Love them or loathe them, Home Information Packs (Hips) look like they’re here to stay. Designed to make buying a house easier and more transparent, from this month a Hip will need to be available as soon as a property is marketed. But will they speed up the house buying process, as the government hopes? Or are they just another piece of bureaucratic meddling in a property market that’s already out for the count?
Originally mooted by Labour in 1997, Hips, or ‘seller packs’, are a collection of documents containing key information on everything from a house’s energy-efficiency rating to evidence of title. First introduced two years ago, the idea was that they’ll smooth out any potential problems between buyers and sellers, ridding the market of problems such as gazumping and gazundering. That was the theory anyway. But at a cost of about £350 a time, the only people who seem to have benefited so far are the several thousand surveyors who have been trained to issue Hips.
The main problem is that most buyers ignore Hips. According to the National Association of Estate Agents (NAEA), the government’s own statistics show that 77% of people pay no attention to Hips when deciding whether or not to buy a property. In short, they are nothing but an unnecessary headache for the seller, who has to get a Hip before putting a house on the market. And given the plunge in property prices, that’s an extra burden they could do without. “An expensive waste of time is counterproductive at the best of times, but in a housing slump Hips are downright damaging,” Peter Bolton King, CEO of the NAEA tells the BBC.
And things have just got worse. Recent changes mean that what was an annoying, but harmless, document could now open sellers up to legal action. From this month, they must also fill out a Property Information Questionnaire. This contains 30 questions, covering everything from flood risk and fire damage to questions on the property’s council tax band and parking arrangements. “If a purchaser considers your answers to be misleading, they could sue you, without even having committed to buying your house,” says Simon Seaton, a property lawyer on The Daily Telegraph blog.
Politicians hate U-turns, but dumping Hips is one that the government should certainly consider.
A week in the property market
• The FT House Price Index fell for the 13th successive month in March, according to the Financial Times. Prices were down by 0.9% month-on-month in March compared with a 0.8% fall in February. The average price of a home in England and Wales is now £200,086 – down £31,738 (13.4%) since the February 2008 peak of £231,824.
• HSBC is considering selling three properties, including its headquarters in Canary Wharf, London, and offices in Paris and New York, says The Sunday Times. In December, HSBC bought back the Canary Wharf tower from Spanish property group Metrovacesa for £838m, or 25% less than Metrovacesa paid in 2006. The total asking price is £2.7bn, says the paper.
• Office rents in Ho Chi Minh City, the Vietnamese capital, have plunged by up to 50% after overbuilding led to a supply glut. Real-estate firms Cushman & Wakefield, Savills and CB Richard Ellis say rents have fallen from a peak of $70 per square metre in early 2008 to $43 this year, and forecast that they could go as low as $30.
• The housing collapse has left many middle-class homeowners in dire straits, according to Property Portfolio Rescue, which specialises in buying properties from distressed sellers. It says enquiries from homeowners with properties worth more than £500,000 have soared by 220% since last year.
• The National Housing Federation says that the number of new properties built in 2009/2010 could fall by 50% to just 70,000, the lowest level since 1921.