The National Association of Estate Agents, the trade association of estate agents, has issued a call this week for the suspension of Home Information Packs. Nothing new here, as the Association has always viewed the HIP as a threat to their members control over the information the HIP presents to a buyer. It’s a shame the Association has taken this stance as a) this is not fully representative of the view of a large number of estate agents, and b) its attention would be better focused on assisting the HIP industry to push for further and long overdue reform to the buying and selling process.
The Chief Executive of NAEA, Bolton King said: "The cost of the packs punishes sellers, while more than three quarters of buyers – 77 per cent - do not consider them before they decide whether to buy a property. During a recession this is an unacceptable situation. The NAEA calls on the Government to immediately suspend HIPs while the UK economy is in recession, and to commit to re-examining their viability once the economy is out of recession."
Interestingly Mr King does not echo the call of Grant Shapps for the ‘scrapping’ of the HIP, and is merely seeking the temporary suspension. The problem with this however is that a suspension would have the same result on industry as a complete cessation. It would die a death overnight. The fact that many estate agents have and continue to make a decent income out of HIPs may also be one of the reasons there is not an out and out call for ‘scrapping’.
Mr King in making his plea says over three quarters of people do not consider the HIP before they purchase. How does he know this as in the majority of cases the HIP is passed by the buyer to his or her solicitor who then checks the content and advises. If the solicitor finds on looking at the content there is a problem the seller may be advised to reconsider the sale.
Furthermore, as a HIP is nothing other than a bundle of legal documents with an energy assessment certificate, it is not surprising the buyer has little interest and relies on his or her solicitor to undertake the due diligence.
The statement is also devoid of any real understanding of section 162 of the Housing Act ( giving Government a power to suspend) as this is a power that can only be exercised in exceptional circumstances and one not designed for the purpose Mr King mentions.
Instead of always looking to the HIP as the cause of problems within the housing market Mr King should be advocating changes to the selling and buying process as surely it is in his members’ best interests to see the introduction of improvement in speed and transparency. It was only last month that Ian Tonge, chairman of the NAEA International Committee, stated that our system can "give you time to reflect. But I do think we could have a faster system of commitment."
Those advocating the retention of the HIP consider the HIP presents an excellent vehicle to bring about reform of this type and to bring about benefits for the consumer in terms of less cost and more importantly, stress.
Perhaps Mr King’s statement was designed to deflect attention away from his own industry given the article in this week’s Times Newspaper in which Estate agents were accused of boosting profits by strong-arming potential buyers into using in-house mortgage services, leaving customers thousands of pounds worse off.
It was reported: ‘Evidence has emerged that buyers are being pressured into taking additional services that earn agency staff commission payments’.
The report disclosed that a consumer survey prepared for the OFT found that one homebuyer in 20 who had taken a mortgage from an estate agent had been told he or she had to do so to secure the purchase.
The HIP is not perfect. It does however provide a buyer with information that would not otherwise be provided by an estate agent, as well as helping to speed up the selling and buying process once an offer is accepted.
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