UK Industry Welcomes the Death of HIPs

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The new coalition government in London last week officially scrapped the much-loathed Home Information Pack (HIP) program, which added expense and multiple levels of annoyance to home transactions.

News of the HIPs demise is good news for sellers, who "no longer need to shell out hundreds of pounds for a piece of pointless regulation that benefits no one," the National Association of Estate Agents said in a statement.

Under the program which went into effect in 2007--with stunningly bad timing--every home owner needed to spend hundreds of pounds to produce a HIP, including all the house's certifications and titles.

In hindsight, it seems fairly silly to add an expensive level of complexity to the process at a time when the market was moving into its worst period in a generation. In fact, the property industry railed against HIPs from day one, and almost certainly aided the rapid decline in respect for Prime Minister Gordon Brown's government.

HIPs did have one immediate affect: People who were on the fence about selling their homes rushed to market, in order to avoid the HIPS annoyance. HIPS may not have been the only factor, but it certainly helped attribute to what many researchers saw as an increase in supply at the exact worse time in the market, when the U.K. was trying to stabilize prices.

Once HIPS went affect, agents say it served to keep sellers from testing the market, since they were not willing to spend the money on a HIP, just to put their finger to the wind.

The program also generated a multi-million-pound industry in HIPS inspections and consultancies, designed to help sellers with their new-found HIPS annoyance. While buyers were offered a new level of security, it's hard to argue the program did much good, unless you believe sellers routinely get away with scamming buyers.

One of the key benefits of the HIP program--requirement that each house receive an energy performance certificate--will actually remain in place, experts say. But now sellers will simply need to get the certificate, which will like cost about £50.

After the HIPs announcement, the number of properties listed for sale jumped by one-third, as buyers looked to avoid the HIP expense, estate agents reported. Sellers freed from the HIP expense may be racing to beat a capital gains tax increase looming on the horizon, they speculate.

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