Packing a punch

The advent of home information packs has sparked fears of a two-tier conveyancing market with ‘cowboy’ inspectors undermining the work of high street solicitors, reports Jon Robins

It is said that buying a house can be one of the most stressful times in a person’s life, and so perhaps it is appropriate that the introduction of home information packs (HIPs) to simplify the house-moving process is proving so traumatic for conveyancing solicitors.


HIPs hysteria hit the headlines this month. The long-awaited publication of the draft regulations sparked a wave of sceptical coverage of the government’s intended revolution in home-buying. But housing minister Yvette Cooper was adamant of the need for change (see [2005] Gazette, 3 November, 5). The experience of moving home was ‘stressful enough without losing hundreds of pounds on legal fees or valuations for properties’ when sales fall through, she said.

‘It is crazy that over £1 million a day is wasted like this. HIPs will actually save money and cut waste in buying and selling homes,’ she said. At the moment, more than a quarter of sales collapse after an offer has been accepted, nearly half because of the problems that emerge when surveys or valuations are carried out. The HIPs logic is that by providing the information at the beginning of the process, the packs will dramatically reduce the number of sales that fall through.


The proposed contents would include a sale statement describing the property; forms for fixtures and fittings; evidence of title from the Land Registry or copies of the deeds; search information; warranties and guarantees; and a home condition report (HCR). For leaseholders, it is proposed that the pack would also include the lease; details of the landlord or managing company; details of service charges, ground rent and insurance; and information about planned works.


Only inspectors who qualify under a certification scheme approved by the secretary of state would be able to prepare HCRs. This will be robust to ensure that standards are maintained, ministers insist. Compulsory HIPs would be introduced in early 2007.


Media cynics complain that buyers are hardly likely to trust HCRs filled in by ‘cowboy’ inspectors, or in any case a survey commissioned by the seller. Nor would lenders have any confidence in the packs, and would ultimately require their own surveys. Solicitors have their own concerns. ‘There are still many problems surrounding HCRs and choice of inspectors and regulation,’ Law Society President Kevin Martin warns. ‘The HCR is one of the most important components of the packs. It is worrying that the government still has not set up appropriate certification arrangements to regulate and control not only the production of the report, but the people who produce them.’


Other solicitors are more outspoken. ‘We are in the process of making the best of a bad job,’ reflects Michael Garson, a former Law Society Council member for residential conveyancing, who was involved in the consultation on the proposals by the Office of the Deputy Prime Minister. ‘The legislation is a mess. It is an incomplete revolution because it leaves certain areas untouched.’


Like many practitioners, he is concerned about the regulatory void in which a new breed of home inspectors would thrive. ‘The government doesn’t want to go to the expense of setting an independent regulator, and so it will be left to the private sector,’ he argues. ‘Obviously the market will be driven by the need to make a bottom-line profit as opposed to the need to have high standards.’


‘It seems that while solicitors have to be regulated under a new independent regulatory regime, for a mere 7,000 home inspectors the government is prepared to just cobble together a system where they’ll be several certification schemes,’ comments Denis Cameron, immediate past chairman of the Law Society’s land law and residential conveyancing committee and a Law Society Council member.


He maintains that the government’s original intention to have a proper centralised certification body has ‘gone by the board because of pragmatism, concerns about time, and also because the government does not put money into it’. He argues that it is ‘inevitable’ that inspectors will be linked with HIPs providers. Practitioners’ concerns have been echoed by politicians in the past few weeks. ‘HIPs will be a breeding ground for cowboys happy to ignore problems, or worse, not qualified to identify them,’ said Sarah Teather, the local government spokeswoman for the Liberal Democrats.


There are more self-interested, if understandable, reasons why a profession that is faced with a struggle to secure its role in the post-HIPs world may be sceptical about the proposals. ‘Solicitors can’t just continue moaning and standing on the sidelines,’ Mr Cameron says. ‘We must be in there fighting, or we will lose the market.’


Over the summer, Chancery Lane urged caution on the part of the profession before jumping too quickly into IT deals to produce packs. Instead, the Society has announced, just ahead of publication of the draft regulations, that it will be developing its own product to enable solicitors to prepare packs. Mr Martin describes it as having ‘numerous advantages’ – such as being an on-line service ‘which will require nothing more than a PC and an Internet connection’, as well as being ‘competitively priced’.


Richard Barnett, senior partner of north-west volume conveyancing firm Barnetts, reckons that there are ‘approaching 150 different organisations’ lining up to be HIPs providers. His view is that the big estate agents would delegate the work to the conveyancers that they are recommending. However, several corporate estate agents have already declared that they intend to provide HIPs themselves. ‘The people who haven’t yet revealed their hands are the lenders,’ says the solicitor, who is also on the Law Society’s HIPs task force. ‘They might say defensively that they have to produce HIPs, and might as well do it at a reduced-to-nil charge if the seller takes a new mortgage with the lender. It becomes a cheap way to keep loyalty.’


Mr Barnett points out that the draft regulations appear to have left the possibility of any kind of legal comment on the documentation up in the air. The Law Society has argued that the pack should have a ‘health warning’ to make it clear to buyers that they would need to take legal advice on the transaction.


Rob Hailstone is founder of the Home Information Pack Action Group (HIPAG), a solicitor-led pack production group. ‘I have been a conveyancer for 25 years, and 18 months ago I saw that e-conveyancing and HIPs were coming, and I was just fed up with all the changes,’ he recalls. ‘I thought, “we won’t survive this unless we are proactive”.’



Mr Hailstone has suggested that solicitors should take their own initiative, which was the start of HIPAG, and immediately attracted 50 members. Since then the group has built a membership of 230 solicitors plus 80 estate agents. ‘We’ve only just really scratched the surface,’ he says. HIPAG has recently announced a partnership with stationery and legal software provider OyezStraker to go into pack production, and is now ready to do some ‘serious marketing’.


‘There are a lot of competitors out there who don’t have the interests of anyone else but themselves at heart,’ he says. ‘They aren’t thinking about the independent estate agent, the high street solicitor, or even that the public gets the pack that it deserves.’ His view is that the best way to produce a pack is to work in conjunction with high street solicitors, local estate agents and locally-based home inspectors.


Easy Convey is, as the name suggests, a developer of electronic conveyancing products and will produce HIPs for estate agents and their sellers. Its managing director Dominic Cullis thinks that solicitors will remain an important part of the process. He predicts that estate agents are going to need help to compile HIPs, and local solicitors ‘will be the obvious first port of call’. He adds: ‘Our message is that legal profession should not be concerned about the change. They should be embracing it.’


Easy Convey already provides software to some 270 law firms across the country and has been doing it since 1999. ‘I don’t see how someone can provide a HIP service if they aren’t a solicitor or a licensed conveyancer,’ he argues. If issues are identified in the production of a pack – for example, the seller has failed to get the right planning consent or there is a defect in the title – a properly qualified professional is required to sort out the problem. If those issues are dealt with immediately, then the property is more marketable, because people are not going to buy or make offers on properties that have unresolved issues, he says.


Solicitors are concerned that the regulations as drafted will create two types of pack – a thorough, professionally-executed model versus a bargain-basement version. Mr Hailstone explains that the regulations specify a required list of documents, plus a list of authorised documents that are not obligatory. ‘Most of the producers will put in the required documents and then put the property on the market straightaway, end of story,’ he says. Unless the HIP is a ‘quality product’, the solicitor maintains that the seller’s lawyer is just going to insist on the authorised documents as well. ‘It could be a pointless exercise, really,’ he adds.


Mr Garson is hopeful that solicitors can turn the Law Society pack into the ‘pack of choice’. He says the problem is that there may be many businesses coming into the field which could produce packs and churn them out like pieces of paper. He reports that feedback from estate-agent clients suggests that many will go for the cheapest pack possible which, as he sees it, defeats the whole point of the legislation.


He also argues that such an approach is actually encouraged by the draft regulations, as the basic documents that must be included are fairly straightforward, and the regulations allow providers to put in a standard form and leave some of it blank. ‘It effectively encourages a two-tier market,’ he warns.