The Government’s housing policy of Home Information Packs (HIPs) suffered another setback this week following the news that a major HIP provider is withdrawing from the market.

The HIP Facilities Group and its subsidiary HIP Payment Services have announced that they are closing their operation down due to uncertain outlook and the housing market slump. The group will not be accepting any new business from 31 August.

HIP Payment Services will continue to service the needs of its customers, agents and Hip providers on any matters relating to existing loans until each case is concluded.

The company was a leading provider of ‘deferred payment’ HIPs to estate agents; home sellers pay for their HIP when the property is sold, taken off the market, the estate agent is changed or if 10 months elapse.

However, such ‘free’ or ‘no sale, no fee’ Packs have attracted controversy, since they are more expensive to the customer, and can also lead to customers being unexpectedly hit with extra costs if they want to change estate agent (and end up paying for two Packs).
Jeff Smith, chief executive of HIP Facilities Group, said: “Having weathered the shambolic launch and roll out of HIPs, I am very disappointed that we have had to take this decision.

“But there eventually comes a time when even a market leader must acknowledge that the transaction volumes in the HIP market no longer offer an independent lender such as HIP Payment Services a viable platform on which to build a profitable business.”

He explained that his company was unable to justify the further investment required to continue to support trading with market prospects remaining grim for the foreseeable future and the political outlook still uncertain.

Smith added that he believed the HIP market as a whole will continue to suffer unnecessarily until the Labour government had the courage to implement a clear and positive stance for HIPs. He also blamed the Tories for using the industry as a political football.

He said: Frankly everyone connected with the production and use of HIPs deserves better.”

Shadow Ministers have pledged that an incoming Conservative Government will pass legislation to scrap the requirement for a home owner to purchase a Pack.

Shadow Minister for Housing, Grant Shapps, said: “The closure of this company is another blow to the credibility of Home Information Packs and a new warning of the dire state of the housing market. Sadly, Labour’s red tape of Home Information Packs has served to undermine the market, by increasing the cost of buying and selling a home and by discouraging speculative sellers.

“Labour Ministers have led business up the garden path, promising a golden future for Pack providers that was only ever going to end in tears. Given a Conservative Government will scrap this red tape, investing in Home Information Pack companies should now carry a health warning. Sensible investors should consider the high risk involved in this business, and companies would do well to diversify.

“The days of Home Information Packs are numbered, and the housing market will be better when they go.”