Market report

Skip to the HIP-hop

8 March 2008

When a new piece of property legislation is implemented, it is not always easy to foresee how the industry will adapt and evolve in response. In the case of Home Information Packs (HIPs), estate agents were immediately identified as the profession for whom the HIP would have the greatest impact. Of course, there were many other interested parties and the Royal Institution of Chartered Surveyors and the Council of Mortgage Lenders entered the debate alongside the voices of the National Association of Estate Agents and the Association of Home Information Pack Providers.

However, now that HIPs have been fully rolled out for all properties, it is starting to become clear that the new legislation is in fact opening up opportunities for a much more diverse group of property professionals and that a network of relationships is being formed.

Enhancing your service

Although estate agents naturally account for a large proportion of the HIPs being ordered from HIP providers, other groups such as mortgage intermediaries, lenders and conveyancers are also taking the opport-

unity to order HIPs on behalf of their clients, increasing and enhancing the level of service they are able to offer.

A steady percentage of HIP orders come from mortgage brokers and IFAs and in real terms, the numbers are substantial. If the IFA, for example, is the first port of call for a seller who initially wants to see what they can afford for their next property, it makes good business sense for the adviser to offer a HIP as an additional service. What’s more, many IFAs that have provided HIPs have been able to increase their commission further by also selling a conveyancing service. In the current climate where the market is tightening, this diversification of business offering is creating a very welcome boost to their profitability.

The handful of HIP providers that have established a pedigree in the industry are able to tailor their offering for brokers, providing bespoke software that is individually branded and laid out in a user-friendly way. Having the capacity to offer their clients a HIP allows IFAs to strengthen their consumer proposition and this can set them apart from the

competition.

To this end, business alliances have begun to form within the property industry, greatly improving the efficiency of the HIP production process. Partnerships between HIP providers and mortgage advisers enable a fully integrated service to be offered, allowing the home buying and selling process to become fully streamlined for the consumer. As the HIP becomes properly ingrained over the next couple of months, we expect alliances with HIP providers to become much more common, extending across the various property professions.

Better informed

So, how useful is a HIP to brokers and lenders and how are HIPs being received by the mortgage industry so far? Initial feedback tells us that having the information from the HIP earlier in the process is helping these professionals to feel more in control and better informed.

In this respect, HIPs are doing what they were conceived to do – improving the transparency and efficiency of the home buying process by providing important information upfront to the parties that need it.

However, as it currently stands, the HIP can only go so far in informing the mortgage industry. There is therefore a strong case for bringing back the compulsory Home Condition Report (HCR), as arguably, this is what will transform the packs into a really useful tool for mortgage advisers and lenders.

This view that lenders should start to use HCRs to assist in vaulations was supported at a recent industry roundtable on HIPs. In the current climate, with stricter lending criteria and falling mortgage approvals, the need for more specific information at the start of the mortgage application process is paramount.

In more ways than one, HIPs have already had a greater ripple effect on the property industry than could at first have been guessed. Over the next six months, as we approach the first anniversary of the packs and the first-day marketing deadline passes, we are likely to see the network of relationships expand as the need for a streamlined service becomes more important than ever.