As the introduction of home information packs draws near, Raymond Perry assesses the danger that the government could still abandon them


The planned introduction of home information packs (HIPs) on 1 July 2007 will be the end of a ten-year struggle by campaigners to reduce uncertainty and delay in the conveyancing process. HIPs will be the most significant change to affect the UK housing market in recent decades.



So when last October the Council of Mortgage Lenders (CML) urged the government to think again about whether HIPs could still be justified, supporters of the reforms were entitled to feel uneasy. Might HIPs be abandoned at the 11th hour? There are some warning signs.



Certainly the government does have form in this respect. No one has forgotten the Treasury's last-minute U-turn in 2005 when it announced that residential property could not after all be used in a self-invested personal pension (SIPP). The government seemed insouciant about the wasted effort on that occasion, enraging accountants who had done an enormous amount of preparatory work.



The change of approach by the CML was just the latest in a series of blows to hit the nascent HIPs industry during 2006. Most important was the unexpected announcement in July by housing minister Yvette Cooper that the home condition report (HCR), the cornerstone of the packs, would no longer be mandatory.



This was an unpleasant shock for those who had already paid to train as the home inspectors needed to prepare the HCRs. Businesses that expected to make large profits out of preparing HIPs with a HCR were also hit. The consumer group Which? - one of the strongest backers of HIPs - also withdrew its support, believing that the altered scheme was now a waste of money.



The July decision came against a background of increasing media hostility towards HIPs as journalists discovered that only a handful of home inspectors had been approved. There was also celebrity opposition when Kirstie Allsopp and Phil Spencer, presenters of the popular Channel 4 property series 'Location, Location, Location', issued an open letter opposing HIPs.



Enforcement threatens another headache. The Local Authorities Co-ordinators of Regulatory Services warned that Trading Standards officers would be unable to enforce the regulations properly without criminal powers to investigate alleged breaches. A penalty charge notice can be served - but if an offender does not pay, it has to be recovered as a civil debt via the county court.



At present the government insists that HIPs will still be introduced in July 2007 with a now voluntary HCR. Should conveyancers believe that?



As the government gave assurances that there would be a 'dry run' to test HIPs, £4 million of public funding has been made available and area trials of HIPs began on a phased basis in November. Sellers in some areas are offered the incentive of a free HIP, making some suspicious of the dry run. The anti-pack pressure group, SPLINTA, complains that offering free packs will inevitably skew the trial results.



Whatever the outcome of the trials, the biggest danger to HIPs is the fear of unintended consequences. Previous interventions in the housing market - abolition of double MIRAS tax relief in 1988 and the stamp duty holiday in 1992 - show that transaction levels and prices are sensitive to regulatory changes. As with SIPPs, a last-minute realisation that the outcome of the new measures might be electorally damaging may still lead to HIPs being abandoned.



Raymond Perry is a partner at Davies and Partners in Gloucester