It has been known for some months that the Department for Business Innovation and Skills is going to be looking into the home-buying process, with a view to making it “better value for money and more consumer-friendly”.
Agents should not lose sight of what this could mean, even if you are currently pre-occupied with the aftermath of the Leave vote.
At some point in the not too distant future the Department will be making a call for evidence to which individuals and bodies may make responses. We can then expect some sort of report to be published by BIS detailing the findings and making recommendations to Government.
For many of us, there is a feeling of déjà vu about the whole thing.
Way back in the late 1990s the then Labour government embarked on a similar process – which led to a decade-long debacle and the introduction of the ill-fated Home Information Pack.
The coalition government first suspended and then abolished HIPs via the Localism Act in 2012.
I write this piece with the sincere hope that this administration will not repeat the mistakes of its predecessors, and here I declare my interest for, as many of you will know, I led the SPLINTA campaign against the packs.
It was a coalition of some 2,000 firms of agents, lawyers, surveyors, mortgage brokers and association bodies. It gained enormous publicity and I don’t think it is being immodest to say that the campaign was highly influential in the eventual demise of the pack – but that demise was not our original goal…
In 1997-8 without very much publicity at all, and even less consultation, what became the Department of Communities & Local Government commissioned a weighty report into the home-buying process.
It was packed with so-called ‘facts’ and concluded that about 28% of all sales fell through and that the consumer was wasting some £350m a year in abortive transactions.
As a result it was deemed necessary to improve the process and to do it by requiring the seller of a property to prepare a package of legal information about the property prior to it going on the market. In addition, the pack would have to contain a ‘condition report’ on the structure of the building.
On the surface the proposal made sense but when the practicalities were considered the whole scheme fell apart. Worse, the ‘research’ turned out to be less than robust.
The property/ finance/ legal industries polarised into ‘pro’ and ‘anti’ camps over HIPs.
At times things got every bit as rough and nasty as the recent Referendum campaigning. Housing ministers even lost their jobs over it.
The root cause of this long, costly and ultimately wasteful saga was the intransigence of ministers and, crucially, their civil servants, to bend from the original declaration that a Sellers Pack (later called Home Information Pack) would be introduced come what may, and that certain key elements of the pack were not open for negotiation or amendment.
Faced with this reality, SPLINTA had no option other than to abandon attempts to get the proposal made practical – by providing relevant information to the buyer in a timely manner – and instead aim the campaign at getting the pack killed off entirely. And that’s where the real fight began.
If you want to read a history of HIPs there is a pretty comprehensive paper on the parliamentary website which you can download: www.parliament.uk/briefing-papers/rp10-69.pdf
Today it looks as if the wheel is turning full circle again and we are back with a government that wants to improve the home-buying process. You’ll forgive me if I view the intention, laudable though it is in theory, with a slightly jaundiced eye.
For regrettably there is already more than a whiff of suspect ‘research’ and simplistic/ sensationalist reporting in the air.
On March 17 ‘This is Money’ ran a story on the Government intention to improve the home-buying process. It stated that BIS research shows consumers are losing £270m a year in abortive transactions (at least that’s £80m less than last time round).
I do hope that their research is more robust than that undertaken in 1997 when the spurious figure of £350m of losses was extrapolated from the data of less than 30 individual transactions. But since I cannot lay hands on the actual BIS research I can’t tell you.
And ‘This is Money’ had these lines as well, which could have been lifted from just about any story about HIPs any time from ’97 onwards. (By the way, Which? has form when it comes to this subject and I think it is fair to say that estate agents are not their favourite people.)
“Recent research from Which? Mortgage suggests seven in 10 people who have bought or sold a home have found it nerve-wrecking and the biggest source of stress except for getting a divorce. Having a child, changing jobs and arranging care for an elderly relative are all said to be less stressful than getting involved in the property market, according to the survey.”
Do we all want to improve the home-buying process? Yes, of course we do. Can the process be made more transparent and less stressful? Probably.
When the Sellers Pack came along I was a working estate agent. I knew from experience of the effect the packs would have on the market and how they would fail to cure its ills.
SPLINTA grew from the support of agents, legal firms, surveyors and mortgage groups. It gave a voice to those whose voices would not otherwise have been heard. But we had to build it from scratch, and that took some time.
Happily, today, we have a ready formed voice for the industry – Property Industry Eye – and we are going to use it to give YOU a say in what goes on with the BIS initiative and any of the resulting proposals.
In the coming weeks we shall be actively monitoring the story and at the appropriate time we shall:
- Survey EYE readers for information, research, constructive responses and proposals
- Set up a special panel of readers to monitor sentiment in the industry and the actual call for evidence when it comes
- Run conference/ round table events to discuss the evidence and any proposals
- Use webinars and video to interact with readers on the subject
- Deliver news stories and thought pieces on the subject along the way
- Collate and deliver an industry response to the consultation
We know that you will want to be part of this and we look forward to bringing you into the process.
From time to time I shall break my usual habit of not getting involved or commenting on stories on EYE.
I will do so because I care about the industry, have experience of dealing with such proposals, and can hopefully contribute positively to what BIS is setting out to achieve. This may be ‘Son of HIPs’ but it won’t be ‘Son of SPLINTA’.
It will be ‘EYE leads the industry’.
Comments (14)
Wasnt the main problem with these is they were neither fish nor fowl . Any defects flagged up were never expressed in sufficent detail to satisfy the requirments of the lender This meant the buyer then had to go to the additional expense of commissioning a full structural survey to satisfy the mortgage company which then introduced the delay back into the system
You are almost correct Gwrthdaro27 but a full structural was nothing to do with mortgage companies.
The structural survey would have filled in the massive gaps within the Home Condition Report – not least the costs of remedial works etc.
The government/civil servants swallowed the pro-HIPs line that mortgage lenders would rely on automatic valuation models (so-called desktop valuations) – which was always nonsense – so a buyer would still have had to pay for the mortgage valuation inspection (which is never a survey) and we would still have had the delays inherent in the mortgage application process.
Just another nail or two in the coffin of HIPs.
n.b. In a day or two I will copy the article and comments to a new topic on the EYE forum so that the thread can be continued if anyone wishes.
I dont really understand your comment “the full structural survey has nothing to do with the mortgage companies” Most buyers avoid the expense of a full structural survey unless the mortgage company insists on one as a condition of the loan .As you say its there to fill the gaps in the Conditions Report Thats why the report has limited use and does little to speed up the process
The original idea of the home condition report (HCR) was to satisfy equally the seller, the buyer and the mortgage lender. Both seller and buyer have a better idea of the properties faults and be in a position to make a more informed choice, prior to making an offer. How many sellers have no idea what state their house is actually in? Very many sales fall apart on sight of a Home Buyers report or similar..
The very original HCR had a report to lender at the end. But of course the Council for Mortgage Lenders didn’t much like this as it effectively did away with the income potential in providing ‘mortgage valuations’.
The HCR was never intended to be a substitute for a structural report (most houses don’t need a full structural) but it was designed to provide the seller, buyer and lender with a much better idea of the condition of a property and to flag up any items for all parties requiring further investigation.
Many buyers having a mortgage valuation (and agents for that matter) still refer to ‘the survey’ and of course it isn’t.
Does anyone else find this amusing to see it rearing its head again now that Parliament are debating the privatisation of Land Registry today!?
The starting point is sales are now taking an inordinate amount of time, leading to uncertainty and frustration which adds to sale risks and abortive costs running into millions…yes I agree!! I would describe conveyancing as forensic now due to so many (provincial firms) now staffed by part time conveyancers as a result of the credit crunch. There are many on line solutions (firms), either tied/connected to the large estate agency chains staffed by call centre staff and processes with no face to face accountability. Fixed fee conveyancing firms who want top copy papers as their margins are too tight to print and robustly approve a contract and therefore get into repeated lines of standard questionnaires and with a disjointed set of professionals in the loop, delay and disaster are inevitable. Likewise, solicitors etc are scared of being sued, so pursue lines of questioning until someone makes a mistake and therefore they can delegate blame if there is a liability that arises. Don’t get me started on Indemnity Insurance that the can be pulled out of a top drawer…for a premium…when the answers are not acceptable. The insurers are exerting a lot of influence from behind the scenes.
The system has supposedly been improved with compulsory Title Registration and Land Registry data online, so why are we in this mess? Its due to the humans and their processes. Anyway, I need to get a move on, I’m applying for the vacancy at number 10 and England F.C. Never let children do grown ups work!
Is Property Industry Eye to become a pressure group? I hope not and would expect a balanced approach to reflect the views of all of us in the industry in which some like me have spent all of their working lives. In my case 50 years!
I have always been pro HIP as it seemed to me to be the only way any one had come up with to improve the currently chaotic, stressful and costly home moving process. Many agents now struggling to get transactions through to exchange have told me that they regret having campaigned against HIP’s as they see now how they helped even in their watered down form to smooth the process and remove most conveyancers excuses for not getting things done.
My hope was that with the help of efficient, digitally engaged non legal HIP producers agents would be able to take control of the whole home moving process only employing lawyers, following exchange, to effect legal transfer of title. This would perhaps have led to agents having to be better qualified and maybe becoming proper licensed professionals. By making it harder to market properties without jumping through a few hoops and having to have a better qualified professional estate agents doing the job perhaps it would not be so easy for the Purple Bricks of this world to steal our market share.
Hi Phil. Good to see you on EYE.
In answer to your opening question. No.
I’ll look forward to your contributions if this review ever gets going.
Sounds an interesting idea.
To be honest i do not know what can be added to help the process, a lot of agents could do a lot more to help themselves and without sounding like a broken record the biggest change would need to be in the attitude of solicitors.
Not sure what can be made mandatory that would speed up the process and not deter sellers from coming to the market.
Will be watching with interest though.
More jobs for the old boys brigade!! Nice big new department and millions upon millions of pounds wasted by people who quite simply couldn’t run a p–s up in a brewery.
Hi Rob
Yes, I do. But as we know so well, it is the practical implementation of that goal that causes the issues. As a single example you’ll remember the fuss over the longevity of local searches in a slow market.
You’ll also remember how the various disciplines in the process all pulled in different directions and how, despite efforts to draw them together, they never sang off the same songsheet. Too many ‘vested interests’ I’m afraid.
I suspect that BIS and government may have rather more pressing items to deal with in the coming months or even years but if they do decide to start the exercise it would be great to have you involved with what EYE is doing. We never were that far apart in our respective thinking.
More than happy to be involved Nick.
Good summary of the history of HIPs Nick.
Do you still hold with the concept of “providing relevant information to the buyer in a timely manner”?
Like you, I want to help (if I can) improve the home buying and selling process.
Unless the legal profession are prepared to join with us to improve the system (and lord knows they need to) I dont think the Civil Service will take any notice, as before. You only have to look at the mess the Civil Service made of the renewable energy Feed in Tariffs and the Green Deal as well.
Insufficient understanding of the market be it property or anything else is a recipe for disaster.
Thanks Nick for such a thoughtful and balanced article and well done to “Eye” for showing leadership on this topic.
I’m really looking forward to reading the contributions from fellow estate agents across the UK.