 12 month period it still can be taken off and put back on providing that after 12 months the property goes back on within 28 days of an offer for that property being rejected. This can continue to happen indefinitely. A new HIP would only be required if the property does not go back on within that 28 period. Furthermore even after the 12 month period no content within the HIP needs updating. It will as say remain valid for so long as the HIP remains valid.

So in conclusion a speculative purchaser should not be put off from testing the market. Providing these rules are known and adhered too there should be no problem of facing the cost of paying for more than one HIP.

  

A final note.....if some estate agents sincerely believe that it is the HIP that is stifling the property market why, I would ask, do they not offer to meet the cost of the HIP themselves. Surely the benefit of speculative selling that they continue to claim to be an important part of their business, is worth more to them than the cost of a HIP at around £199

Please leave your feedback.

 

What is a ‘ready to exchange’ pack?

The question of what constitutes a ‘ready to exchange’ pack is in a number of respects very similar to the age-old question of how long is a piece of string?

There are so many different definitions within the Home Information Pack community to the extent the true objective of the concept has to a large degree become lost and diluted

In the past week or so we have seen a number of home information pack facilitators come to market with their own versions of a ‘ready to exchange’ pack.

First on the block was Simply HIP with a product that purports to put the home seller in a position to move from offer to exchange of contracts that much quicker. Their ready to exchange pack has all of the mandatory components of the home information pack but with the addition of a general contract of sale, documents referred to within the registered title, guarantees etc, and a certificate stating that in the opinion of Simply HIP the pack is ‘ready to exchange’.

 

The pack however has no additional searches meaning that if there are mining, flood or other environmental issues for example, ultimate responsibility for commissioning these will still rest with the buyer. To that extent perhaps the title of ‘ready to exchange’ still falls short of the true meaning of those words.

Next on the scene was an organization called ‘BOLD’ – Bundle of Legal Documents - that also promotes the concept of ‘ready to exchange’ by urging a seller to engage with a solicitor or regulated home information pack provider and to order before marketing those documents already within the HIP apart from the searches. Again the recognized benefits of ‘ready to exchange’ of speeding up the sale process, reducing the opportunity of ‘guzumping’ and taking the stress out of the sale process, are not truly addressed with this offering.

The idea here is that the ordering of the searches should be left to the buyer. Hold on though – is the ordering and delivery of the searches not one or the main reason for delay? One thing the HIP experience has shown is that a large number of local authorities around the country are not geared up to deliver a quick and efficient service when it comes to property searches.

If one is to build a standard definition of ‘ready to exchange’ it is important to ensure this includes the early ordering of property searches. Without this as a fundamental feature, the whole objective of speeding up the sale process is lost.

 

So back to the question of what constitutes a true ‘ready to exchange’ concept. The truth is that it is perhaps too much too soon to look at a prescribed format for the delivery of documents and information needed by a buyer to enable a seller to put pressure on that buyer to move from offer to exchange within a couple of weeks as opposed to where we are now with a window of around 9 to 10 weeks. Surely the best and perhaps only way forward is to leave the content of the delivery to the judgment of the deliverer of the documents and information whether that person is a solicitor or other facilitator.

So how could this work? I am looking to put my property on the market. Before I can do that I am obliged to engage a solicitor or other regulated facilitator and to order from that supplier all those legal documents and information I will need to ensure that when an offer is made from my home I will be able to put pressure on the buyer to proceed to an early exchange. The obligation would require the information and documents to be delivered within 28 days of first point of marketing and no later than the receipt of offer.

 

The advantage of a non-prescriptive approach is that searches can be selected and ordered in response to specific factors such as location of property. Each transaction is different and needs to be dealt with differently to ensure the true benefits of ‘ready to exchange’ are secured.

This idea also falls within the Conservative Party’s policy-making ideology. They do no like regulation and where regulation is necessary they prefer regulation where the delivery is non prescriptive and relies of the judgment of the deliverer. See my earlier article on Oliver Letwin.

This concept should lend itself to support from stakeholders. Speeding up the time it takes to complete should be good news for estate agents and the National Association of Estate Agents. They will have happier clients and more importantly get their hands on their commission that much quicker. Surveyors may also see it as an opportunity to demonstrate the benefits of including within the delivery a property condition report. RICS already has an offering along these lines. As regards Solicitors and the Law Society - what better way is there than this to try and retain conveyancing services in the face of one of the greatest threats ever presented to the profession, that is the implementation next year of the Legal Services Act.

So in conclusion ‘ready to exchange’ is about delivering the benefits of making legal documents and information on a property to be marketed upfront and available to a prospective buyer. How this is delivered and packaged will I am sure vary, but it is important for there to be present some regulation as with out it there will be no prospect of universal compliance. This is vital as without all parties within a chain of transactions subscribing, the speed of each linked transaction will be very much dependant on the slowest party within it.

Those interested in learning more about how my company proposes to keep pace with the move towards ‘ready to exchange’ and of how we propose to use technology to make the process more interactive with the consumer please contact me at david.pett@hipshomes.com. We will Beta trialing our offering in early December.

The Conservative Party's policy on Home Information Packs - Legal action may be required

This week saw the Negotiator Magazine report on a letter ( a private one!) sent by the Association of Home Information Pack Providers to its members comprising solicitors, estate agents, domestic energy assessors, home inspectors, insurance companies and other home information pack providers. The letter related to legal advice sought on issues surrounding the Conservative’s pledge to ‘scrap’ Hips. The letter was never intended to be made public. It is clear its publication was deliberate stemming no doubt from the same childish mischief that saw the AHIPP video prepared for the Conservative Party Conference being ‘dubbed’ with anti-HIP comments.

I am not sure why the activity of a well organised and funded organisation that has and continues to do all it can to protect the interests of the 10,000 people working within the HIP industry, seems to attract so much attention and in certain quarters, derision. Is it I ask to do with the fact that unlike other trade associations, such as the Law Society and the National Association of Estate Agents, AHIPP in its action and words is beginning to have some impact on the Conservatives and the anti-HIP lobbyists? Is AHIPP beginning to get under their skin?

I also question whether it is proper and correct to belittle their efforts when all they are trying to do is to bring about an outcome that will save thousands of jobs and use the investment and innovation of their members as a spring board for further reform to an antiquated system for buying and selling property.

It is hardly the fault of their members that they are now looking down the barrel of a political gun? Just because HIPs do not fall within the political ideology of the Conservative Party they are facing major uncertainty and the prospect of losing millions and millions of pounds of investment. Does the Conservative Party care? According to Grant Shapps it seems the personal consequences of his Party’s political whim are of no concern. He and his Party have no connection with the loss of employment and investment. Those young people who we and other businesses employ and who are dependent on their jobs in a climate where unemployment runs high, to pay their bills etc, simply do not register on his radar. I made this observation to a local and recently appointed Conservative MP and her reaction was dismissive. She did not seem to care one iota.

The industry has now been up and running for over 2 years. It was established in response to the call from Government. The Government encouraged those in the industry to invest in information technology as well as people so as to ensure its legislation could be implemented and more importantly work. The industry responded accordingly and has despite the recession and other hurdles worked hard to establish successful networks and IT infrastructures. Forget the legal implications for one moment, is it, I ask, morally correct for a Government, albeit a different Government to then change its mind and to then allow an established industry and all those working within it to fall over and crash.

In the same way as RICS stood up to the Government at the time the HIP regulations were first introduced, surely AHIPP should not be viewed as desperate or antagonist just because it is wishes to preserve jobs and investment. Yes self interest, but surely this is what motivates us all to act with passion and focus. Look at the refuge workers in Leeds and the postal workers. Look also a Joanne Lumley and her work with the Gherkas. Her reason for taking up their cause emanated not only from her personal belief that a wrong was being perpetrated but also from a family connection.

There is a general perception that the HIP industry is based on ‘fly by night’ businesses. This is however so far from the truth as it comprises of well intentioned property professionals, such as solicitors, surveyors and energy assessors who really care about their industry and who wish do all they can to preserve their businesses and livelihoods whilst at the same time using this passion to bring about reforms that will benefit the consumer.

These people are also entrepreneurs, the same entrepreneurs that David Cameron referred to in his key note speech at the Conservative Party Conference. He said entrepreneurs would be needed to help repair what he described as ‘broken Britain’. Well Mr Cameron you already have entrepreneurs willing and able to help if your Party is prepared to give them a chance to develop and expand their businesses.

So back to the article in the Negotiator on which surprisingly (or perhaps not so surprisingly) Mr Shapps was available for comment. He stated in response to the news of AHIPP’s decision to seek legal advice:

"Once again AHHIP is leading their members up a garden path by asking them to pay yet more money for pointless legal advice. No legal challenge can successfully trump a manifesto pledge and primary legislation. It's a fact that no parliament can bind a future parliament, and so there will be no legal route to blocking the abolition of HIPs."

To begin with there is no manifesto pledge as yet, and secondly is it not perhaps presumptive (and perhaps bordering on arrogance) to believe Mr Shapps that the Conservative Party will become the next Government. Having seen the legal opinion, and in my capacity as a lawyer with experience in this area (I was part of the legal team involved in the RICS judicial review litigation) Mr Shapps and his legal advisors should proceed with caution. The Industry will not go down without a fight.

Surely the risk of legal embarrassment so soon after being elected (if this turns out to be the case) must be good reason without more (let alone the strong intellectual arguments) to work with the industry and come up with a solution that will maintain the momentum of reform to the home buying and selling process and ensure that the existing industry and the jobs and innovation it provides is kept in place.

There is good and solid legal argument that could make it very difficult for Mr Shapps to implement his political agenda. Surely it would be far better (and safer) for a progressive political party to listen, to engage in intellectual dialogue and not to act solely on the desire to point score.

I know this is political as I was at the Conservative Party Conference. I spoke to at least 25 MPs during my attendance. Much to my annoyance the majority of these politicians did not know what was in a HIP and a fair few number still believed the HIP comprised of a survey of a property!

With so much ignorance and lack of understanding it so important that the industry has an effective trade association and one that is prepared to look at all available options to convey their case and to ensure politics is not allowed to adversely impact on jobs, livelihoods, progressive and intuitive technology, as well as well placed investment. If this means going to Court then so be it.

I call upon those within the industry as well as outside observers to support this industry and to bring further pressure on the Conservative Party to come to the table and to engage and work with the industry to use the existing infrastructure to bring about reforms to the home buying and selling process. Please engage with Mr Shapps and your local Conservative Party MP or prospective MP. Mr Shapps can be e-mailed at: collinsti@parliament.uk Tell Mr Shapps how you entered the industry, the sacrifices you made, the money that you have committed, the feedback that you have received from consumers and what will happen if he goes ahead as he says he will to dismantle the industry. Tell him about the personal consequences. Have your say before it becomes too late. Feel free to copy me in.

Please also email me at david.pett@me.com if you are interested in becoming part of an industry legal action group.