David Marshall, Partner
Back in 2004, the Government planned to introduce the Home Information Pack (HIP) which was designed to take some of the stress out of the Conveyancing process. The “revolutionary” idea was that the Seller would pay for the Pack with a view to providing fundamental information to the Buyer “up front” and right from the outset – i.e. at the point of the property being marketed through the Estate Agent. The core part of the HIP was to be the Home Condition Report (HCR) essentially a survey of the property carried out by a qualified Surveyor and which would identify in advance all the points requiring attention that the Buyer needed to know about.
The Government’s view was that Mandatory HIPS, complete with HCR’s, would boost the fluidity of the housing market by tackling delays and improving transparency but, of course, the fundamental question remained as to how much faith Buyers would have in an HCR paid for by the Seller.
Consumer research quickly established that Buyers would rather rely on their own detailed survey and would be happy to continue paying for that privilege and when the Council of Mortgage Lenders came out and said that Lenders were of the same opinion and that they would not rely on an HCR and would continue to seek separate Mortgage Valuation Surveys then alarm bells started ringing and the days of the HCR were numbered.
On 18 July, less than a year before so called compulsory implementation, Housing Minister Yvette Cooper announced a Government U turn on HIPS by saying that, although HIPS would continue to be mandatory from next June, it would be in a diluted form and that it was no longer compulsory for them to contain the HCR. These could be provided but they would be purely voluntary and the HIP would now contain just the following:-
- A Sale Statement detailing price etc. (not a Contract)
- Title Documents
- Standard Searches
- Warranties and Guarantees
- A Mandatory Energy Performance Certificate
- Property Use and Contents Forms
- Service charge information (for Leasehold Properties)
The Government justification of the U turn were concerns over whether there would be sufficient Home Inspectors to cope with the demand and training plans were behind schedule. The fact that the Training Courses for even qualified Surveyors cost many thousands of pounds were played down as were the fact that more than 130 MP’s signed a motion against HIPS fearing the adverse effect on house prices and the consequent loss of income from Stamp Duty Land Tax.
“We have concluded that there would be significant risks and potential disadvantages to consumers from a mandatory “big bang” introduction of full home condition reports on 1 June 2007” stated the Housing Minister who stressed that further testing was needed to ensure that the system would deliver the assumed benefits and that the support systems would operate smoothly.
In conclusion, the concept of mandatory HCR’s will remain on the table if the Conveyancing industry fails to make a success of the roll out of voluntary HCR’s which will undoubtedly be the case. There can surely be little justification for a Seller paying £1,000 plus for a HCR when the current criteria can be fulfilled by paying probably no more than £300 for essential searches and whatever the Energy Performance Certificate will cost. That in itself remains an issue given that with only a little more than six months to go there has been no direction given in that regard whatsoever.
We will continue to keep you advised.
