January 2008
Commencement order for homes of less than 3 bedrooms effective from 14 December 2007
Homes aleady on the market without a pack do not yet need one
Packs for leaseholds will not for the time being require all the additional information set out in regualations. A copy of the Lease must be in the pack.
new build homes must have EPC's from april 2008
Marketing can commence without a pack so long as it is commissioned. This relaxation has been extended to end May 2008.
December 2007
23 November Final HIPs Commencement Order laid
22 November Ministerial statement on full roll out of HIPs
22 November Home Information Packs: Housing Market Analysis
20 November NAEA press release on latest survey results
15 November 5794 accredited HI’s/DEA’s
13 November RICS housing survey results published
5 November Daily Telegraph article ‘Buyer’s ignore HIPs’
Until the end of the month, November was quiet with regard to HIPs. The market slow down meant that little of the news focused the pack – the main concern being the effects of the shortfall in recovery on sub prime mortgages in the Surveys published in the Daily Telegraph and other newspapers suggested that buyers were not that interested in the HIP for a property they were buying and that a poor rating in the EPC would not deter them from a property that was in the right location and at the right price. Other surveys confirmed the slow down in the market; figures for new properties going on the market, buyers registering and mortgage application approvals, all indicating that both buyers and sellers were sitting tight.
The figure for accredited HI’s and DEA’s rose to 5794 which, with hindsight signalled the possibility that the final phase would be announced before Christmas – it was also foreshadowed by an AHIPP press release on 16 November suggesting that the government would proceed with an extension to the ‘first day marketing’ relaxation.
And that is exactly what happened on 22 November. From 14 December 2007 all residential properties (that do not come within the exemptions in the current regulations) will require a HIP. The ‘first day marketing ‘relaxation that allows properties to be marketed as soon as a HIP has been commissioned is to be extended for a further six months until 30 June 2008. In addition the government has acknowledged that delays and cost in obtaining leasehold information may be encountered and so it will be amending the current HIP regulations to reduce the additional ‘required’ documents/information for a leasehold property to just a copy of the lease. Whether this is a provisional relaxation of wider concession is yet to be seen.
A government funded research paper ‘Home Information Packs :Housing Market Analysis was published with the announcement of the final phase for HIPs.
This suggests that HIPs have had no effect on current market conditions and that the full roll out should not be affected by the impact so far. At the date of preparing this update the Commencement Order has not yet been publsihed so the actual wording remains to be considered as do the proposed amendments to the HIP (No 2) Regulations.
November update
17 October 2007 RICS Building Cost Information Service publishes report on EPC’s
16 October House of Commons debate on HIPs
15 October HIPAG launches HIPS2Xchange
12 October RICS announces the Carsberg Review of Residential Property
No ‘Drop dead date’ announcement by government
The RICS Building Cost Information Service research has found that the EPC will not produce the benefits for buyers that had made the EPC the poster boy for HIPs. RICS says that home improvements recommended in the EPC as a means of both saving energy and saving costs will actually take years to recoup the initial outlay in reduced energy bills. By way of example, RICS says that solar panels cost around £5000 to install but only reduce bills by about £24 a year – 208 years for payback.
RICS is against the current HIPs system but applauds efforts to reduce energy use and cost –they suggest a government serious about climate change would introduce tax breaks, such as reducing VAT, on energy saving measures. They also point out that the EPC regulations only ‘bite’ when a property is sold leaving the vast majority of the housing stock untouched by the legislation.
An opposition motion to repeal HIPs was debated at short notice on 10th October and, as with previous such motions, was defeated by the government. Yvette Cooper roundly dismissed, any suggestion that HIPs had caused the market slow down - praying in aid the tale of Chicken Licken. She stated in the debate ‘We know that new listings have been falling across the market since June – long before HIPs were introduced and we know there are other factors.’ There certainly are other factors – the US sub prime market crash and increasing interest rates, but an objective observer might ask why the government introduced a scheme that would diminish the number of properties on the market by taking out speculative sellers, whilst aware that the market was already falling.
The Opposition reiterated its intention, when in power, to scrap HIPs and also announced plans to bring in anti – gazumping legislation (the original Labour manifesto promise). Yvette Cooper was correct, however, when she pointed out that the introduction of HIPs had improved both the cost and delivery of searches. Was a new system required to achieve this, or would government intervention in the search system have had the same result?
AHIPP held its second conference on 16th October and continues to push for full implementation of HIPs across the board. Government has accused property professionals of vested interests whilst overlooking the fact that AHIPP would not exist without HIPs and therefore has the greatest vested interest of all. Press releases continue to express the benefits of HIPs completely ignoring reasonable doubts expressed by others. Ian Wright , the government speaker at the conference announced a further postponement on HIPs citing market volatility as the sole reason behind this decision.
15 October saw the launch of a value added HIP by Hipag, a pack provider. This is an ‘exchange ready’ pack designed to further shorten the period between offer/acceptance and exchange of contracts. It advocates the preparation of the basic pack of required documents with the twist that the seller’s solicitor continues to prepare for the sale by obtaining other information a buyer may require and ironing out any problems that arise in advance of a buyer being n found. This may work – in the past sellers have been loath to instruct their solicitor before a buyer was found so as not to incur legal costs in case they were unsuccessful in selling. Now, only committed sellers are in the market –they are incurring costs and so, if they instruct their solicitor to prepare the HIP the extra cost might be saved in the long run.
22 May 2007 was a pivotal date in the life of HIPs. Ruth Kelly announced the government was abandoning 1 June as the start date for HIPs was introducing HIPs in phases and that there would be a 12 week consultation on EPC’s over the coming summer. All as a result of the judicial review proceedings by RICS. The consultation ordered has yet to be launched but RICS has announced its own review chaired by Sir Bryan Carsberg, a former director general of the OFT. This review will look at the entire residential property market focusing on the buying and selling process. Sir Bryan evidenced a less than supportive view of HIPs stating HIPs and EPCs ‘have introduced significant new regulatory and redress structures into relatively low risks aspects of the property transaction while leaving consumers in other parts of the sector, that may carry higher risks, apparently unprotected’. He contrasts this with the more holistic approach taken to regulation in, for example, the financial sector.
It had been intended that HIPs would be brought in across the entire residential property market on 1 June 2007 but the 22nd May announcement mentioned above changed the game, the playing field and the rules. Originally therefore all new properties would have required a pack BUT the wording of the commencement orders exempted those properties built under the requirements of regulation 17C of the Building Regulations 2000. When considering new build therefore a further check has to be carried out to see what building regulations apply.
Issue 23 of the progress newsletter dated 12 October 2007 and to be found at
www.homeinformationpacks.gov.uk clarified what was meant by the Drop Dead Date and how it affected HIPs.
Drop Dead Date (DDD) is another piece of jargon introduced into HIPs. This is the date when all properties that are on the market will be required to have a HIP, regardless of when they were first marketed and therefore had the benefit of transitional provisions to avoid the HIP.
The government says it will ‘set this date in the light of market conditions as HIPs bed in.’ Accordingly no date has yet been set nor is one envisaged in the near future. Put together with the hold on introducing the last phase that would bring all properties into the scheme, one wonders how the government’s promise that HIPs would be of most benefit to first time buyers is holding up!
18 September 2007
Guidance for enforcement officers and form of penalty charge notice published
17 September 2007
Latest numbers for assessors published
14 September 2007
Trainer, Morgan Whittaker, loses authorization for training and accrediting assessors
14 September 2007
Guardian newspaper article about HIPs being the cause of a drop in house prices
12 September 2007
Law Society meet Minister over concerns about HIPs implementation
10 September 2007
DCLG press release ‘Green Findings’
10 September 2007
3 bedroom homes brought into the scheme
1 August 2007
HIPs launched for 4 bedroom homes
July 2007
ARMA leaseholder guide to HIPs published
Following upon the July OFT reminder to estate agents as to their obligations under the new legislation, DCLG have now published Guidance to Enforcement Officers and an example of the form that the Penalty Charge Notice will take. The Guidance is 39 pages long and is essential reading for all those involved in the preparation of packs so that they are aware of the approach Trading Standards Officers may take. The latest numbers for assessors have been published and as at 17 September these were -
Fully accredited 4315
Qualified and awaiting accreditation 926
Examinations passed but not yet qualified and accredited 3728
making a total of 8,969 but, of course, it is not known how much double counting is involved because assessors may be accredited with more than one organisation.
Morgan Whittaker, a domestic energy assessor training organisation based in Brentford,
West London , lost its authorization from City and Guilds apparently as a result of ‘contractual issues’ rather than problems over the quality of training. This has left some would-be assessors in difficulties, having paid not insubstantial fees. C&G are apparently helping these students, both those staring a course and those halfway through their course, to transfer to other courses. The Government insisted that such a hiccup would not affect the roll out of HIPs as Morgan Whittaker was just one of 34 assessment centres.
The headline of the Guardian article could be regarded as misleading – the true story is that the lack of 4 bedroom homes coming onto the market has pushed down the average house price in and
. The fall in August 2007 was 2.6%. The number of 4 bedroom homes coming onto the market dropped by 41% according to Rightmove – from 40,000 to 23,400 in August while ,during the first week in September 2007, the total of homes coming onto the market was just 4,159 instead of the past and expected average of 10,000. This summer slowdown is put down to the increased cost of selling a home (and not just due to HIPs); the lack of speculative sellers and the expense of trading up all of which tempts people to ‘stay put’.
Paul Marsh, the Law Society Vice President, met with the Housing Minister, Yvette Copper, to draw attention to failings in the implementation of HIPs that could cause market disruption. He drew attention to the continued problems with searches, pointing out the problems they caused to lawyers, particularly where searches with little or no value were included in a pack. Buyer’s solicitors then have to explain to buyer clients why they had to buy official searches. All this despite the publicity that the pack would save them money in this regard. Paul Marsh also pointed out the dangers to consumers in the loss/reduction in transparency, competition and choice being brought about by referrals and the bundling up of services to include the pack, marketing and legal work.
The Law Society has a dedicated HIP website at www.hip.lawsociety.org.uk
On the day 3 bedroom homes were brought into the HIPs scheme, the DCLG also published a progress report ‘Green Findings’. Most 4 bedroom homes are being rated with an E for energy efficiency. The accompanying reports suggest that the rating could be improved to a C on cavity wall and loft insulation being installed and with consequent annual savings of £180 on heating; £80 on lighting and £30 on hot water costs.
The 5 top recommendations are –
1. cavity wall insulation
2. low energy lighting
3. thermostatic valves on radiators
4. loft insulation
5. double glazing.
Information about ‘green’ grants that may be available can be found on the Energy Saving Trust website at www.energysavingtrust.org.uk.
1 August 2007 saw the launch of the HIPs scheme with homes marketed with 4 or more bedrooms requiring a pack. ‘Marketing‘ has seen the judicious use of puff such as ‘spacious family accommodation’ ‘flexible accommodation’ etc. This is particularly true for flats that are all on one floor and/or where there is only one occupier – the use of rooms can be varied to meet individual needs that gives a great deal of flexibility in the marketing process. Care must however be taken to avoid breach of the PMA.
ARMA has published a leaflet to draw the attention of leaseholders to the additional information and thus cost and delay that might be incurred in the sale of a leasehold property.
