The Government’s plans to introduce Home Information Packs (HIPs) in a bid to improve the process of buying and selling property fails to address some important issues says property specialist Strutt & Parker.

From some time in 2007, homeowners in England and Wales must have available HIPs before putting their homes up for sale. The HIPs will contain various documents that will provide purchasers with key information about the property they may wish to buy, such as Land Registry searches, copies of the deeds and a Home Condition Report (HCR).

Currently, this information is not normally available until after an offer for a property has been negotiated and accepted subject to contract. Government figures indicate that around £1m per day of professional fees is wasted by those subject to contract deals falling through for whatever reason, often a change of heart or circumstances, not necessarily for reasons which a HIP might highlight in advance.

While Strutt & Parker welcomes any legislation that speeds up and improves the whole process of buying and selling property, the Firm says there are some major issues which need careful consideration:-

1. The Government estimates the cost of a HIP to be between £600 and £700; this is not all new costs as some of the report’s contents are already paid for by the sellers and purchasers under the current process. But it is the first time all these costs fall on the seller in advance of the marketing process. The only compulsory new cost is for the

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Home Condition Report, which is estimated to be around £350 for an average home.

2. Anthony Cane of Strutt & Parker says: “The cost of the HIP will be detrimental to the property market as many who want to ‘test the water’ to see if their house will sell may well decide they don’t want to pay around £600 for the HIP to find out. As a result, there might be a reduction in the supply of houses for sale, which, paradoxically, is the opposite effect desired by a government that is trying to make it easier for people to move around”.

3. Anthony Cane continues “The Home Condition Report (HCR) is the big stumbling block in our view. This has to be produced by a certified home inspector and will contain information about the physical condition of a property, including its energy efficiency. The concern is that there are currently not enough people with the right qualifications to carry out HCRs and this raises the question: will enough people be certified by the time the new legislation goes live in 2007? We could be faced with a situation whereby people hoping to put their homes on the market will be unable to do so simply because they cannot produce the necessary HCRs to go in the HIPs.

4. “Just as there will be a stampede to have HIPs completed by the time they become law, so there will be a race to put properties on the market before the new legislation takes effect. Strutt & Parker believes this will distort the market and could create short term chaos.

5. “While first time buyers will benefit from HIPs, when it comes to selling, the costs involved may well put them off; many will stay put and cause some stalling at the lower end of the property market. Moving up the property ladder will no longer be the reasonably fluid process we are accustomed to due to the inevitable hesitation HIPs will cause in the market place”.

“If the provision of advance information in the form of HIPs encourages greater commitment from both parties early on in the transaction, this can only be good for all concerned. While Strutt & Parker supports the concept of HIPs, we hope the Government will look more closely at some of the key outstanding issues to ensure its smooth implementation.”