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£500 Home Information Packs are 'worthless'
Last updated at 13:22pm on 22.08.07
The Government faced a shortage of inspectors to implement HIPS - now there is more trouble ahead
The excitement of buying a new home is being killed off by soaring prices
Homebuyers are being hit by a double whammy because of concerns over "worthless" Home Information Packs.
Major mortgage lenders, including HSBC and Barclays, are unwilling to trust local authority searches contained in the packs put together by sellers.
They are telling buyers to pay for their own searches - which include information on drainage, planning applications and building consents - through their solicitor.
This means tens of thousands of homeowners in a chain - about 80 per cent of the market - are having to pay out twice.
Not only are they forced by law to spend £500 on an HIP to give to potential buyers of the property they are selling, but they are forced by their mortgage lender to pay a similar amount for a lawyer to carry out searches on the property they want to purchase - a total bill of up to £1,000.
Ministers introduced the controversial packs for properties on sale with four or more bedrooms at the beginning of this month.
Three-bedroom properties will need an HIP from September 10 and the scheme is expected to cover a further 6.4million smaller homes by the end of the year.
The pack includes planning searches as well as an energy performance certificate and title deeds.
The aim was to speed up the selling process because buyers would be given all the information they needed about a home without needing to employ solicitors to carry out any searches.
Experts repeatedly warned that the packs would increase the cost of selling a property and therefore slow down the housing market, but the present fiasco centres over whether mortgage lenders can trust the information they are being given by sellers, who have a clear interest in the searches not throwing up problems.
More than 1.5 million local authority searches are carried out on homes on the property ladder each year.
Before the HIPs scheme was railroaded in, about 40 per cent of searches were carried out by buyers without commissioning a solicitor, known as a personal search.
Now nearly all are expected to be personal searches made by companies providing HIPs for sellers.
However, several mortgage lenders are making clear they will offer home loans only if searches are carried out by the buyer's solicitor.
A spokesman for HSBC said: "If someone wants to buy a house from someone who has a HIP containing a personal local search, we would tell their solicitor we would not lend to them unless they commissioned their own search."
Other mortgage companies will accept searches that are not carried out by the buyers' solicitor - but only if the solicitor accepts financial responsibility if anything jeopardises the future marketability of the home, such as new properties being built nearby.
As a result, thousands of solicitors acting for home-buyers are refusing to trust sellers and are insisting on doing their own searches.
A survey for Splinta, an anti-HIPs group, warned that more than 57 per cent of solicitors were refusing to accept packs containing personal searches.
Peter Ambrose, director of the Partnership, a HIPs provider, said: "Most HIP providers are using personal local authority searches to try to ensure a consistent low price, but several major mortdence-gage lenders do not accept these without guarantees from solicitors.
"This means solicitors representing those lenders are rejecting the local authority search contents of the HIP and will charge their buyers for recommissioning new searches.
"This will result in buyers demanding that sellers reimburse them for the additional costs incurred in commissioning new searches."
Tory housing spokesman Grant Shapps said: "This is yet more proof that HIPs are almost completely and utterly worthless.
"Gordon Brown cannot claim to be on the side of homeowners unless he scraps this disastrous scheme."
A spokesman for the Royal Institution for Chartered Surveyors said: "This is further eviof the Government's flawed implementation of HIPs.
"We need home buying reform, but the Government needs to step back and consider any evidence it has about implementation so far, in cooperation with the industry and other interested groups.
"The residential property market is far too important to the economy to take any risks in the current climate."
Paul Holmes, the Liberal Democrats' housing spokesman, said the situation proved the HIPs scheme was "a shambles".
"It is unbelievable that the Government did not foresee these problems," he said.
"The packs are clearly not worth the paper they are written on."
Reader views (17)
I am trying to get a 4 bedroom house. Now I have to read these HIPS and it is a nightmare. I thought it was going to be easier. Please get rid of them asap. It is already difficult as it is.
- Jacqueline, Hampstead, London
To-days HIP providers = yesterdays used car salesmen and women = tomorrows double glazing sales reps, or vise-versa. We are told to not let strangers in our homes, are we allowed to ask to see the full credentials of these merchants; including their home address and I hope a full CRB search statement.
- Blind Pugh, Addlestone, UK
Bit like the government that pushed these through then.
- Stephend, London, England
I just went to a HIPS process and the buyer was clueless. He still did his own searches because he does not trust it. In the mean time I am £600 (not £500?!) out of pocket. This project should be cancelled and the government should pay back all the money lost!
- Arthur, London
I do not trust HIPS either. It was better before. I guess the government wants their Stalinistic data for when they come up with another stealth tax.
We need another government!
- Pd, London
This was forecast some months ago when a critic of the Government Minister, who was claiming that it would not make the process more expensive, pointed out that the search work would have to be done twice, once for the seller for the HIP and once, at the insistence of the lender, by the buyer; no buyer commissioned search equals no security equals no loan. Mrs Yvette Cooper would have none of it. Now we know; more unintended but not unforeseeable consequences of a lunatic policy for which we will all pay.
- Peter Haldane, London
Any one with half a brain would want all searches done on their behalf for their own peace of mind in the future.
I can see no real benefit for either sellers or buyers with the changes in the process. Sorry of course the people putting the packages together will benefit financially.
- Mike, Bedford
Such a wasted project. Why can they not stop it?
- Georgie, London NW1
It's about time that everyone selling a house took a stand. Refuse to provide a HIP. They cost £500. The fine (tax) for not having one is £200. That's £300 saved even if the court system could handle everyone having to be fined (taxed), which it couldn't!
The government has forgotten the first law of holes. When one is in a hole, stop digging!
- Nigel, London
Come come now, are you telling me the government did something that was completely useless and won't undo it? I refuse to believe it!
- S-M Hearmon, London, UK
So that was Prescott's contribution to our welfare. How many hundreds of millions of pounds were wasted in wasted travel, wasted paper of the newly politicised civil service? How many millions of photocopies were made? How many thousands of flights were taken? How many computers were installed to support this futile exercise? The waste created over the years of political coersion by this bill alone would amount to a comparable amount of energy used by a fleet of jumbo jets over a long period of time. Not to mention the amount it will have cost you and me, the taxpayers, in blatant slippery bribes conducted on behalf of the fat former Cunard empoloyee. Sorry I can't be more precise but you get the picture. Why is this these thieving, dishonest, self-serving group of people still in power?
- Givenuphope, London
I moved home last November before all this nonsense kicked in. Taking into account the incredible, Victorian practices of heel dragging solicitors and pathetic Estate Agents it proved to be one of the most traumatic and stressful experiences I have ever gone through. It's obvious that the whole system is creaking and rotten throughout and any attempt to sweep away the appalling red tape, time wasting and cost would get anyone's support. Sadly HIPs appear to be ill thought out and will only pile on the agony for sellers and purchasers alike. As usual, I expect that only people rubbing their hands with glee will be the legal "profession" and estate agents (who should really come clean and admit to being sales commissioners rather than agents) who will simply rake in the money while the rest of us worry ourselves sick doing all the pushing and pulling ourselves in order to try and get things done. Now we can expect pointless Government ministers giving the usual meaningless drivel in their media interviews to try and get themselves off the hook. Just like estate agents - they're fooling nobody except perhaps themselves.
- Gary Mewis, Rye, East Sussex
If vendors are being forced by lenders to pay twice for surveys I suggest that they send the bill to HM Government via the Small Claims court.
- Adam, Harrow, UK
Did anyone really expect anything else? This whole thing has been an expensive shambles from start to finish, reminiscent of pretty much every other project Labour have attempted since coming to power.
- Terry Roll, London
Unfortunately this was obvious from the moment HIPs were first announced, but somehow - despite all the warnings about the pointlessness of the scheme- we have them now anyway and the scheme is now to be extended.
Where does this government take its advice from?
- Tim, London
A complete waste of time, money and effort. Quite honestly, I don't blame lenders and solicitors for refusing to set any store in HIPs. Yet another example of this government meddling in things it barely comprehends (see also its disastrous efforts to negotiate PPP contracts with big business). Time to apologise, scrap HIPs and move on.
- Mark, London, UK
Just get your own solicitor to prepare the HIP and he will do the right search - don't use a pack provider with a silliy "hip" name. I have just put my 5 bed on the market and was worried about this; my solicitor is preparing it all for 300 pounds including EPC- even cheaper than other HIPS providers.
- Nick, London England
