Before I consider the question, I think it is important that we understand exactly why the Government wanted to bring in reforms to the property market and, in order to do this, we must travel back in time – nearly 10 years – when the property market was very buoyant and some unscrupulous sellers were increasing the prices of their properties just before exchange of contracts (gazumping).  It was considered that doing something about this practice may make the government of the day popular, however, it was soon discovered that gazumping was only affecting 2% or less of the market.  This clearly resulted in a re-think and it was suggested that, because a number of properties fall through just prior to exchange, there were considerable abortive fees incurred, payable to the lawyers and, therefore, that something had to be done to ensure that the transactions exchanged quickly in order to prevent such a high proportion of fall throughs.  The decision was made on historical data, which was out of date at the time, since many lawyers by then had adopted “no sale, no fee” or “indemnity schemes “as a reaction to consumer demands. 

The HIP, as proposed, was to include all searches, survey and proof of title but, through a number of u-turns, the home information pack now only has to include a sale statement, index, office copy of title and plan, drainage search, local search,energy performance certificate (EPC)and laterly a Property Information form.  The survey or home condition report was apparently removed as a result of there being insufficient inspectors available at the time of the launch but anecdotal evidence indicated that the real reason was that the home inspectors were unable to obtain indemnity insurance since it was impossible to state who was the client – was it the seller who will be paying the fee, or was it the buyer who was to rely upon the survey and to whom did the inspector have a duty of care?

 So that is the history and now, in practice, since the home information pack has been a requirement for over a year, what effect has it had on the market?

 It appears that in November 2008  the market had dropped over 75% in terms of volume and we are therefore seeing HIP providers merging or going out of business.  We are seeing estate agents laying off staff and/or going out of business and the same can be said of property lawyers. 

The implementation of HIP certainly brought uncertainty into the market, which had an effect on consumer confidence and in real terms has done nothing to speed up the process since, indeed, many property lawyers, prior to the imposition of HIPs, were already sending out documents to buyer’s lawyers that were designed to speed the transaction to exchange.  The  buyers were merely left to carry out their own searches and arrange their own mortgages.

 The home information pack is clearly an unwelcome change, as regards the consumers, estate agents, lawyers and lenders and no benefit can be found, indeed, many sellers consider it as yet another stealth tax imposed upon them.

 It was the present government, who loudly proclaimed they were to bring down the cost of conveyancing, who have now had a hand in increasing the actual cost of buying/selling a property significantly and not just in monetary terms.

 It is significant that any government interference in the property market has always had an adverse affect and I expect to show this in my next post on this subject .