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HIPs – thorn in the side?

publication date: Jul 10, 2009
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Since their introduction, HIPs have been a thorn in the side of the property business, but estate agents are learning to live with them. On 6 April this year, three significant changes were introduced which brought them right to the top of the agenda for agents:

• the suspension of fi rst day marketing – a HIP must be available to buyers as soon as a property is marketed;
• the inclusion of a Property Information Questionnaire – to be completed by the seller and made available before the property is marketed; and
• the completion of local authority searches, bringing an end to the use of incomplete personal searches.

It’s not surprising, given the time and financial implications of these changes, that many industry experts are still calling for the home grown elements of HIPs to be scrapped. But others, it seems, are warming to the idea – so long as value is added, EPCs are addressed and the Government concedes to finally take advice from the industry.

Of course the majority of agents are only too aware that the new regulations are being flaunted, putting compliant agents at a disadvantage, but as the Government so badly ‘crashed’ the HIPs train when it came on board, HIPs-positive agents are seizing the opportunity to take matters firmly in hand by adding their own value to the HIPs process and ensuring consumers are better informed about the benefits of HIPs. Many, but not all, recognise that there isn’t much point in fighting any more, not until a new government is in power, at least, and that the best way to handle HIPs is to comply and use them as a sales aid.

Peter RollingsPeter Rollings
Managing Director, Marsh and Parsons

“As EPCs are the only thing required under EEC law, I would expect the next government to scrap HIPs but keep the EPC. I don’t believe they add any value to the process that can’t be added by employing a good ‘on-the-ball’ solicitor from day one.”

Miles ShipsideMiles Shipside

“The introduction of first day marketing has created paperwork and some delays to marketing where agents or HIP suppliers systems have been found wanting. However as HIPs were required before April 6th some [agents] are not noticing a major change.

"If the government split the EPC from the HIP and made that part mandatory it would streamline matters in a green way. I suspect a minority of agents are flaunting the law on HIPs but as there is little policing it’s hard to know. The Agent is the responsible person, so the risks to the seller are minimal, other than the fact they may have to find another agent if the ‘law breaker’ agent is barred from practising or cannot pay the fines if caught.

"So are HIPS useful? Few buyers appear interested in the documentation and a HIP would only be better read if it provided a survey, though this brings understandable resistance from sellers and agents. The Local Authority search systems require investment and that might be harder to find in these recessionary times."

Marc GoldbergMarc Goldberg
Head of Residential Sales, Hamptons International

“In the economic downturn, it is vital that consumers receive the best possible service when buying or selling a home. The biggest change from the 6 April HIP revision is that agents will now have to delay marketing properties until they have received the completed HIP, including PIQ.

"Whilst this initial delay in marketing may cause some frustration to begin with, hopefully the extra upfront preparation required will speed up the transaction process. In addition, whilst some agents have previously disregarded HIP requirements, these changes should also help to drive increased monitoring of compliance across the industry”.

Hamptons is running a PR campaign to heighten public awareness of HIPs.

Robert Scott-LeeRobert Scott-Lee
Md, Chancellors

“The introduction of first day marketing has frustrated sellers, who want to progress to the market, and also frustrated buyers who want to know about the new properties we have but cannot tell them about! A useful HIP is difficult to foresee. With management enquiries and searches in disarray there will never be a ‘smooth’ or uniform HIP. Under current rules this just leads to uncertainty with properties being delayed when coming to the market and even withdrawn mid marketing. The Government should split the EPC from the HIP and make that part mandatory but scrap the rest.

“We are committed to following the requirements of HIPs regulations to the letter but remain in the situation where neither buyer nor seller values the HIP as part of the marketing information package. While HIPS can put honest agents at a competitive disadvantage we believe we will demonstrate, to both customers and clients, why a quality agent is needed in the regulated market we work within.

“A scary proportion of agents are flaunting the law on HIPs which can result in fines but more importantly forced withdrawal from market and so missing the key buyer. We have worked hard to ensure we adhere to every element of the regulations but without the government enforcing HIP regulations, and taking action against those that breach the rules, we are left at a competitive disadvantage on the high street.

“Thankfully quality clients do always want a compliant agent so once explained we find most potential clients see the benefit of steering clear of agents who are avoiding the regulations. Currently the disorganisation of Local Authority Searches is putting up the cost of moving for both the seller and buyer – something clearly against the government’s objectives. One would hope Local Authorities are planning to take action as we speak. It is also important to remember that once a sale is agreed any purchaser’s solicitor will use the absence of a HIP as a clear negotiation tool with both timeframe and cost implications to the seller.

Andrew DewarAndrew Dewar
Joint Senior Partner, Curchods

“The introduction of first day marketing has affected the industry with reduced numbers of properties coming on the market and frustrated sellers, who feel they have been robbed of their liberty to sell their property when they wish to. Few buyers ask for HIPs but more buyers’ solicitors are beginning to ask for them.

“One of the problems currently arising is pressure on sellers to renew out-of-date information (mainly searches) as properties are taking so long to sell. For sellers, this means an additional cost attached to selling. Clever buyers are holding guns to sellers’ heads and saying they will withdraw if the sellers don’t agree to pay. This trend will only last during the time it is a buyers’ market, but it is another stress and complication in the process. When one thinks of the Government’s statement at the outset, that HIPs were to make the process of selling and buying less stressful and save wasted costs, it’s a bit of a joke. They could be useful in a fast moving market, but not in current conditions!

“The Government should split the EPC from the HIP and make that part mandatory but scrap the rest. In the main on our patch in Surrey we have few issues with delays in local authority searches but we should also be asking the question why is an EPC for a residential sale valid for three years and yet an identical EPC for a rental is valid for 10 years?

“I’m not able to able to be specific regarding how many agents are flaunting the law on HIPs but on a daily basis, many of our 17 sales offices are encountering properties placed on the market since 6 April being viewed with no HIP in place. Vendors are usually quite happy for this as there is no supposed risk to them, so they don’t care however it could delay a sale if the HIP is late in being created. There is also a danger that “cheap” HIPs may not be compliant, thus creating another delay in waiting to make them so."

Sean PurtillSean Purtill
Proprietor, Ellisons

“HIPs could and should be positive. At the moment they are causing congestion, preventing properties coming into the market for at least two weeks, but HIPs should provide buyers with comprehensive information where everything is ready and all that is needed are some additional enquiries and a mortgage offer.

“By and large, solicitors are not looking at HIPs but rather sticking to old methods and procedures however electronic conveyancing is key to helping the buying and selling process greatly. When all solicitors embrace electronic procedures it will make a big difference to the HIPs process. Indeed, when solicitors have done this and used HIPs effectively we have seen the positive difference it makes. If more properties were on the market the issues regarding HIPs would be less of a problem. Demand is 200 per cent higher than last year but it takes between seven and 14 days to produce a HIP before a property can be marketed. Where we had 200 applicants last Autumn we now have 550. Our clients can see HIPs on line, in a magazine or on file so if HIPs become more fluid, it will boost their appeal.”

Alan Kirkham
Alan Kirkham Estate Agents (part of Fine and Country)

“HIPs are not perfect but they are a great marketing tool and once they get on track they will be very useful to everyone. The concept, of having information available as early as possible, is very sound and it would be a big mistake to go back – we’ve come this far with HIPs and we should carry on. “There are many improvements that can be made to add value to HIPs and make them work as they were intended to – to improve and speed up the transaction process. Problems have arisen because the Government has not taken advice from the industry but had its own ideas on HIPs. We actively promote the HIP when they go to see potential sellers and when we explain the benefits of a HIP to people, focusing on the way the HIP can provide all the information about a property so that buyers can make their decisions and proceed far more quickly, people accept it and we’ve found there is no animosity towards the industry.

"There is a lot the industry can do. Our ‘oven-ready’ HIP is designed to include as much as possible, but we hope eventually to include extra documentation, such as, for this area, a coal board search and an independent property valuation. We have also set up our own highly qualified conveyancing team this April so that the whole chain can be handled in one office, reducing costs for all the buyers and sellers in the chain and cutting the delays and potential for problems.

“People say that buyers should not be able to withdraw from a purchase once committed but that can be very damaging to people who have to withdraw for very good reasons. When a transaction goes on and on for months the chance of changes in circumstance – death, unemployment, divorce etc – is high. The solution is simply to speed up the process so that a sale can be made in days or weeks rather than months. That is what we aim to do.”

Phil TennantPhil Tennant
Regional Director, Hamptons International

“HIPS are useful. Whilst the method and timing of the introduction of HIPs legislation has attracted significant criticism, for the first time the onus is on the vendor to declare exactly what it is that they are selling. Whilst very few buyers have yet cottoned on, it can only be a matter of time before they realise that there is significantly more information available to them than ever before. More information will hopefully lead to fewer assumptions and therefore less stress throughout the conveyancing process.

“A few agents are respecting the rules [regarding the introduction of first day marketing] and in general, there is confusion mixed with denial. Anecdotally, very few agents seem to be observing the new HIP rules, in force since 6 April 2009. We see for sale boards up when the HIP isn’t yet compliant (when the basic HIP has been compiled); applicants talk to us about multiple agency properties where the other agent has “accidentally” mentioned it, before the HIP is back.

“So should the Government split the EPC from the HIP? The EPC is already separate in spirit from the HIP, in that EPCs were brought in to comply with European legislation, whereas HIPs are home-grown. Hopefully, the Government will listen to the feedback and amend the legislation to make HIPs less onerous. One of the original aims was to simplify the sale process – the current legislation is delaying it however; in London, few local authorities seem to be the delaying factor in creating a compliant HIP. In their defence, local authorities were not given much advance warning of the required changes.

“We have already had clients trying to pressurise us to market before the HIP is complete. Whilst Trading Standards have visited some of our branches, we have yet to see any enforcement action taken. There is little risk to the seller – the fines and possible Banning Order relate to the agent.”

Michael O'FlynnMichael O’Flynn
Content Editor,

“It’s a little early to say how the introduction of first day marketing affected the industry. Opponents complain that it will inhibit sellers already reluctant to enter the market and that may well be the case. Our own figures show a fall in the number of properties on the market since April, but don’t necessarily demonstrate a clear correlation between the April change and stock levels, which have declined over the past three months at similar rates:

May -4.8 per cent, April -4.8 per cent and March: -4 per cent. In the current climate, price falls and the reluctance of buyers to commit, or to access finance, are probably as significant an inhibiting factor as HIPs.

“The idea of HIPS itself is not a bad one – clearly the way property is bought and sold creates a lot of stress and uncertainty – but the implementation was botched. The recent PIQ adds an extra level of information which is quite useful, especially to first-time buyers, though from the sellers’ point of view it’s just more bureaucracy to deal with. It may be possible to reform HIPs based on assessment of what’s worked and what hasn’t – either that or come up with reforms that address some of the problems associated with the process of buying and selling property (gazumping).

“When HIPs were launched the EPC was the most substantive part of the Pack, though the recent introduction of PIQs has added more detail. If you’re going to have a Pack then it makes sense to put it all together. That said, the EPC process is far from perfect – it’s not every clever at dealing with period properties, for example, and that needs to be addressed.

"As for HIPs in general – reform based on consultation with the industry and an honest assessment of what’s worked and what hasn’t seems the most sensible way forward, rather than outright abolition. If the seller uses an agent, it is the agent’s responsibility to ensure the property is marketed with a HIP and it is the agent who will be penalised for failing to do this.”