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HIPS: Exchange Ready Packs

publication date: Dec 4, 2009
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Grant Shapps’ speech at the Conservative conference opened strongly with his declaration that “HIPs are history under the next Conservative Government”. Most of his speech focused on house building and planning reform but I was encouraged by references to the Conservatives being the progressive party in housing. I am hopeful there will be considered debate on reform of home buying and selling in the coming weeks and months.

AHIPP has always been clear about the need to keep the existing legislative framework in place, at least until such time as there is a suitable alternative or improved product that can be put in its place. Encouragingly, the Conservatives have said they want to support entrepreneurial businesses and innovation – something the industry has clearly demonstrated over the last few years, particularly in the area of technology.

There are around 10,000 people working within the HIP industry which has a value of over £350 million per annum in the current market and makes major contributions to both local and national economies, so will be working with all relevant stakeholders and organisations to ensure the best result for industry and consumers is achieved.

The Conservative Party’s Home-Buying Review suggested that uncertainty for buyers and sellers may be reduced if solicitors could confirm they had necessary documentation to hand and could send out a contract at short notice prior to placing a property on the market. This is exactly what an Exchange Ready Pack (ERP) means, a product that many AHIPP members have been offering in recent months. The ERP is essentially a revised set of information with additional legal documents such as a contract for sale and the completed sellers disclosure forms. The advantage of an ERP over a HIP is that all the documents the conveyancer needs to advise his client and proceed to exchange of contracts are made readily available by the seller shortly after marketing and before an offer is made and accepted. Thus the time between acceptance of offer and exchange of contracts is drastically reduced; on average the exchange of contracts is taking place over 35 days as opposed to the old average of 80 days, clearly demonstrating their worth.

However, it is vital to note that ERPs would simply not work if they were voluntary. The positive impacts simply wouldn’t materialise if one of the parties in a chain of transactions made use of the ERP and another didn’t. The benefits of speed and cost saving would not be delivered as the transaction can only proceed as quickly as the slowest participant. We only need to look at the Law Society’s attempts to introduce a national conveyancing protocol for buying and selling homes in 1985 as an example of a viable scheme that failed to deliver simply because it was based on a voluntary uptake. For any reform to work and have demonstrable benefits, it must apply to all transactions and therefore be mandatory. Anything short of this will be a wasted initiative. We know that the Conservatives have said they aren’t in favour of heavy regulation but we need to look at the extent of effective reform without regulation. Regulation needn’t be burdensome and there is already a legislative framework that can be used to bring about the reform. The beauty of ERPs is they help consumers by helping professionals to do their jobs quicker.

As 2009 is quickly drawing to a close, we are starting to reflect on what has been achieved this year and what more needs to be done in 2010. We have made progress by raising awareness about our concerns over Conservative plans to scrap HIPs, dispelling the myths surrounding HIPs, understanding consumer attitudes and working towards improving the current product, but there is more work to be done. The green issues around the EPC will be of paramount importance after EU approval for the Energy Performance of Buildings Directive (EPBD) recast where there is a general acceptance of the need for upfront information, not least in an industry of 10,000 people, many of whom are young DEAs. The infrastructure is in place for progressive reform of the home buying and selling process but we now need everyone to come together as we develop realistic steps that will best deliver this in 2010.