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Hips myths 'perpetrated' in the House of Commons

At least ten myths and inaccuracies about the impact and implementation of Home Information Packs have been perpetrated in the House of Commons, according to a report from the Association of Home Information Pack Providers, (AHIPP).

Home Information Packs (Hips) are already being rolled out and will become compulsory on June 1st next year.

Myth 1 - 30% fewer properties will come to market

In a debate last week the Conservatives indicated that the introduction of Hips will cause up to 30% fewer properties will come to market. But AHIPP said in a report refuting the myths, that this was highly unlikely, as people tend to move for reasons of necessity - for employment, divorce, death and for more or less space. Sentiment certainly affects the market but Hips are likely to have a positive benefit, as they will undoubtedly prevent so many sales falling through. One of AHIPP'S member's who provides voluntary Hips has seen the fall through rate drop from 26% to fewer than 2%. "That is a fact," said AHIPP.

Myth 2 - no shelf life

Myth 2 was that the potential cost of a Hip is made worse because the pack has no shelf life. But AHIPP point out that as packs will substantially speed up the selling and buying process the shelf life of packs and specifically searches and the Home Condition Report is unlikely to be an issue. If these elements need refreshing this can be done speedily and at a marginal extra cost.

Myth 3 - Inspectors cannot be trained before Hips come into operation

The numbers of Home Inspectors who will carry out the Home Condition Report are not there and such people cannot be trained before Hips comes into operation, the House of Commons was told. "Again not true," said AHIPP in its report. There are 4,000 registered future Home Inspectors in training. In addition to this number large surveying companies are all training up their surveyors to become trained and certified Home Inspectors.

The qualification involves an independent exam set by the Awarding Body for the Built Environment. True, there are only around 200 inspectors who have obtained their diploma to date, but this is understandable as there is a limited income stream for Home Inspectors at this stage. There is plenty of time for the remainder to get their qualification by June 2007, said the trade body.

Myths 4 to 6 - The seller will now be hit by an up-front tax of up to £1,000 to buy a Hip.

Myth 4 was that the seller will be hit by an up-front tax cost of £1000. This was really three myths rolled into one. Firstly, said AHIPP, the average freehold hip price is expected to be nearer to £700. Secondly it was not a tax but a very effective use of cost, particularly in the context of the much higher fees and stamp duty which are charged in the buying selling process. Thirdly much of the increased cost to a seller of procuring a Hip will be offset by a reduction in the costs that buyers have to bear. As most sellers are buyers they will get the benefit of this offset. AHIPP also pointed out that sellers will not be asked to pay for the HIP upfront. It will normally come out of the proceeds of the sale of the house.

Myth 7 - Pack will take weeks to prepare on leasehold properties

The House was told it will take weeks or even longer to get a pack together on leasehold properties because managing agents are not incentivised to supply the information. AHIPP points out if obtaining leasehold documents is delayed by managing agents the property can be marketed after 14 days and the remainder of the documentation gathered after the property has been placed on the market.

Myth 8 - Property specialist groups are deeply worried about the implementation

Nearly every interested group in the property market has deep worries about the implementation of the scheme including the CML, The Law Society and the NAEA, the House was told. However, apart from the NAEA, who AHIPS says has had so many different positions on Hips it is difficult to keep up with where they are, the remainder are either positive or have expressed they are neither pro or anti Hip, says the trade group.

CML has asked that the government sets out and meets a timetable for implementation, a position that AHIPP supports. On the point that lenders will still need valuations, AHIPP agrees they probably will but points out valuations are not the same as homebuyers' reports ('surveys' have not been used for a number of years). The HCR will effectively take the place of Homebuyers reports.

Myth 9 - Dry runs won't be impartial

The House was told government's dry run is to be overseen by the Hip providers themselves and so can't be impartial. AHIPP says this is nonsense. The government has announced that its dry run has already begun with 45 organisations taking part as early adopters. Some of these are AHIPP members but others will be rolling out Hips in a more concentrated way in as many as 10 distinct areas of the UK towards the end of the year.

Whilst AHIPP hopes this activity will be supported by government and the results of it may be shared with it, in essence it is totally independent of it.

Myth 10 - home inspectors will be of low quality

Myth 10 was that many home inspectors will be of low quality and have low quality training. AHIPP pointed out the training is extremely rigorous and requires Home Inspectors to provide evidence of competence based on actual inspection of at least 10 properties. The test to a NVQ level 4 questions all aspects of a building's pathology and requires knowledge of how to conduct an energy report and much more. They will be highly regulated and have a duty of care to buyer, seller and lender. On the point presented to the House that home inspector will be required to carry out at least four home surveys a day, AHIPP said that most of the big firms believe that figure will be no more than two homes a day.

It would be useful for such motions in future to be based on facts and the expert views of the industry delivering Hips rather than misinformation, misunderstanding and conjecture, concluded AHIPP.

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