Home improvements packs, or ‘Hips’, were due to be introduced next May – not any more. While the Government haven’t actually scrapped Hips, they have decided not to let them go ahead in their full form and to introduce “half-Hips” instead. Vendors will still have to provide legal documents and an energy report detailing the energy efficiency of a property, but will no longer be obliged to provide a survey or “home condition report”(HCR). This has brought the cost of Hips down from around £1,000 to £200-£400 for sellers.
Half-Hips: reasons for the rethink
So what’s the thinking behind this U-turn? The official Government line is that a lack of qualified housing inspectors to carry out surveys is the real reason behind the downgrading. “But it is widely believed the Government has bowed to fears that Hips could distort the housing market,” says the FT. This is because many lenders and estate agents stoke fears that a glut of properties would come on the market in the run-up to May 2007 as vendors tried to avoid the fees, presaging a housing slump. According to property investment consultancy In2Perspective, “The introduction of Hips (with compulsory HCRs) would have triggered a self-perpetuating downward spiral in prices that could have reduced the value of Britain’s housing stock by a third.”
Half-Hips: what they mean for the consumer
In2Perspective, and others in the property industry, are pretty happy about the U-turn, but consumer groups claim that the concession from the Government is bad for consumers, who would have benefited from increased transparency in the buying process. “This half-baked compromise will result in something of little value, but of real expense to consumers,” Nick Stace of the Consumers Association tells The Sunday Times. Buyers will be vulnerable, “just as they make the biggest purchasing decision of their lives”.
But that’s not necessarily the case; 400 home inspectors are already trained, with another 4,500 on the way. They’ve paid up to £10,000 to become qualified to carry out the reports, which means there is even more competition for a piece of a smaller market than was first envisaged. And competition is always good for the consumer. Clickconveyancing.co.uk is offering to do the energy performance certificate for £100-£150 and legal documents for £150-£200, while Springmove.com says it has a no-sale, no-fee plan. If the vendor fails to sell a property, they won’t charge for the Hip.