Interview With The Angry HIP Consultant

For those of you unaware, a few weeks ago, the newly formed Coalition Government scrapped the Home Information Packs (HIPs).

Unsurprisingly, most people were more than pleased to see the back of them. The added cost of selling a house just didn’t make sense for vendors and estate agents! But on the flip-side, there are thousands of people who have changed their lives/careers so they could make a living out of providing HIPs! What about those people?

As soon as it was confirmed that the HIPs were indeed going to be scrapped, I contacted Paul from hip-consultant.co.uk and asked him whether I could ask him a few questions about the killer blow that has pretty much destroyed his business.

Unfortunately, by the time I received the answers to my questions, I was due to go on holiday, so I couldn’t publish the interview while the iron was hot, which I apologise for. But nonetheless, here’s how Paul feels about the scrapage of HIPs, and how it’s affected his business…

1) How has the scrapping of the HIP’s affected your business in terms of:

a) Staff e.g. have you personally had to let people go?
b) Revenue
c) General business model

Unfortunately, Paul refused to answer the above questions, which I can fully appreciate and understand. I did say he could answer whichever questions he felt comfortable with.

2) How do you feel the new coalition government has handled the situation with HIPs?

Firstly, of course the government recent actions have affected us very badly and I disagree strongly with both the way the Conservatives handled it both in opposition and now government. We had contact with Grant Shapps’s (housing minister) office and whilst they generally responded we were never given any confidence they were listening or managing the situation well. The majority of this correspondence and our concerns we detailed on our blog.

I don’t want to pick over the bones too much as I accept HIPs are history and we all need to move on, me included. However, I know many have been left feeling perplexed and bemused by the way it was actually conducted. Most people are now realising we have taken a step backwards and there is now no obvious way forward.

3) Who and how many people have been affected by scrapping HIPs?

No-one knows what the actual number of job losses will be though most tend to agree it will be between 3,000 – 10,000 jobs.

4) Any words to those that wanted the HIPs scraped?

On the day it was announced we had Eric Pickles (secretary of state), Grant Shapps (housing minister) and Kirsty Allsopp (TV presenter / housing expert) using the opportunity as a political and self promotional PR event. They cut ribbon, laughed and joked and made speeches on what a great day it was, all the time knowing they were going to decimate an industry.

Stand back from whether you in favour of HIPs or not and ask yourself was this PR event not done in rather bad taste. I can tell you many in the industry were shocked and left feeling absolutely disgusted at this.

For example, I do wonder if a change to the law which meant two car factories closing down each with 5,000 job losses or 10,000 job losses at BA due to changes in government legislation would have been welcomed in the same way as our industry and the job losses to follow. Would the secretary of state be marking the day with a jubilant event set up by his department? Would the government recruit celebrities to attract more media attention?

5) Over the years of distributing HIPs, do you think they’ve improved the buying/selling process of properties?

Simply, yes. I am not going to try and kid you that they were perfect, they were not and needed improvement. To expect that it was going to be perfect from the start would be very naive. From experience, a lot of members of the public didn’t understand the HIP; it was one of the industries’ biggest failures in my opinion but that is a different story. Once the concept was explained most could see the solid basis on which and why it was introduced.

However, the HIP was quite simple in that it gave a vehicle or shell if you like for upfront information to be provided about a property for sale. This shell could have been used to include information which the industry felt would help the home buying and selling process. There was the opportunity to add more information, remove existing documents or even change timescales associated with certain documents such as searches if required. This was not explored by the government and I feel that is a great shame.

As I stated there were mistake made along the way during the introduction and implementation of HIPs without doubt. However, the concerted anti-HIP campaign I witnessed was quite unbelievable at times. I have often felt that if the same amount of effort, co-ordination, resources and dedication to the aim of bringing down the HIP had been put into working with it, the industry could have really moved home buying and selling forwards and not backwards.

Whilst it was obvious companies such as ours, HIP-Consultant.co.uk would benefit from the success of the HIP, there are clearer businesses, organizations and their members who will now benefit from its demise.

One can question whether this is the real root of the problem to the home buying and selling process and its reform? Have these organizations become so powerful they control the market and present problems and issues comparable to what we saw in the banking crisis?

Unfortunately, due to Grant Shapps (housing minister) stance and personal crusade to scrap HIPs it was almost politically impossible for him to listen to reason and adapt not scrap HIPs. Grant Shapps has never put forward alternatives to help the home buying and selling process that am aware of.

6) On a personal level, how angry/frustrated are you about this whole issue? What part about it angers you the most? Let it all out. As you may know, censorship is not an issue on my blog.

At present I remain incredibly frustrated, angry and annoyed at the destruction to our business and it feels like an incredible waste of the time and effort we have put in over the last 3 years. We had started to look at the future in case HIPs were scrapped; with hindsight we should have started this sooner.

We believed Grant Shapps would honor his official statement to us and the industry when he said he would consult with the industry before scrapping HIPs. Grant Shapps refused to explain to us about how he envisaged the consultation process would work. I should have been more skeptical on the consultation actually happening as I was never sure what the point of it was meant to be when they had clearly made their minds up of the end goal.

It remains unclear if the way the government suspended HIPS was lawful and there are talks about whether this will be challenged and put to the test in the courts. It does not appear there was a great deal of evidence to suspend the legislation and if it would be ‘classed’ as ‘exceptional circumstances’ as per the section of the HIP regulation which I understand the government used to implement the suspension. This area is not something I know a great deal about so I will refrain from giving out amateur analysis.

It still came as a shock the day it was announced. The following responses by some experts/commentators on various points has added insult to injury for many. Some of the comments and statements are almost bewildering and lack a great deal of insight to say the least.

For example, Kirsty Allsop “property expert” and “special advisor” to Grant Shapps the new Housing Minister. I have to wonder whether Kirsty Allsopp even knows what was in a HIP or what HIPs were all about. I have personally invited her to a Q&A interview on our site after a little contact with her though she has not responded to this invitation.

Kirsty claimed on Radio 4 quite categorically that “Lawyers fees never dropped” while HIPs were in. So I have to ask, did Kirsty Allsop believe that the HIP providers were acting as lawyers for the seller and therefore they should pay the Lawyer less for Conveyancing or is she claiming that thousands of Lawyers have defrauded their clients by not dropping their disbursement charges by charging for a new search even though they used a search provided to them in a HIP during the conveyance?

Kirsty also spoke about ‘some kind of statutory pack that everyone does before they market their house’ at (about 3 mins 50 secs) being a good idea. It is an incredible statement and I am lost for words every time I listen to it. I am sure Kirsty will say this ‘statutory pack’ would be completely different to a HIP though I would be interested to hear what she would suggest goes into this ‘statutory’ pack that could not have been included into a HIP if the desire had been there.

I do not question that Kirsty’s intentions are to improve the home buying and selling process. However, it seems to be mis-guided to campaign to scrap HIPs, and then within hours suggest a replacement which could have easily been accommodated within the current structure.

With Grant Shapps refusing a review of the home buying and selling process it looks as if we will return to the outdated and lengthy complicated process we had prior to HIPs for some time to come.

7) So, what now? Any ideas on how you’re going to adapt your business to the scrapping? Obviously, EPC’s are still required, but are generating those enough to survive on?

Yes, we will still provide energy performance certificates as a standalone service. The business has always had a good level of diversity and varied income streams, though HIPs was the main one as am sure most will recognize. It has gone un-noticed to some extent but the government has lessened the importance of EPCs. It is my belief they would have scrapped them also if it had been legally possible.

We as a business will evolve, though am sure it will take time for us to develop new areas and expand on existing ones. We have just launched a new website Housing Energy Advisor which has recently gone live and we are currently trying to rapidly develop further behind the scenes.

In regard to our Housing blog, we have received some good support for us to continue this, which is our intention. The articles and commentary remain relevant and we will be promoting our new meaning for HIP; ‘helping innovate property’. We will continue to write about property on our blog and have a great series of articles underway de-mystifying Conveyancing, written by a Conveyancer I must add!!

Many thanks for the opportunity to air our views.

Thank you

Just like to thank Paul for answering my questions, and providing me with such in-depth responses. I wish him and his business the best of luck for the future.

Jerry’s final thoughts…

Love ’em or hate him, scraping the HIP’s is going to have a major impact on thousands of peoples livelihood.

To make it clear, I think HIPs were pointless when they were introduced, and I still think they’re pointless now. They should NEVER have been introduced in the first place, in my opinion. But the fact is, the Government did introduce them, and on the back of that, thousands of people created jobs around the scheme. Fair enough.

However, I don’t agree with how the Government put something like that in place, encouraged thousands of people to get training and build careers around the scheme, and then completely scrap them. That’s bullshit.

Your thoughts?

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20 Comments- Join The Conversation...

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Nick 10th June, 2010 @ 21:02

There is a huge difference between making cars and producing HIPs.

One is wanted, and the other was artificially created. If the demand from people for HIPs was there, he would still be in business.

We could alway get one group to dig holes, and the other group to fill them in. Create a law mandating the digging and filling of holes.

Some would claim that its productive.

Nick

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Colin 11th June, 2010 @ 07:36

Hi Nick

You'd be right if that were true, HIPs were the result of over ten years of investigation having been in the Labour manifesto of 1997 giving them a mandate to bring reform in. In actual fact the review was started by the Tories in the late 80's and involved RICs because of a general consensus that reform was needed, what have we seen since, longer transaction times than ever.

HIPs did work to an extent and were easily adaptable as Paul Sailes stated, many improvements were proposed to Grant Shapps while he was in opposition but all he did was moved the goal posts, it became in a sense like having an argument with your dad, once you'd won the argument he'd just say " because I say so!"

The downright lies told and reported in the media about HIPs was unbelieveable including "responsible" organisations like the NAEA, did you know they have not canvassed their members fully since the introduction of HIPs in 2006/2007 yet fully backed the scrapping of HIPs. 100% of NAEA members that I deal with opposed HIPs when they came in but after 3 years they all now supported them and didn't want them to go after seeing how useful they were, we are still and will do for months ahead receiving calls from Solicitors for a copy of the HIP to be used in the conveyance process, proof of the lies told that they are never looked at by Solicitors who incidentally had also come round to approving of them in general.

The problem with HIPs was around them but not really about them, there was massive self interest opposition from powerful organisations who tainted ther HIP from an early stage combined with a Government that couldn't have made a worse job of introducing them if they tried. Lastly was the information provided about them and the HIPs Industry was as much to blame as anyone about this, no one really understood what a HIP was all about until you got to meet them face to face and explained it, many a time I've met a customer who was really anti when I arrived but changed to understanding and accepting what a good idea they were once they were explained properly, most consumers thought that the HIP was just the EPC.

Lastly the Government should have placed more emphasis on quality control of the HIPs Industry, Companies had invested millions to set up and quickly began to cut corners with the cheapest products they could secure, we argued unsuccesfully with CLG that a mandatory product to the consumer should have had Government invovlement in the QA issues surrounding it, had this be in place from the start the parties involved ie Lawyers etc would have had more faith in the product.

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GillsMan 11th June, 2010 @ 08:48

A very interesting article, and good to see the POV from the other side.

Firstly, I completely agree that it was tasteless to celebrate an act which has a massive affect on people's jobs. That was quite disgraceful.

Secondly, when HIPs were first announced, I thought they were a good idea. I still like the idea of such a pack, however as Nick pointed out, there were problems. Personally, I don't think you should have to provide one before you put it on the market. I think you should have to provide one before you sell. The reason is that, paying £500 odd quid for a HIP stops people speculatively putting their house on the market, which slows house sales.

I might be talking bollocks, but that is what I think about HIPs. The theory is, I think, a good idea. It was implemented poorly, however, and that's a shame.

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Nick 11th June, 2010 @ 08:55

However, it still leaves this question.

If HIPs are so good, people will be willing to pay 500 pounds for them.

If they are willing, why do you need to make them compulsorary?

The answer is that people don't want them. That was the only reason that they were made compulsory.

So back to Mr HIP. Why do you want to force people to pay for something they don't want or need?

Nick

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Aunty P 11th June, 2010 @ 09:16

I find Colins claim that 100% of NAEA members he deals with support the HIPS laughable and don't believe it. I haven't come across a single person amongst vendors, buyers, solicitors or any other profession within the industry who deos support them. At every ARLA and NAEA meeting it's spoken about and every single person said they were bad for the industry and put a stranglehold on house buying. When the news broke that they were suspended it was like party time with the good news flying round the industry like a rocket because HIPS was the killer blow to the industry. I didn't hear a single comment saying what a shame, HIPS were useful, etc. etc.

Many believe they were a tool for the government to introduce yet another VAT income stream. They did not help buyers or sellers. The EPC may have some benefits in the long term but it's hard to see how and I have my doubts.

I do have sympathy for HIPS companies. What's happened is not their fault and Paul has a point about the publicity. I didn't hear about that and it does seem in very bad taste to rub peoples noses in it when 1000s of jobs are at stake.

By the way, who is Jerry?

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The Landlord Avatar
The Landlord 11th June, 2010 @ 09:53

hahah! At the end of each Jerry Springer show there's a small caption which says, "Jerry's final thoughts..." where he basically gives a final conclusion to the show!

I guess I was hoping everyone was a Jerry Springer fan!

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Nick 11th June, 2010 @ 15:40

HIPs weren't introduced for the fun of it - in the 80s & 90s there was a major problem with how properties were being traded and HIPs were supposed to be the solution. Whether you think they were the solution or not the decision to be made is whether to go back to the system which has been operating since the 1930s revolution in Land Registry, or whether to develop something a bit 3rd Millenium.

My own choice is to move forward, maybe with drastic modification and improvement, but nevertheless NOT going back 80 years.

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Aunty P 11th June, 2010 @ 18:20

@The Landlord - you been spending too much time in the USA! lol

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Nick 11th June, 2010 @ 19:32

So HIPS solve a problem. So why make them compulsorary?

If they work and are cost effective, people would willingly use them.

The proof was that people didn't want them. In the time they have been in place, they didn't solve anything either. No evidence for any effect.

What is the real problem? It's that the government all too often draws a boundary around the public sector. The effect is the effect on things inside that boundary, and bugger to those outside.

For example, lets get HIPS in, because we will get an increase in VAT. Nothing about the pointless nature of HIPS and the huge cost to others.

It's the same with regulation. ie. Force more people to fill out tax forms. Introduce new tax forms. IR35 is a good example. It's all about the tax take, nothing about the cost to business. Outside the boundary, so not a concern for the government.

For example, what are the inefficiencies in the housing market when it comes to rental?

1. Housing benefit rules.
2. We have landlord registration
3. We don't have tennant registration
4. Eviction is a biased game.
5. Effective redress isn't in place, either way

The only one I agree with is deposits in separate accounts.
HB should be paid direct, and the local authority has to tell the landlord of a change in benefit. If the LA carries on paying, its the LA's problem and not the landlord. They aren't in a position to check.

Nick

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Sarah 11th June, 2010 @ 20:11

Hello Nick

You have twice mentioned 'So HIPS solve a problem. So why make them compulsorary?'

Well simply if they are not compulsorary then a vendor could end up paying for his own searches and for the property he is purchaseing. That would of course be unfair.

Anyone with the most basic grasp of HIPs can understand that.

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Colin 11th June, 2010 @ 21:10

Of course you can also add that if one party doesn't have the correct documents in place than the whole chain can be held up, that's why to work any pack needs all parties to be involved.

Sometimes things have to be compulsory, I wouldn't MOT my car every year if I didn't have to yet I know it's in my own interests to.

HIPS at £500 is rubbish and shows the continued mis information about them, I could supply both a HIP and the sales conveyancing for that price.

AuntyP

You can dispute my comments about NAEA members but I can guarantee they are totally correct, i do wonder how many people who comment on HIPs know aht they were about and what was actually included in them, a very tiny minority I'd guess from the rubbish that has been written about them, the ignorance and vested interests of those involved in this Industry is why the last Government felt that legislation was needed in the first place, Grant Shapps must have had his arse bitten by a HIP pack because he's been that vindictive against them and anyone involved in the Industry.

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Jools 12th June, 2010 @ 08:12

I have never looked at a HIP when buying a property. Whilst an excellent idea in principle they were just too expensive and the only person remotely interested in them was my conveyancing solicitor.

They were ill thought out and, in combination with the continuing ridiculous policy of the EPC, were a white elephant from the start. I do feel very sorry for those who invested time and money into this "pyramid scheme" .

The idea of providing information crucial to making a decision at the front end of the deal is still an excellent idea - Notification of planning issues, neighbour disputes, the provision of a pikey camp next door by the PC coincil, sewage etc is exactly what people need to know - but not at £500.00.

This is the problem with this bloody country - people are too greedy. Instead of reducing HIPS to say £150 and then getting more turnover because of the lower cost the first thought is how much can I make from this?

Yet another of the Labour Governments wet dreams about "empowerment".

Jools

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Nick 12th June, 2010 @ 10:53

Sarah, you misunderstand the point.

Why make the compulsorary?

What's the test that should be applied? It's not like an MOT. An MOT is to protect others from people driving dangerous cars. i.e. You can be adversly affected even when you haven't entered into any deal with the driver of that dangerous car. I've no issue here.

However, with a house, its different. You have every opportunity to look at the property before you buy. You are a willing participant.

So on the compulsion. Think of it in evolutionary terms. What conveys the most advantage and how you test for it. It's simple. You let people decide if they want a HIP or not. If HIPS are so good, then vendors will put up the cash for the HIP because they will get more on the sale than they would without one. If HIPS are not worth the money because there is no difference in sale price, they won't. For a buyer, they can make the judgement. Go for a HIPed property because you save on the searches etc, or ignore them completely because they don't work.

ie. Let competition sort it out. However, the government didn't do that. That means you have to ask the question, why?

It's because they knew what people would decide. They would decide no. ie. People were forced to take HIPs even though they didn't want or need them. VAT is part of the answer.

Nick

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Colin 12th June, 2010 @ 22:54

Quote

"but not at £500.00.

This is the problem with this bloody country - people are too greedy. Instead of reducing HIPS to say £150 and then getting more turnover because of the lower cost the first thought is how much can I make from this?"

HIPS weren't £500, they were readily available at anything from £199 upwards, the problem with this country is people are bloody lazy and don't look around for a good deal, if you paid £500 the YOU were ripped off, that's not the HIPs fault but yours and your suppliers!

The reason your conveyancer was interested in the HIP was why they cost money, the searches involved have always been part of the conveyance process and were just moved forward in the process, your comment proves that the person they were designed for( the conveyancer ) used them, relatively speaking HIPs were a neutral cost but with all the benefits, the problem being they weren't utilised because of bad press , lazyness and ignorance by the consumer not helped by a HIPs Industry that failed to get the message across!

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Nick 13th June, 2010 @ 08:37

They aren't neutral. That's easy to show.

HIP includes searches, and yet costs more than just the searches.

Not neutral.

Again the clear point is, make them voluntary. Then if there are advantages, people will pay for them. If there aren't advantages, they will go the way of the dodo.

Nick

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Jools 13th June, 2010 @ 11:46

Colin,

Re-read my post. I did say I paid £500 for a HIP. I was buying NOT selling!

With regard to people being lazy - I believe it is the fault of the Estate Agents as it is they who provide the service and helpfully do not say " why not look around for a cheaper HIP". However if you do look around the EA will charge you more for their services.

Jools

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Nick 13th June, 2010 @ 13:12

Who pays for a HIP? Seller or buyer? In reality both do. Seller has to pay a higher price, buyer has to accept a lower price, the difference being the cost of HIP.

It's the usual argument that we can tax companies because people don't pay the tax so its painless.

In reality companies aren't taxed, its people. Either customers or shareholders are the payers of all taxes, abeit indirectly.

If you think that is wrong, consider VAT. You are unlikely to have paid VAT unless you are running a company. Or do you? Companies pay it on your behalf.

Nick

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Martin 14th June, 2010 @ 17:50

They were a waste of time and paper, meant absolutely nothing to anyone - had no real value at all, slowed sales, made them more expensive, and were carried out by people with virtually no knowledge of properties whatsoever, who were conned into a "scam" by the crooks we had in government who dreamed it up as yet another "non-jobs"scheme that their cronies could rake in a few bob running...........

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Esme 1st July, 2010 @ 17:52

I am sorry to hear that people will be losing jobs over this, but I am glad to see that they are no longer compulsory.

I hate dealing with Estate agents. They make the whole buying and letting process an absolutely nightmare for me.
If anything I don't think many people would grumble if we made it compulsory for estate agents to be better at serving customers rather than right rude buggers when we are trying to give them business :p

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Trevor Triumph 8th August, 2010 @ 08:54

In reality nobody made big bucks from HIPs, not the HIP providers, Energy Assessors, Estate Agents or Solicitors. The much hyped intitial price of £750 came down to £200-300 very quickly once competition kicked in. Thats less than you used to pay for the searches alone.
I suspect the HIP companies were making less than £25 profit on each HIP, the energy assessors were only making £20 - 30 profit and the end seller, normally the estate agent, might make £50 if they were lucky ( or £200 if you're Countrywide) All these companies set up their business models on the sort of transaction volumes of previous years. Nobody foresaw the credit crunch/ banking crisis that has hit us in the last 3 years, just as HIPs arrived.I doubt if many of these businesses could have survived much longer anyway, even if HIPs had stayed.

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