Financial Times FT.com

Agents turn Hips into a marketing tool

By Elaine Moore

Published: May 4 2007 14:02 | Last updated: May 4 2007 14:02

As the deadline looms for Home Information Packs (Hips), the level of antagonism from industry bodies has been matched only by the level of apathy from the public.

The consensus from industry experts is that the majority of consumers still don’t know exactly what Hips are or what they will have to do to obtain one.

This means that come June 1, when the packs become compulsory for anyone putting their house on the market, there is likely to be widespread confusion.

Hips will contain information about a property such as statement of sale and evidence of title, along with local authority searches, leasehold information and an energy performance certificate. The cost of a pack will vary from house to house but is expected to be £300 to £500.

When you decide to sell your house you have a 28- day period of grace to obtain a Hip. After this you will be hit with a £200 fine.

You will be able to put a pack together yourself, or obtain one through a specialist pack provider. However it is likely that most people will rely on their estate agent to guide them through the process.

While estate agents haven’t all wholeheartedly supported the implementation of Hips in their current form, many have been readying themselves for the deadline and using them as a handy marketing tool. Some, such as Haart, have been urging would-be sellers to put their property on the market before Hips are introduced.

Despite predictions that this would cause sellers to flood the market in the months running up to the introduction of Hips, estate agents say this has not yet happened.

However many still expect a drop-off in the property market after the packs are implemented as speculative sellers currently account for around 30 per cent of the market and these may be dterred by the upfront costs of Hips.

Most large estate agents are negotiating deals with Hip providers and say they will be able to offer clients competitive prices for the packs.

But some have gone one step further and announced that they will take on the cost of Hips themselves.

Hamptons International and Douglas & Gordon estate agents say they will provide Hips for free to their clients, therefore saving them money and hassle. Asda has also said it will provide some free packs for customers in the north-east of England as part of a trial for its new Homes@Supermarkets house selling service.

There is, however, a catch. If you are selling a house and the estate agent provides you with a Hip, it belongs to the agent, not you. If you sell your house with another agent, or remove your house from the market, then you will be liable for a withdrawal fee. The Royal Institute of Chartered Surveyors says you therefore need to be aware of all the costs involved.

It doesn’t matter if you think your estate agent has performed badly, or if your house has been on the market with it for so long that parts of the Hip, such as local authority searches which are valid for three to six months, are now irrelevant, you still have to pay up. The danger is that you then risk paying over the odds for a Hip. As more pack providers enter the market the cost of Hips is likely to drop and could be far less than the one obtained by your original estate agent.

At Douglas & Gordon you will need to pay for a new Hip if your property goes unsold for three months. Director Ed Mead says that there will be space to negotiate this with clients.

If your property is leasehold you could face additional costs at Hamptons. Managing agents who hold leasehold information are under no obligation to provide it at a certain cost. Hamptons therefore will expect the seller to pay these costs, despite claiming to provide free Hips.

Hamptons says it has no intention of raising its commission charge in June to cover the costs of providing Hips for free. Ian Westerling, regional director, says it is relying on the new business the deal will attract.

Mike Ockenden, director-general of the Association of Home Information Pack Providers, says he is wary of estate agent offering free Hips as the cost is likely to hit the consumer at some point. If you sell your house with an estate agent offering free Hips you may save yourself some administrative hassle, but whether it is through a withdrawal fee, a raised commission or increased fee, the cost of a free Hip is bound to end up back with you eventually.

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