L&G reveals HIPs survey findings
This Government-led initiative means that from June 2007, homeowners in England and Wales will be required to have a HIP in place before putting their property on the market. A trial run is planned from June 2006. The Government believes that providing key information up front will make the home buying process more efficient and will mean less risk of wasted expenditure and greater certainty for everyone in the process.
When Legal & General first conducted this research in June 2005, 55 per cent of homeowners in England and Wales (or prospective homeowners) had not heard of HIPs. In this year’s research, the level of awareness has risen moderately by 12 per cent but this indicates that there is still much work to be done to help customers and the industry to understand how HIPs will work and how they will affect the housing market.
Perception of Costs
The pack, which will include details on legal issues, warranties and guarantees, energy efficiency and general conditions of the property, is expected to cost in the region of £800. However, over 60 per cent of respondents in the Legal & General survey estimated the cost to be under £600, with 45 per cent believing that the cost should be added to the value of the property and therefore that the buyer should pay. Only 24 per cent think that the seller should pay directly.
This therefore contradicts the view that payment up-front will reduce the number of speculative homeowners testing the market, without any firm intention of selling, with most consumers believing a way will be found to remove the up-front costs.
Paper Vs. Electronic
The HIP is estimated to be over 80 pages for a freehold property and larger for a leasehold property. This year, 63 per cent of homeowners said they would want the pack in paper form with 21 per cent looking for an alternative method on a CD and only 8 per cent would want to view the HIP via a website. The logistical challenge this poses for the industry is substantial.
While the majority of people indicated they would approach either an estate agent or solicitor to provide a HIP, a significant proportion (23 per cent) thought they would collate the information required in the pack themselves. This again highlights the need for education.
Although the HIP will contain a Home Condition Report on the condition of the property, a massive 73 per cent still want to conduct their own survey. If even only a proportion of the people expressing this opinion follow through to action, there will be a huge increase in demand for private surveys in the next few years.
Another key message which doesn’t appear to be coming across is that HIPs are to be introduced to speed up the sales process. Only 37 per cent of homeowners believed this will actually happen, with 59 per cent believing that there will be either no change or an actual slowing of the process.
Stephen Smith, housing director at Legal & General said: “The key learning from this survey is that there is still a need for a huge programme of education so that homeowners understand how the introduction of HIPs will affect their plans to sell property.
“What even the fiercest critics in the industry must recognise is that 75 per cent of those surveyed believed that the introduction of HIPs is a good thing and would not put them off trying to sell their homes. It is now clearly up to the industry to deliver.”