And what HIP reformers don’t get
Gordon Brown has today said he wants to bring about:
UK Brown Vows To Put Social Mobility At Heart Of Election Racea wave of social mobility not seen in this country since the immediate aftermath of the second world war
I know if I were Grant Shapps, I would be seizing this opportunity to argue that Home Information Packs serve as a barrier to social mobility.
I’ve always had a major problem with HIPs: the middle, ruling and lobbying classes, who dream-up and formulate these laws, seem to believe - in their cosy world of conferences and consultations - that people just don't live hand-to-mouth in the UK. It just doesn't compute.
My home is my prison
When I did the podcast with Paul Broadhead of AHIPP (he's since moved on) back in December 07, I mentioned that AXA, the insurance company, had just published research which revealed that some four million people had been credit-blacklisted.
That was before the crash.
I asked Paul whether this impediment might trap people in their own homes, unable to raise money upfront to pay for a HIP and EPC. He didn’t see it as a “big issue” and suggested the market would sort it out with additional products like deferred payment schemes.
At the time, there was a smattering of deferred payment schemes but all entailed both a credit-check and a time-limit in which to sell the property – if it didn’t sell, you stumped up (plus some).
Thanks to the credit-crunch, there are now even fewer of these schemes knocking about.
The latest one I ran across, last week, via Hip View (No Sale No Fee Home Information Packs), potentially places the vendor at the mercy of the estate agent. One of the conditions it imposes is:
The Seller must comply with any advice given by the Estate Agent to reduce the price of the property and may not reject two or more offers within 90% of the asking price.
No good for my mate. He would be lucky to break-even in this market, even assuming he could sell at the price paid at the peak of the boom (incidentally just weeks before the podcast with Paul, when we were all worried about the rising cost of living and interest rates – how quickly things changed!).
A year after the podcast, just before Christmas 2008, he was made redundant. He now lives as a prisoner in his own home, on the dole, and further hemmed-in by a lack of money to pay for a HIP. Going further into debt is definitely not an option.
The agreement also states: “The vendor must not have had any mortgage arrears for one month or more within the last 12 months.”
Whilst he isn’t in arrears (he had insurance, thankfully), many people are, and someone will argue, I’m sure, that HIPs risk pushing more people into arrears.
However, my friend’s insurance will stop paying-out at the end of this year - his arse is twitching already. In 2007 he fixed his mortgage for 5 years at the then prevailing rate of 5-odd percent.
The dole will only pay interest on a mortgage - and then only at the rate it dictates. With interest rates very low at the moment, it is likely he will have to make-up the shortfall (somehow).
He’s lying on quick-sand, paralysed. Any sharp movement towards terra-firma could sink him.
Social mobility?
This is not to knock the above deferment scheme out-of-hand: it does away with credit checks, interest, and a hefty bill later if there is no sale - which is welcome. But this type of product, whilst trying to target cash-poor folks keen to sell, still excludes many from selling their homes.
The war of surveys
We don’t hear about people in my friend’s position, of course; it doesn’t suit the HIP industry and its representatives to fund surveys that find these “economically-inactive” folk. It only wants numbers that support its existence.
The war of surveys conducted by both sides of the HIP debate is genuinely laughable, if not confusing to the public. I’m sure the only people who believe them are… well, who? I daresay even the authors who cherry-pick amongst them to assert their position don’t really believe they prove anything.
One side says something and the other feels compelled to say the opposite - within days. It plays-out like a pointless game of tennis, except the only people playing are the one’s with most to win or lose – they certainly don’t include folks like my friend, or the lowly DEA trapped in the middle of this mess.
One survey metric the industry is unable to fight, but still insists on trying, is the lack of interest in HIPs from buyers. Is Peter Ambrose (The Partnership) the only HIP guy to get it? HIPs are for solicitors; punters don’t want to wade through 60-odd pages of legalese, for every property they visit.
And with growing illiteracy amongst the (mainly) poor, what good a HIP to them?
Come on guys, it’s time to give ground on this self-delusion. Instead you cling on to anything suggesting otherwise, then spin-it-out to be a majority view - very embarrassing.
OK, maybe HIPs were a little wrong
And now, faced with the real threat of a Tory government in six months time, suddenly AHIPP et al are willing to publicly admit, for the first time: OK, maybe Home Information Packs aren’t as good as we had protested they were for the last three years; and yeah, OK, maybe they could do with a little “reform”, after all.
Yet still the reformers remain blind to the HIP industry’s social responsibility in its proposals. They fail to recognise that markets do, shock, crash; and people like my friend do actually, shock, exist, because of these events.
And so consequently they fail to “stress-test” the implications – both financial and social – on house-prices, shock, actually dropping significantly.
All the industry seems concerned about is selling the idea of a more “efficient” regime of exchange-ready packs, and perhaps a few other minor tweaks – it’s all sales puff they believe a free-market-thinking Tory party wants to hear.
Privacy
I’ve mentioned this before, and I’ve drawn it to the attention of Mr Finch of the Property Codes Compliance Board / HIP Code, way back.
Perform certain keyword searches on Google, and within seconds an identity fraudster’s dream comes to life. Thousands of HIP documents. I’ve even had them drop into my inbox, thanks to Google Alerts.
Reading the privacy policies, terms and conditions, submission forms and agreements of these companies, you soon discover that lots say nothing about a client’s rights under HIP regs. It’s scandalous, and I know if I discovered my financial and personal details so openly littered on the web, I’d haul their ass through court.
By the way, the Data Protection bods have just hiked fines for data breaches up to £500,000 – good.
Truth is, few HIP providers know their responsibilities under the regulations, and lack the expertise to stop these documents leaking out onto the web - either that or they just blatantly ignore the regs to keep costs down; or disregard things which don’t fit into their “minimum touch” business model.
Now the HIP industry is interested in DEAs
In its desperation for strength in numbers, some voices within the HIP camp have even resorted to ring-fencing DEAs into its camp by employing a little 'guilt-play': the ploy of “green-washing” HIPs and arguing that its abolition would not only be dangerous to the livelihoods of energy assessors (appealing to self-interest), but also to the environment (politicians eyeing-up the green vote) - as if either do anything to save the environment anyway!
I do think that’s low. HIPs have always relied on EPCs – or more succinctly, DEAs. That’s the Government’s fault for meshing them together when it should’ve kept them separate (boiler-scrappage scheme anyone? CERT? CESP? HES? Home Energy Advisor? Community Energy Advisor?). But we are where we are.
Despite the key pivotal role of DEAs, however, the HIP industry has all along sought to position itself in front of the EPC and wrestle DEAs to the ground – with considerable success.
And even now, whilst seducing DEAs into its camp, some reformers are happy to quietly agree that EPCs slip back in the marketing process; presumably to sit on-side with current Tory thinking (leaving aside the EPBD2 requirement); but certainly to keep HIPs a legal requirement.
On the podcast, Paul Broadhead admitted that, in hindsight, if the calamitous introduction of Home Information Packs in 2007 was played out again, AHIPP would have reached out to the DEA community and worked with it to overcome the hurdles – made eminent sense.
He also made various allusions that AHIPP would do so going forward, too. Two years later, and…?
Listen to it yourself: Podcast #20: AHIPP's Paul Broadhead (please excuse the embarrassing intro which will probably make absolutely no sense today, assuming it even did then!).
Any replacement or solution to HIPs must be all-inclusive otherwise Government, either through or because of its agents – the HIP industry – fails in its social, moral and legal obligations.
The economy is in for some tough times yet. To plough ahead with a patched quilt of reforms thinking another crash isn’t possible is negligently delusional.
It has to be thought-through - from all angles - to be rounded. Whilst we expect Government to think in these terms, HIPs prove it didn’t. I have less faith that HIP Plc will do better.
But if it doesn’t, HIPs will always remain vulnerable.
The sharp thump of Adam Smith’s invisible hand means for a truly free market to function, distressed assets must be released for others to employ more productively, thus freeing a debtor to discharge his debts and become, once again, productive too.
That one is a reminder for the Tories reading this (I know you do!). But it’s also a reminder for the HIP industry to think about how it would facilitate personal misfortune in its reform, whilst preserving dignity and compassion. Think in the round, like Government is obliged to do.
Social mobility.
Posts: 2
Reply #2 on : Mon January 18, 2010, 15:48:25
admin
Posts: 1
Posts: 1
Reply #3 on : Mon January 18, 2010, 16:36:35
Posts: 2
Reply #1 on : Mon January 18, 2010, 09:27:32