The introduction of home information packs is fraught with problems, but enterprising solicitors can capitalise on the system’s evident shortcomings, says Catherine Baksi


It is two months since the controversial home information packs (HIPs) became mandatory for all residential properties. They have been roundly attacked, by all but the Department for Communities and Local Government (DCLG), as time-wasting instruments which do nothing to improve the buying and selling process.



The final stage of implementation coincided with a downturn in the housing market following the ‘credit crunch’ and the Northern Rock crisis. In the coming months, conveyancers face the challenge not only of maintaining their businesses in the slower market, but also of having to grapple with issues that will be thrown up by the packs – and the regulations that implemented them – as HIPs bed in and develop.



First, there is the troublesome issue of searches. Temporary provisions enable incomplete personal searches to be included in the packs, so long as insurance is in place to cover the possible consequences of omissions. However, these provisions are scheduled to end late next month.



Much of the delay in the conveyancing process is still attributed to the time it takes for searches to be carried out, and personal search companies complain that they are being denied access by local authorities to the information required.



The DCLG has tried to improve the situation by issuing guidance to local authorities, stating that search data should be provided to personal search companies within 24 hours of a request.



But practitioners claim this will not solve the problem. Peter Ambrose, director of HIP provider The Partnership, says local authorities lack the capacity to comply with the suggested turnaround times, as they are short-staffed and have been given no extra money by central government.



In any event, he adds, ‘it’s only guidance that’s been given from the DCLG – the time-frames are not obligatory and I can’t see that it’ll make any difference’.



John Cook, business development manager at Newcastle firm Dickinson Dees, agrees. ‘If you want to make a difference you need compulsion, but change is always going to be an organic process,’ he says.



Most in the industry believe the government will have no choice but to extend the current incomplete personal search provisions. As David Kempster, marketing manager at search company Searchflow, says: ‘The industry is just not organised sufficiently for this change to come in.’



Obtaining leasehold documents is another problem area. Currently, only the lease or a copy of the lease needs to be supplied in the HIP; other leasehold information is optional. But this temporary provision is expected to end, and from 1 June full leasehold documents will be required. The consensus among conveyancing solicitors is that this will lead to delays for all leasehold properties coming on to the market, unless the provision is extended.



Another matter that is getting people hot under the collar is the deadline for the end of so-called ‘first-day marketing’ – which lets sellers put their property on the market without a completed HIP, provided that all the documents currently required have been commissioned.

This concession was scheduled to end on 1 January but has been extended to 1 June. From that date, sellers will only be able to put their property on the market if they have a HIP with title documents and an Energy Performance Certificate (EPC). Anti-HIPs campaigners argue that, because HIPs take days to produce, there will be delays for sellers, with the potential to further damage an already fragile market.



Nick Salmon, estate agent and founder of campaign group Splinta – which stands for seller’s pack law is not the answer – says: ‘The end of first-day marketing could be a real downer for the market – it will result in delay and the potential for buyers to lose out. The restriction is unnecessary and will add to the pain HIPs are already causing.’



The pressure group launched a petition on the Downing Street website calling for the government to maintain the current position and allow first-day marketing to continue. So far, it has received more than 6,000 signatures.



Many solicitors seem to agree with Mr Salmon. John Cook says he would be glad to see first-day marketing continued. ‘There are still challenges in the search market that I don’t think will be resolved by the current expiry date,’ he says, ‘and this will delay the process.’



Richard Barnett, senior partner at national firm Barnetts and chairman of the Law Society’s conveyancing and land law committee, agrees. ‘I don’t think there’s any mischief in allowing first-day marketing. If it were to be stopped, it would put up a barrier to the free market.’



The DCLG would not be drawn on whether the current practice would be extended, but Mr Ambrose says the change would not be as problematic as people think. ‘The end of first-day marketing is getting a lot of people very nervous, but they’ll still have 28 days to get searches and leasehold documents while the property is still marketed. The only things they have to wait for are the EPCs and the title documents.’



When they were first announced ten years ago, the home sellers’ packs were supposed to speed up the home-buying and selling process and reduce the number of failed transactions, by providing the potential buyer with as much information as possible at the earliest stage. Since then, however, the packs have been greatly slimmed down, and the government is now emphasising the green benefits of the EPCs. HIPs now only need to contain the index, evidence of title, sale statement, searches, an energy performance certificate and, where appropriate, a copy of the lease or commonhold information.



Many share the view that, in their current state, HIPs are unhelpful and add nothing to the process.



Rob Hailstone, chief executive of pack provider HIPAG, says: ‘We’ve got a basic pack that doesn’t help at all. What is required is a more comprehensive pack.’ But, he says, ‘we do have the foundations to build upon, and I think we will see moves towards a more useful pack and possibly a step towards some form of legal summary’.



He anticipates the packs will take a completely different shape over the coming months and, on a more positive note for solicitors, says the paucity of the current pack could act in their favour.



‘The commercial advantages of HIPs being in such a poor shape are weighted in favour of solicitors, who can take the opportunity to add value to the packs by adding extra documents earlier on in the process, such as planning permissions, guarantees, court proceedings.’



Mr Barnett would also like to see the packs evolve into something more worthwhile, with greater legal emphasis and solicitor involvement. ‘I’d like to see a “HIP plus” that would contain all the elements that are currently mandatory, plus other documents such as leasehold papers, a draft contract and transfer agreement – something almost akin to what solicitors prepare for an auction.’



Law Society Vice-President Paul Marsh would like to see this too, but he does not think the contents will be changed in short order, given the problems in obtaining the documents currently required.



HIPs were initially planned to contain a report on the condition of the property – the home condition report (HCR) – but the government decided to make these voluntary, due in part to mortgage lenders’ unwillingness to rely on surveys conducted by the sellers. The DCLG says the position it has taken on the issue is to adopt a market-led rather than mandatory approach to HCRs. But, as the market is ignoring HCRs because they are not compulsory, they seem likely to remain excluded.



Mike Ockenden, director general of the Association of Home Information Pack Providers, would like HCRs to be mandatory and the DCLG to bite the bullet in the same way that the Scottish government did earlier this month. From December 2008, all properties being marketed north of the border will require a seller’s survey known as a Home Report. But, given the market’s attitude and the government stance, this seems most unlikely to happen south of the border.



Michael Garson, chairman of the executive committee of the Law Society’s property section, sums the situation up: ‘HIPs are changing and will continue to modify over the next year. By the end of the year, I wouldn’t be surprised if the new minister called for a moratorium. She should halt the process, produce the results of how things have gone so far, and have a fresh consultation to address the problems in the conveyancing process.’



Mr Garson acknowledges, however, that this may be wishful thinking.