“The turkey twizzlers of HIPs are finally coming home to roost”

When we raised the issue last summer about the quality of content within HIPs, we received a barrage of complaints from our competitors that we were causing unnecessary problems. However, as sellers continue to remain ill-informed about the variable quality of personal local authority searches, an inspection by Birmingham trading standards officers has revealed that a majority of HIPs they inspected contained sub-standard searches. We were delighted that at a recent conference Ian Wright MP agreed with our concerns about the use of poor quality content and confirmed this matter would be addressed “imminently”. With the provision allowing the inclusion of personal search insurance due to expire on 31st December, we continue to press for the exclusion on the use of personal searches in HIPs.

HIP effectiveness and Exchange Ready HIPs

Recent research from Connells has revealed that the time between offer and exchange has been reduced by 6 days where HIPs are involved in the process. Inevitably, there remain concerns about the effectiveness of some of the content and the latest fashion for “Exchange-Ready HIPs” appears to do little to address this. “Exchange Ready HIPs” include some forms (which are due to be obligatory from January 1st 2009) an environmental search and a draft contract. Feedback from the Law Society and solicitors has revealed that as most use their own contracts, the value of including such draft documents is highly questionable.

October 1st - EPCs for all properties

As many people are aware, most residential properties that are being marketed for sale now need an Energy Performance Certificate (EPC) before exchange of contracts. However, there are some exceptions for small standalone properties (under 50 sqm), those that are temporary, agricultural or for religious use. It is important to note that the owner rather than their estate agent is responsible for providing an EPC, which differs from HIPs where the estate agent is responsible.

Commercial Energy Performance Certificate Rules

Originally, from October 1st all commercial properties being offered for sale or had a change of tenancy, would need an EPC. The temporary provision that excluded smaller properties (under 2500sqm) that were already on the market, has been delayed until January 2009. However, all new instructions (other than those exempted under the rules above) do need an EPC. The complexity of producing commercial certificates combined with a current shortage of commercial energy assessors has resulted in higher prices with lead-times typically of three to four weeks.

“I love the smell of napalm in the morning ...”

If someone could be convinced to bring the recent machinations of the property market to the big screen, we feel they could do far worse than draw upon Francis Ford Coppola’s experience with Apocalypse Now. With the news of several better-known names in the HIP industry closing due to lower-than-expected volumes, it seems only a matter of time before others will follow suit. As ever, we remain unconvinced by the strategy of very low price points in a service market, and we watch with interest over the next three months, whether those firms that were relying on the usual Autumn increase in instructions will survive.

EPCs for Lettings

From October 1st, an Energy Performance Certificate is required before a property may be marketed as being available to be let. There is a belief that they are only required when an actual tenant is found, probably caused by the requirement that they are required at first change of tenancy. However, the law is clear and states that an EPC must be available to show to any prospective tenant.
Another area of confusion is whether energy charts need to be on lettings particulars. The law states that they are required on particulars for those properties covered by the Housing Act, which does not refer to rental properties. Therefore, charts are only required on sales particulars, but some agents are including these as a matter of course on lettings particulars.

We have found a significant interest in our 48 hour-turnaround EPC service, and in particular our use of employed assessors, which ensures we can guarantee exact appointment times. More information is available on our new website:

www.thepartnershiplimited.com/html/epclettings.html

Extending the “life” of EPCs in HIPs

Given the confusion over the validity of Energy Performance Certificates, the latest announcement from the government was a missed opportunity to simplify the position. Although EPCs are valid for ten years, currently, they can only be up to a year old when first included in a HIP. However, a recent announcement has confirmed that from October 1st, EPCs can be up to three years old when they are first included in a HIP.

Rebranding Complete

We have finished our rebranding which includes a complete overhaul of our website. The site has been designed to be more accessible for agents, solicitors and sellers, which reflects the increase we have seen from sellers looking for information about HIPs directly from us.

www.thepartnershiplimited.com

We of course welcome all feedback on our new site.

"... lollipops, ice-cream, chocolate ... all free today!"

The latest promises from back-bedroom HIP providers would make even a child-catcher blush. With their free floorplans, virtual tours, photographs and brochures, it seems that their plans to capture agents like the hapless children in Chitty Chitty Bang Bang are ambitious to say the least. Indeed, given assurances that their energy assessors have now also become property photographers, we await the results from Boots with mounting anticipation. In our opinion, never has the adage, “if it sounds too good to be true, then it probably is” been more appropriate, especially given the implications of the Property Misdescriptions Act relating to such matters.

Property Information Questionnaire

In a move that reflects government efforts to listen to feedback about HIPs, a new consultation paper was announced this month. There are changes proposed to the contents of HIPs to include additional information about the property itself such as access, boundaries and leasehold details if appropriate. If approved, this change will be introduced in January 2009 and will require sellers to complete the forms for inclusion in the HIP. The Partnership will provide a solution for capturing this information and planning is already underway for the process change required.

Thatched roofs recognised

It has become clear over the past year that home owners with thatched roofs felt somewhat short-changed when it came to the Energy Performance Certificate (EPC). While the insulating properties of thatch are well-known, the calculation methods used in the EPC could not take this into account directly and many owners have been disappointed to see that their roofs were not detailed in the report. However, from next month, thatch will now explicitly be included, highlighting its energy efficient qualities.

New Partnership branding

As one of the few companies actually growing its client base significantly, we continue to invest in the business. From September, we will be refreshing our entire brand which will include changes to the website and our HIPs will sport a new, more professional look. Widely acknowledged as the leader in the premium property market, we continue to invest in our people, systems and our materials to ensure that our clients receive the most professional support in the industry.

Association of HIP Providers – an apology

In our last newsletter, it was stated that the Association of HIP Providers had not warned their members that EPCs could no longer be accessed through a direct link. We have been informed that AHIPP did provide details to their clients and we apologise for any distress that this reporting may have caused.

“Thank you very much David Davis”

We believe that everyone in the property sector owes the former shadow secretary a debt of gratitude. This is because, despite our best efforts, we couldn’t find a single story in Friday’s newspapers about the property market. Given that in recent weeks, not a day has gone by without a doom-laden headline obscuring the details of stories about rising prices and confidence growing amongst surveyors, so it was refreshing to see a change in media focus. Naturally, we agree that HIPs must shoulder the blame for the current dearth of buyers, especially since it now costs less to buy property and agents such as Connells are reporting significant reductions in transaction times due to their use.

Energy Performance Certificate links broken

Earlier this month, the direct links to the EPC register were broken by a system change that had been requested by the government. Although The Partnership has chosen not to join the Association of HIP Providers, it quickly became apparent that not even their members were aware of this change until it was made. The effect is that existing direct links to complete EPCs will no longer work, although we will of course provide replacement links to our clients when requested.

Energy performance firm receives funding

It was announced last week that Close Ventures have made “a significant investment” in Vibrant Energy, an EPC provider, to help ensure their growth. While much of the focus appeared to be on the potential growth in the commercial and residential rental market, this commitment from a respected venture capital firm gives an indication that investors are convinced about the longevity and profitability of energy reporting.

Energy Performance Certificates advertising

Further evidence of the commitment to the analysis of energy use has been the arrival of new advertisements for EPCs in both the national media and regional radio stations. These new advertisements feature a house running on a treadmill while it is being examined by a suitably qualified energy assessor, advising consumers that very soon, an EPC will be coming to a home near them.

The Partnership goes from strength to strength

Finally, we are delighted to report that our business continues to expand with new pilots starting with some of the most respected estate agents in the country. We have been chosen primarily due to our informed and pragmatic approach, as well as the benefits of our technology integration with Reapit. With the support provided by companies such as Niche, ehouse and Christopher Rodgers, we continue to earn the respect of clients and competitors alike as one of the most professional companies on the market today.

"... it's not dead ... merely resting ... pining for the fjords"

With the government's recent announcement that it plans to introduce a single set of standards for Home Information Packs, it appears that despite the efforts of supporters of the HIPCode, this first fledgling attempt at standards appears consigned to the same fate as the Norwegian Blue. In a statement, the government confirmed that they will be working with professional bodies including RICS, NAEA and The Law Society to improve the documentation contained within HIPs. This issue, that The Partnership has been campaigning for over the past three years, has clearly yet to be addressed and the government is now ready to step in to help improve standards. With the use of variable quality, manually produced personal local authority searches and incomplete title information still widespread amongst the majority of HIP providers, this new code of practice should help guide consumers to using professional suppliers and eliminate the duplication of effort that inferior quality HIPs have been generating to date.

Shift in Conservative position on HIPs

The twilight zone that is English Politics 2008 has revealed a change in attitude towards HIPs by the Conservative party. Grant Schapps, the shadow housing minister, has been describing the “positive spin-offs from the introduction of HIPs” and that any future government would be “mad to do away with anything that has been helpful … there is no dogma about this whole thing at all as far as I am concerned”. This monumental shift may cause consternation amongst anti-HIP campaigners who have been ticking off the days to a Conservative government. After years of campaigning against their introduction it appears that to opposition politicians, maybe HIPs are not the guaranteed vote-loser that they had originally envisaged.

Newbuilds

There appears to be continued confusion about HIPs for newbuilds. Although since April, all newly marketed properties irrespective of their build status require a HIP, there is still questions about the use of Predicted Energy Assessments (PEAs) and full Energy Performance Certificates (EPCs). Fundamentally, if a building is incomplete, it will need a PEA that is derived from the Standard Assessment Procedure (SAP) ratings available for all new buildings, calculations that are available from the developer. The PEA can be calculated from these figures without requiring a visit to the property. However, when the building is complete, a full EPC must still be produced, but this does not require an assessor to re-visit the property and is calculated off-site.

Partnership System Usage

To enable our users to enter instructions even more quickly, we have added a new postcode lookup for those that do not use the Reapit RPS system. This means that with our system, universally accepted as being the simplest on the market with single-click ordering and requiring only four pieces of information, it now takes less than 20 seconds to place an order, and we still offer the flexibility of client invoicing and unrivalled ease of access to documents and energy data. We have also added the ability for clients to tell us where there are ancillary properties, as well as online help screens for assistance where necessary.

"... and in the wing-mirror she sees her husband's severed head being banged on the car roof by a crazed axeman".

We are pleased to learn of a new urban myth that is challenging this rather tired classic. Although trade magazines continue to print articles on the market-killing properties of HIPs, the "Exchange-Ready HIP" now seems flavour of the month. Some observers are suggesting that by including the Home Condition Report and the Home Use and Contents forms, this will make them "Exchange Ready". While we welcome their optimism, we are concerned that expectations are being unfairly raised by such promises. Until HIPs include a contract which is agreeable to any purchaser's conveyancer and has all the answers to all the questions about the property that the aforementioned conveyancer could ever ask, the concept of the "Exchange-Ready HIP" remains in the twilight world of urban mythology.

All properties need HIPs

From the beginning of April, all qualifying properties that are brought to market now need a HIP, including newbuilds. This is because Energy Performance Certificates (EPCs) can now be produced for all types of properties, and hence the exceptions that used to exist for properties built to the latest building regulations have been eliminated.

The "Drop-Dead Date" that required properties already on the market before HIPs were introduced, to have a HIP, has still not been announced. With the first year of HIPs nearly upon us, there is still no confirmation whether such a measure will ever be introduced.

June 1st Position

To clarify the position from June 1st 2008 , this merely marks the end of the temporary measures that were introduced last year. From that date, it will be necessary to have the following documents available for prospective buyers before a property can be marketed;

- Index

- Sale statement

- Evidence of title (or a copy of the SIM search showing registration status)

- Energy Performance Certificate

As before, the seller still has 28 days to deliver the searches and the leasehold documentation, but the property may be marketed without these, although the HIP provider must demonstrate continuing efforts to obtain such documents.

EPCs for rental properties

Although not due until later this year, discussions are starting about the requirement for EPCs for rental properties. It appears that the impact of the introduction of EPCs on the rental market will be nowhere near as onerous as many had feared, with a single EPC required only at the first change of tenancy after the start date of October 1st 2008. As EPCs last for ten years, and are NOT required at future changes of tenant, their introduction will be less costly than some had thought.

''The complete collapse of the housing market''

Judging by the number of new instructions that we have been receiving over the past month, it seems that media rumours of the complete collapse of the housing market are somewhat over-rated. Naturally, the amount of negative media coverage about the state of the property market has led some buyers to be a little cautious, but the over-riding message is that the market is alive and well. It seems therefore that despite the introduction of HIPs, the property market has not ground to a complete standstill.

Government validates The Partnership’s concerns

In the most recent release of Progress (http://www.home-information.info/20080314) the government’s bulletin on HIPs, it has confirmed the concerns that we reported last month about some HIP providers not following the legislation accurately, and exposing their clients and estate agents to the risk of penalties for non-compliance. The government has also acknowledged the practice of some providers that deliberately do not proceed with the HIP once they have been ordered and appear not to have the full understanding of what is meant by the term, “official copies of title documents”.

MDA buys Richards Gray

As anticipated, and with the rapid growth in the number of HIP providers, the consolidation amongst them has already started. MDA, one of the larger HIP suppliers, announced at the start of March that it was acquiring Richards Gray, a smaller competitor. Although the acquisition is to be approved by the Office of Fair Trading, this transaction illustrates that companies are seeking to increase market share as quickly as possible and the most effective method is through appears to be through supplier, rather than client, acquisition.

Enhancements to HIP ordering and tracking

Following feedback from our clients, we are making some significant improvements to our HIP ordering and tracking system. While our system is recognised as being the simplest on the market, with single-click ordering from within Reapit, we’re adding more facilities to make ordering and tracking even easier.

After Easter, the upgrade will be complete, with new facilities including:

- Postcode address lookup
- Simplified HIP type ordering (already complete)
- Improved tracking including HIP search
- HIP instruction communication (already complete)

If you would like to know more about these features, please contact us.