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In defence of HIPS

publication date: Jul 10, 2009
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Mike OckendenA great deal has happened over the last month, particularly on the political scene, where we have witnessed a cabinet reshuffle, resulting in our fourth Housing Minister in two years and much speculation about the future of our current Government and its leader. Despite much political upheaval, Shadow Housing Minister Grant Shapps still took the decision to table an Early Day Motion calling for the suspension of HIPs, which received very limited support from his colleagues. In addition to Mr Shapps’ latest activity, HIPs have also faced numerous other attacks from a select number of organisations and I’d like to set the record straight on a few matters.


Agents’ mark-up on HIPs

Many of you will have seen the recent Channel 4 News investigation, which looked at the HIP prices charged by estate agents to their customers. The programme suggested that the existence of undisclosed commissions meant something underhand was going on, but this is not the case. It’s no secret that HIP providers often supply HIPs to estate agents on a wholesale price basis and that the agent then charges a retail price to the vendor, which may or may not include a mark-up. This practice is no different to any other industry where retailers as it were charge a mark up – it is not underhand, just the nature of commerce! The implication that the retailer’s price can never be higher than the cost of the goods supplied is ridiculous.

Further, consumers are free to shop around for the overall service that suits them best – they don’t have to buy through an agent, they can go direct to a HIP provider if they wish. There are lots of different payment structures and consumers are under no obligation to buy a HIP through their chosen agent. Rarely did the press coverage mention the fact that estate agents become the responsible person at law when they are appointed to sell a property. This comes with duties and responsibilities that put the agent at risk of a fine and even (theoretically) their livelihood. For this reason it is entirely appropriate that estate agents are remunerated in their role as both retailer and responsible person at law.

Through its HIP Code, AHIPP has always been committed to ensuring that the standard of HIP provision among its members is consistently high and provides full protection for consumers. The vast majority of HIP providers subscribe to the Code. The obligations imposed on HIP providers who subscribe to the Code are to inform vendors of the charge for the HIP before it is provided, and to ensure the terms on which the HIP is provided are clear, fair and not misleading.

Another misconception is that HIPs have deterred sellers from entering the market. However, it is clearly inaccurate to say HIPs have had an adverse effect, as mandatory packs have been in place for nearly 18 months. The recent, dramatic slow down is a result of economic factors, not HIPs. In-depth research from one of our members following the changes to First Day Marketing legislation on 6 April conclusively showed that HIPs are not a deterrent to selling a home, with 100 per cent of vendors stating that the need to obtain a pack did not influence their decision to sell. A recent NAEA report showed one in ten agents reported that they believed the number of sellers would double if HIPs were removed; it was pleasing to see that the other 90 per cent of its members were not so deluded!

AHIPP

Looking to the future

AHIPP and its members are working hard to ensure that HIPs do the job they were initially intended to do – provide buyers with more, upfront information and speed up the sales process. The packs have already been considerably improved by the introduction of the Property Information Questionnaire (PIQ), which gives buyers simple, accessible information about the property they are considering buying.

There is no denying that HIPs still have a long way to go but we would now like to take the opportunity to work with both Government and other industry bodies to advance and improve the pack for the benefit of the consumer.


The Association of Home Information Pack Providers represents members in conveyancing, estate agency, search providers and HIP providers. Go to: www.hipassociation.co.uk