Law Society insists on home buying reform in wake of HIPs axe

20 May 2010

The Government's decision to abolish HIPs can only improve the consumer experience in home buying and selling, the Law Society announced today.

Reacting to the news that the coalition government has suspended the use of Home Information Packs (HIPs) with immediate effect, the Law Society said reform of the home buying process is essential to meet the real needs of the home buying market.

HIPs were introduced in 2007 in England and Wales with the aim of speeding up the house selling process by obliging sellers to provide much of the required conveyancing information when properties are first put up for sale.

The Law Society has consistently opposed the compulsory nature of HIPs, arguing that the packs failed to resolve a number of key issues for home buyers. Instead of providing the essential information consumers needed, HIPs were regularly prepared by individuals who lacked professional training or professional responsibility and ultimately became part of the marketing of a property rather than providing essential data that a full investigation should produce to ensure that the property would satisfy buyers and lenders.

"Relentless uncertainty in the housing market, coupled with the excessive costs to the consumer, has made the abandonment of Home Information Packs [HIPs] the only sensible option", said Law Society President, Robert Heslett

The Law Society President explained: "The Society has regularly argued that HIPs have led to increased costs and a host of cross-selling initiatives that were not in the consumer's interests. The advent of HIPs encouraged estate agents and HIP providers to vie with eachother to gain the initial access to the consumer so that they could be referred, for a fee, to other professionals and service providers which distorted the market. These fees were not transparent to the consumer. Having written to Grant Shapps MP, Minister of State for Housing, on May 14th, to ask for HIPs to be abolished, I am extremely pleased with this outcome."

The Law Society has always supported the idea of buyers receiving information about a property they wish to buy up front. The Society wants to develop innovative solutions to properly address some of the issues that HIPs have not resolved. It is working to develop and improve its protocols with a view to improving efficiency, value and transparency.

Concern about the additional cost to sellers and lack of benefit to consumers has prompted the Law Society to propose a complete and comprehensive set of documents, prepared by a solicitor, who has the benefit of specialist legal training and professional responsibility. The Society is recommending that the information be provided in a standard format to bring proper value to consumers and improvements in the process whilst at the same time reducing cost. The Society's approach is designed to support consumers and improve the process by providing practical and innovative support to provide a better experience for all those involved in the home buying process.

Robert Heslett added, "The professional integrity and legal skills which solicitors have traditionally brought to the housing market are probably more important now than they have ever been. The marked increase in property fraud, including registration fraud and mortgage fraud, means that the role of the solicitors as the gatekeeper in the process assumes a greater importance .This role falls to solicitors as the most highly regulated professionals in the process. Solicitors can help consumers understand the residential conveyancing process, the role of the solicitor and others in the buying and selling market and to make informed choices."

Notes:

The new coalition government announced on 20 May 2010 that the requirement to have a HIP was suspended with effect from midnight on 20 May.

The obligation to have an Energy Performance Certificate (EPC) is a requirement of EU law and so will remain but it will only be necessary to have commissioned an energy performance certificate to be prepared before marketing a property rather than actually be in possession of one. An EPC certificate provides 'A' to 'G' ratings for the building, with 'A' being the most energy efficient and 'G' being the least, with the average up to now being 'D'. They give information about insulation, boilers and the nature of the lightbulbs. They come with a report which suggests improvements to make a building more energy efficient.

The obligations have been suspended under S162 of the Housing Act 2004 but primary legislation is pending. Full abolition of HIPs will require repeal of Part 5 of the Housing Act 2004 and the Rt Hon Eric Pickles MP the Secretary of state for Communities and Local Government has written to Des Hudson the Chief Executive of the Law Society to say that they will make this a priority for their new legislative programme.