Anne Main calls for expensive HIPs scheme to be scrapped

Anne Main has challenged Government officials to scrap the Home Information Pack scheme (HIPs), in light of the stalling housing market.

Anne Main, MP for St Albans, has challenged Government officials to scrap the Home Information Pack scheme (HIPs), in light of the stalling housing market.

During a session of the Communities and Local Government Select Committee, Anne questioned Peter Housden, Permanent Secretary of the Department for Communities and Local Government, and Richard McCarthy, Director General of Housing and Planning, about whether or nor the Home Information Pack offered value for money for house buyers and sellers.

Anne said:

"I fail to see how it is rational, in a stalling market, to charge people hundreds of pounds for a Home Information Pack on the off-chance their house may sell, just for buyers to make a saving of £30. All the Government has done is lumber house sellers with hundreds of pounds of extra cost and even they can't come up with any real benefits.

The whole scheme is ridiculous. We should be thinking about how we can help the home-buyer, rather than sticking with a bureaucratic scheme which offers very poor value for money for the consumer, and does nothing to improve the house buying and selling process."

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Transcript of the exchange:

Anne Main: Given that the housing market is now taking a long time to sell, some people are not having any visible date for a sale, have you evaluated the shelf life of HIPs and the fact that people have to commission HIPs to put their house on the market but by the time the house has been sold the HIP is considered to be outdated by both the people wanting to buy the house and also those lending finance on the house?

Mr McCarthy: Those are quite different matters. First of all the HIP has no bearing at all on the way the market works in terms of the scale of challenge that we see in the sharp reduction in transactions.

Anne Main: But is having HIPs worthwhile? People will wonder why they have to have it when it becomes redundant after a certain period of time.

Mr McCarthy: This hangs on the central issue that you want to improve the information provided to the consumer at the beginning rather than part way or at the end of the process. What the HIP does is that it puts more information in front of the consumer earlier and if you are choosing to buy a home yourself in whatever form in the market that is uncertain, that strikes me again that there are clearly some benefits that may derive from giving you that information earlier rather than later.

Anne Main: Only if you find a purchaser for the property within a reasonable period of time.

Mr McCarthy: Clearly the action the Government has taken to seek to stabilise the banking sector and hopefully over time unlock credit will actually hopefully have the impact that we all want to see, I am sure, which is to see the market moving again.

Anne Main: The buyers and sellers that you mentioned earlier on, it is as if they are all coming to the party at the same time and at the moment they are not. Particularly in a housing market where people are being obliged to put their house for sale because of financial problems themselves, they will then have to buy this thing which only seven per cent of people say is valuable and it is therefore going to start ticking its sell buy date, and the purchaser is still out there waiting for things to fall a bit further to get a better deal. I would say, at this moment in time, HIPs to me seem to be a completely redundant thing to be having.

Mr Housden: I think the ministers' intentions in introducing them were to rebalance, if you like, the transaction in favour of the purchaser, to provide that individual with a better picture of what they are about to buy, not only for consumer protection but also to prevent chains collapsing when new information surfaced part way through. I think that ministers evaluated that that actually would work, that the potential benefits to the consumer were worth the additional costs.

Anne Main: That was then, this is now.

Mr McCarthy added later: search costs are down by an average of £30 a search. Connells, the estate agents, say that it is now reducing the speed of time from people starting the process to completing the purchase of their home, so there is some indication of (a) some positive impact and (b) some innovation now occurring within the market. That is one of the reasons why there was a recent consultation which closed on 30 September for example for something called a Property Information Questionnaire completed by the seller to see what can be done to improve, at very low cost, the quality of information provided. Some are now starting to prepare HIPs that are ready for mortgage approval. So that innovation is going on out there."