Estate agents are being accused of putting house sales at risk by ignoring the law on Home Information Packs and marketing homes before Hips are prepared.
A trade body, the Association of Hip Providers (Ahipp), says mystery shopping exercises at estate agents’ offices in three London boroughs show at least 80 homes for sale without packs.
The body claims four council trading standards departments across the UK have issued fixed penalty notices on estate agents – the official sanction for breaching pack legislation – and says some councils are reporting offending agents to the Office of Fair Trading.
The packs include title deeds, search information and energy efficiency data about the property for sale, and must be commissioned by the seller before a home goes on the market. Those who start marketing a home without a Hip in place can be fined up to £200 a day, and if a purchaser’s conveyancing solicitor discovers the pack is missing the sale will fall through.
Ahipp says some estate agents are “openly flouting the law” adding that the penalties served so far are the tip of the iceberg and there are “many more to come.”
“This is not about the rights and wrongs of Hips but about some agents trying to attain a perceived advantage over their competitors by listing properties without Hips. It is perverse, even absurd, that law breakers should be able to get away with this,” says Mike Ockenden of Ahipp.
Hips were introduced in England and Wales in 2007 to provide more “up front” information for buyers. Before them some 28% of sales fell through, often because of problems discovered late in the purchase process.
But despite a decade of debate between the government and the property industry before the packs’ introduction, they have been vigorously opposed by estate agents. The packs have also been criticised by Location, Location, Location presenter and Conservative party housing adviser Kirstie Allsopp. The Tories have vowed to scrap Hips “within weeks” of taking office should the party win the spring general election.
Meanwhile, consumer groups have withdrawn support for Hips because the packs do not include a compulsory survey. This was likely to have been the most useful part of the pack for would-be buyers, who would otherwise not know of a major problem with the home they wanted until late in the transaction process. But the survey was pulled from the packs by the government after opposition from estate agents.
Consumer groups say the system in Scotland works far better. There, the new Home Report system introduced in December 2008 contains only three documents – an energy assessment, an independent valuation and a survey of the property – compared with the seven documents in the Hips used in England and Wales.
Many of those who criticised the Scottish system when it was introduced now support the reports, but south of the border few property professionals have come out for Hips.
“Our view is that the vendor and his agent should put the house in some kind of order before it is offered for sale. It’s frustrating to spend weeks on negotiations and due diligence only to find a problem with the title. We would hope Hips, in some form, remain,” says James Greenwood, managing director of Stacks Property Search.
Supporters also claim that research into 3,000 sales by Connells, Britain’s third-largest estate agent, shows that Hips contributed to an average seven-day reduction in the time transactions took to complete.
However, further controversy has engulfed Hips after research by Which? showed sellers were paying as much as £300 over the odds for their packs to be prepared.
The research showed that the Halifax offered the most expensive Hip for a typical three-bedroom freehold semi-detached property, charging £413. In contrast, online provider Fridays Property Lawyers charged just £189. The research also showed the dearest pack for a two-bedroom leasehold flat was from estate agent Spicerhaart at £516 – more than £290 dearer than the cheapest option from Hip Save.
Which? found that companies that specialised in preparing packs were generally cheaper than estate agents who offered the service in addition to their sales and marketing of the property. Even so, prices varied widely between direct providers, with some almost £200 dearer than others.
The fear among some in the property industry is that if the Tories remain favourites to win the election, some estate agents will not commission Hips on homes prepared for sale shortly before polling day in the belief that they will no longer be needed.
“That’s unwise,” says a spokesman for the Department of Communities and Local Government, adding: “The law is the law until a new one is in place, and that may take months or years, even supposing there is a change of government.”