Government Implements Home Information Pack Roll-Out

Following the successful introduction on 1^st August 2007, of the Home Information Packs (HIPs) for homes with four bedrooms and above, the Government has confirmed there will be enough energy assessors, nationally and regionally, to roll out to three bedroom homes next month.

The Government is committing itself to further implementing HIPs and Energy Performance Certificates (EPCs) to three bedroom properties from 10 September 2007. HIPs and EPCs are being introduced on a phased basis to ensure a smooth transition in the housing market, and to begin the process of transforming the home buying and selling process in the interests of consumers and the environment at the earliest opportunity.

HIPs and EPCs will give house buyers energy ratings for homes for the first time, from A to G – similar to consumer friendly ratings for fridges, helping to lower fuel bills and reduce carbon emissions. The packs will also help to cut costs for consumers by increasing transparency and competition in the home buying and selling process.

A further announcement on rolling out HIPs and EPCs to other properties will be made in due course. Our key criteria will be ensuring a smooth implementation and that the necessary energy assessors, both nationally and regionally, are in place. Measures recommended in the EPC could save the average consumer £300 a year off their fuel bills, according to the Energy Saving Trust. Typical ‘green grants’ of £100 to £300 for energy saving improvements like loft insulation are available for many home owners.

A new system to make it easier for home owners to access these grants from energy suppliers was launched earlier this month. Energy suppliers are providing immediate access and information about green grants and offers to home buyers when they sign up to an energy contract. A new portal on the Energy Saving Trust’s website also allows consumers to tap in their postcode to find out offers available. A snapshot of leading HIP providers shows packs are taking five days on average to produce. Many major estate agent chains are offering HIPs as part of their ordinary fees. Others are charging in the region of £300 to £350 plus VAT on an upfront or deferred basis – £200 to £250 of which is already paid for in the current system.

Communities Minister Baroness Andrews said:

“We are now ready to start rolling out HIPs and EPCs to the next part of the market as promised, and improve a home buying and selling process which currently is not working for consumers or the environment.”

“HIPs and EPCs can help families to save hundreds of pounds off their fuel bills, and cut a million tonnes of carbon a year. They also have the potential to reduce the millions of pounds wasted by consumers when buying and selling a home, by increasing transparency and competition in a process that hasn’t changed for a generation.”

Government Wants HIPs To Benefit Consumers

The Government is seeking to extend measures, to help ensure consumers are seeing the vital information in Home Information Packs and to make sure they are receiving a higher standard of service from HIP and other service providers.

The new measures include: developing a new set of standards with industry on what consumers should expect from property professionals in the home buying and selling process; further building on the quality of information in the packs; working with industry to ensure that consumers are fully seeing and benefiting from the HIP, including the EPC, early in the process; extending until the end of the year the provisions enabling consumers to market their home as long as they have ordered and committed to pay for a HIP, and the provision requiring the lease to be included in the HIP for leasehold properties.

The latest figures on HIPs show that consumers are already benefiting from the introduction of Home Information Packs. More than 700,000 homes now have energy ratings as a result of HIPs, helping home owners to save money on their fuel bills and cut carbon emissions. Greater competition in the property searches market is also leading to reductions in costs with some local authorities reducing their search fees by up to £120.

Housing Minister, Caroline Flint said,

“Home Information Packs are already bringing benefits to consumers. Property search costs are falling and new information on energy efficiency can help cut carbon emissions and enable prospective purchasers to get a better idea of the likely costs of energy bills.

“But we want to do more to improve the HIP and the home buying and selling process for consumers. Developing a new set of standards for industry is an important next step in further ensuring all consumers get the highest quality of service when buying or selling a home. We also want to ensure all consumers are seeing the vital information in a HIP early in the process so they can fully benefit.

“Alongside the development of a new industry code, we will continue to work with the industry to promote higher and consistent standards of practice on the delivery of HIPs.”

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Government To Proceed With HIP Final Roll-Out

The Government reported that sixty per cent of the housing market is now covered by HIPs. and the criteria for roll out to the rest of the market have now been met. The press release 22^nd November 2007 said it is therefore the government’s intention, to complete the phased roll out by extending coverage to the rest of the market from 14th December 2007.

First time buyers of one and two bedroom homes will be the main beneficiaries as they will now get important information about their new home for free. Information such as searches for which they would previously have had to pay will now is included in the HIP paid for by the seller, reducing the costs of the first step onto the property ladder.

But all householders will benefit from having detailed information about the energy efficiency of their home, and measures to save on their fuel bills and cut carbon emissions. Home buyers could potentially be eligible for hundreds of pounds to get help with insulation or other improvements.

According to Government figures, two hundred thousand Energy Performance Certificates have been generated since the summer. As set out in the criteria of 11 June there are now sufficient energy assessors and home inspectors fully qualified and accredited to provide Energy Performance Certificates for all homes bought and sold. Some 5794 people are now accredited

The analysis of the early phase of rollout of HIPs found that the average rating for homes was an E, and we know that approximately one-fifth of all homes are likely to get an F or G rating. This means that basic measures could significantly cut both fuel bills and carbon emissions. The Energy Savings Trust has also estimated that homeowners could also save around £300 a year on fuel bills from implementing the recommendations in the Energy Performance Certificate.

The Government is also proposing to establish a new Green Homes Service offering those buying or selling a home with an F or G rating free or discounted help with energy efficiency measures, by linking them up with grants and loans provided by energy companies and others. Home buyers could potentially be eligible for hundreds of pounds to get help with insulation or other improvements.

In addition, the government has also conducted monitoring and analyses of the implementation programme to ensure continued smooth roll out. Early monitoring shows:

• HIPs are taking on average seven to 10 days to prepare.

• The majority of property, and drainage and water searches are being delivered within five days.

• Energy Performance Certificates (EPCs) are being prepared on average within two to four days.

• On average, a HIP costs between £300 and £350. Most of these are not new costs, as they cover the cost of searches and other documents which have simply been transferred from buyer to seller at the beginning of the process. The Energy Performance Certificate (EPC) is of course new but provides consumers with valuable information of the costs of running their home.

• Competition from HIPs is reducing the costs of average property searches. Eighty-five local authorities have already reduced their charges by £30 on average.

The Government have also commissioned and considered extensive analysis by Europe Economics on the impact of HIPs on the market. It is intending to publish their independent report which includes modelling on the impact as well as analysis of the first few months of implementation. Presently it finds no evidence of any impact on transactions or prices, although there is a predicted short term impact on new listings as sellers change the timings of their listings. It concludes that the impact on listings is short lived, and the impact on the market is marginal compared to the wider factors.

Dr. Peter Williams (who is a member of the National Housing and Planning Advice Unit) and other leading economist have been approached to consider whether changing housing market conditions meant we should change the approach to completing the roll out. Their conclusion presented strong arguments for continued rolling out as planned, and that further delay could cause greater difficulties and uncertainties in the market.

In the light of this evidence the Government will lay the commencement order to extend HIPs and EPCs to one and two bedroom properties from 14th December 2007. In order to ensure continued smooth implementation, they are also extending the temporary provisions on first day marketing for all properties from 1 January to 1 June 208, providing flexibility for sellers as part of the roll out to one and two bedroom properties.

The implementation of Home Information Packs so far, and the work of the Stakeholder Panel, has also highlighted further improvements that are needed to benefit consumers.

Research shows HIPs has already led to improvements in the delivery and cost of searches, with significant reductions in the cost of searches, and in some areas, substantial reductions in the delays in producing searches. However, there are still wide variations in costs and services and the Government want to see further improvements for consumers. It is promising to publish guidance on access and charging, for local authorities and personal searchers, with the aim of speeding up searches and delivering a fairer deal for consumers.

Ted Beardsall, Deputy Chief Executive of the Land Registry (and member of our Home Buying and Selling Stakeholder Panel) have been approached by the Housing Minister, to advise on what else could be done to improve the search process, ensuring better quality and timeliness of information, and improving value for money for consumers.

Stakeholders have also raised concerns about the costs and timeliness of leasehold information, and the impact that this will have on Home Information Packs when one and two bedroom properties are included given the higher number of leasehold properties. In the majority of cases the stakeholder Panel expects leasehold documents to be readily available and easily provided as part of Home Information Packs.

The Stakeholder panel are also aware that some leaseholders, whether in the pre-existing system or creating a HIP, can find the relevant documents difficult to obtain quickly. This further hampered with some consumers having to face disproportionate charges to access their documents.

As leasehold information is an important part of the home buying and selling process, and is already generally paid for and provided by the seller, the Government continues to believe there are considerable advantages to consumers from having leasehold information early on in the Home Information Pack. But to ensure continued smooth roll out, it is anticipated that the Housing Minister will phase the introduction of leasehold information in response to stakeholder concerns.

To assist further the Government is proposing to temporarily amend the HIP regulations so that the lease document itself must be included, but other leasehold information will be introduced as a requirement at a later date (preferably in six months time). This will allow HIPs for one and two bedroom properties to bed down in advance of leasehold information being required.

In the interim, Ted Beardsall is to advise the Government and the Home Buying Stakeholder panel on what more can be done to improve the timeliness and cost of leasehold information, alongside the work on searches.

From April 2008, the Government will begin to roll out EPCs for newly built homes, as well as across commercial property for sale, rent or construction. By October 2008 all public buildings will be required to have a displayed certificate.

All these measures are designed to promote the interests of the consumer, with the Government continuing to actively monitor the rollout of HIPs and energy performance certificates, and the home buying and selling process. The introduction of HIPs is part of a wider programme of reforms to home buying and selling including e-conveyancing and better redress, which aims to provide consumers with a clarity and transparency. The Government wants to reassure consumers that it will act and respond where further improvements are needed.

Home Buyers And Sellers Need To Be Patient

The difficulty, many individuals are presently having in both buying and consequently selling their homes, is now beginning to put added pressure on household budgets. This is reflected in the number of house buyers on estate agents books, which has fallen considerably following research by the National Association of Estate Agent (NAEA). This finding also confirms the shrinkage in the number of first-time buyers seeking homes.

Despite a growing demand for fixed rate mortgages, competitive deals are becoming increasingly hard to come by. Lenders suffering their own fallout from the credit crunch are now beginning to find it increasingly difficult to source funding. This situation is now fast putting further pressure on the number of mortgage products available to the consumer, leading to a tightening and contraction of the lending industry.

In another survey by Moneyfacts, the number of mortgages available to sub prime borrowers has dropped considerably, since the credit crisis broke last summer 2007. The number has fallen from 6,501 (from 32 lenders) to 1,867 (currently available from 20 lenders) today. This is confirmation that some mortgage providers have scrapped them altogether.

Julia Harris, a mortgage analyst from moneyfacts said, “Investment banks have been hit hard by the troubles facing the US sub prime market and therefore are less willing or able to securitize the mortgage books of UK sub prime lenders.”

Homeowners wishing to sell up are helping to slow the market, by listing their properties with prices that are just not viable. According to the latest House Price Index from Rightmove, sellers are coming to the market and ignoring the increased competition from other unsold properties, and the challenge buyers now face in obtaining a mortgage.

The number of properties available to sell during the summer months is 85 per cent greater than a year ago. Therefore it is now concluded ‘a seller’s market has been replaced very quickly by a buyer’s market.’ We know what a seller’s market looks like- several buyers for each property, bidding up the price and usually resulting in a sealed bid at a level way over the asking price. A buyer’s market is one where each buyer has a multitude of offers on several different properties, all at prices that he/she is comfortable to pay. This as now become reality in summer 2008.

This housing climate has made it increasingly difficult for first-time buyers to get a foot on the ladder. At the start of 2008, the numbers thinking of buying their first property had fallen dramatically, with some still having an inclination of battling on through the storm. We can safely say that ‘the rug as been pulled from underneath their feet’ by lenders now turning their back on this market sector. Many first-time buyers will have no other option, except to delay buying until the housing market corrects itself and stabilises in the short-to-medium term. However, those whom are privileged and able to push-on will now be in a strong position to receive attractive big discounts in the market place.

Since Easter, we have begun to see house builders and developers cut house prices, in an attempt to clear slow moving stocks. First-time buyers are being aggressively targeted with packages which include:-

• Deposits paid

• Legal fees paid

• Stamp Duty paid

• Survey fees paid

• Incentives worth thousands of pounds given

• Property prices reduced significantly (in some cases by £35,000)

In the words of UK former Prime Minister, Margaret Thatcher, ‘Tough times never last, but tough people do.’ Is the attitude with which everyone (home buyer and seller) have to adapt in the forthcoming months,

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