Beneath the spin
The CLG yesterday published the results of its two "dry-run" area trials of the Home Condition Report (HCR) and Home Information Pack (HIP).
The trials, which were undertaken by Ipsos MORI on behalf of the CLG and ran from 6th November 2006 through to 31st October 2007, was setup to answer three questions:
- do HIPs improve the home-buying and selling process?
- how can the take-up of Home Condition Reports (HCRs) be maximised to accelerate any benefits associated with HIPs?
- how can the impact of Energy Performance Certificates (EPCs) be maximised?
Let's scratch a little deeper below the CLG spin.
The two HIP trial phases
Phase one: Sellers were offered a free HIP with the option to include a free Home Condition Report (HCR).
Of the 1,892 participants:
- 1,279 took the free HIP and HCR
- 613 declined the free HCR
So, just over two-thirds (68%) of homesellers opted for both the free HIP and HCR.
I have to say, I'm quite surprised at how many declined a free HCR. However, during interviews with researchers, Home Inspectors suggested that estate agents in some areas "were not encouraging prospective sellers to take HCRs.".
In other areas, "some HIP providers were declining to provide HCRs for older or more non-standard properties.".
Phase two: Sellers were offered a free basic HIP without an HCR, but with the option to purchase an HCR.
Of the 698 participants:
- 34 (5%) took the free HIP and purchased the HCR
- 664 (95%) took the free HIP only
Total sample size: 2,616 (26 didn't state)
So... phase two? Well, the mere framing of the exercise is akin to offering airport travellers the choice between walking through the green customs channel, or paying for a finger inspection in the red channel.
Not the full picture
The above picture is somewhat skewed, however, because the sample size of 2,616 reflects only tracked participants - more than 4,000 HIPs were actually ordered:
"In total, 4,319 HIPs were ordered across all eight areas between 6 November 2006 and 27 April 2007. Of these, 3,118 HIPs were ordered during this study’s timeframe, and 2,616 were received by estate agents (2,099 in the six original areas and 517 in the two new areas). It is these 2,616 properties that were tracked until 31 October 2007. Half of those HIPs received (1,313) contained an HCR."
Get that?
Good. Because out of those 2,616 sellers, only 1,268 were interviewed to describe the outcome of the transaction at the end of the Area Trials, according to IPSOS MORI's survey.
How many properties sold (or not)
Lumping everything together (ie: whether with an HCR or without):
- 55% sold
- 20% withdrawn
- 24% remain on market
So 44% did not sell, for whatever reason... which strikes me as quite high given the area trails were conducted during a housing boom.
Interestingly, around four in ten sellers agreed that having a HIP would speed up the sale of their property and approximately the same proportion disagreed.
But after the property was sold, fewer sellers were likely to agree that the HIP helped to sell their property (22%). In addition, whilst 37% of buyers agreed the HIP had helped, 41% disagreed.
On a plus point, despite the survey saying the HIP had very little impact on a buyers decision to purchase a property, I actually thought the 7% that said it did, quite high.
But then, that was during a time when the HIP was not compulsory. Now the HIP is mandatory - and given that any problems it throws up will/should be ironed out before presentation - it's difficult to imagine that the HIP alone will impact a buyers decision to purchase.
HIP providers
During interviews with HIP providers, it emerged that "...they were only complying with the minimum requirements for the HIP using personal searches and including only mandatory documentation in the HIP."
The decision to include only mandatory documents was for "...business reasons to reduce costs". Many stated that including more than the minimum would lead to a delay in the property transaction.
Some HIP providers told researchers that, although they could find Home Inspectors to conduct HCRs easily, they wanted to charge variable rates according to property-type and size. This meant that - because of the incentive available during the trials - the HIP provider didn't feel HCRs were worth pursuing.
The Energy Performance Certificate
On page 60 of the report we come to the Energy Performance Certificate (EPC) which finds - surprise, surprise - that sellers were unlikely to act on the information provided prior to, or during, marketing.
When asked why, sellers said they didn't believe the EPC would greatly influence a buyers decision to buy their home. This was backed-up by comments made during a group discussion held with home-buyers.
Sellers did say, however, that they would consider making at least some of the EPC recommendations to a home they bought. One-third of buyers said they would consider making at least one.
EPC won't help sell property
Like the HIP, sellers weren't convinced the EPC would influence a buyers' decision to buy.
Again, the trials were conducted before we had $100+ per barrel of oil and the recent 15% increase in household energy bills (on average).
How many EPCs a day?
Home Inspectors told researchers they could do, on average, 4.5 EPCs a day, citing between 30 minutes to an hour for the survey, and between 20 minutes to an hour for write-up and submission.
EPC has pretty graphs but too text heavy
Sellers, in general, paid more attention to the charts and tables but found the text beneath too "text-heavy" and not directly related to their homes.
Some sellers felt their EPC ratings didn't explain if their home was "typical", or whether they should be concerned.
Sellers with older properties wanted the EPC to explain that it was the house, rather than lack of investment, that drove an EPCs rating.
Sellers were also concerned about the impact of a secondary heating source on their energy rating and thought including secondary sources in the rating would potentially be misleading.
Very few buyers apparently felt the EPC would influence their purchasing decision but they did admit it could be a tool for price negotiation.
Home Inspector suggestions for the EPC
Unsurprisingly, HIs thought the EPC to be a "very good product" and "excellent value for money".
They expressed concerns on how the forms restricted the scope of reporting; particularly for non-standard properties. The example given was deciding whether forms of heating were either primary or secondary, which could have a large impact on the results of the survey.
Home Inspectors also wanted to be able to express on the EPC if certain energy efficiency measures would be inappropriate for a property. For example, inappropriate PVC windows or solar panels on a listed property.
There is much more but the above are my take-home points and cover the main areas.
Conclusion
My feelings - on the whole - are indifferent; I'm neither surprised nor disappointed. It's basically in-line with what I expected... an expensive waste. Even the report itself emphasises - in several places - how the study is significantly out-of-step with the operation of today's full HIP market.
We often heard from various ministers how this-and-that would be informed by the area trial results, yet there they were, rolling HIPs out regardless. Instead of leading from an informed position, they found themselves pushed by an EU timetable and a growing impoverished, desperate, and unemployed workforce.
"Lessons learnt", we were told. Where are they? And given that the trial-runs bear no comparison to today's full HIP market, what use are they anyway?!
In fact, the 'lessons learnt', arguably play directly into the hands of HIP detractors.
There are no significant lessons within this report that I can determine - Certainly not enough to have merited the drawn-out painful delay suffered by businesses and thousands of DEAs who were left chomping at the bit for a full HIP market back in September of last year.
The mere fact Govt. rolled-out before it was published only serves to feed comments suggesting it was just an expensive exercise; not that attractive to read; too late; and to be largely ignored anyway, because that's what the Govt. did.
You can find the full report from the CLGs spin on it: Trials highlight satisfaction with Home Information Packs and buyers acting on energy ratings
