The Council of Mortgage Lenders (CML) and the Association of Home Information Pack Providers (AHIPP) have clashed over the prospects for Home Information Packs (HIPs) today.

New reports published today by the Council of Mortgage Lenders (CML) express serious concern to government over how home information packs (HIPs) will be implemented on time and the risks of making over-optimistic assumptions about their market impact.

The Council's key messages for the Government are:

• Eleven weeks after the 1 June 2007 was announced as the "go live" date for HIPs, the Government has still not published a detailed timetable for their implementation. Without this, the CML will have little confidence in the process.
• The CML is concerned that neither the Government nor the public fully understand how little impact the home condition report (HCR) element of the HIP will initially have on the mortgage process. CML argues the HCR will not remove the need for lenders to conduct valuations on each transaction to assess potential levels of lending risk. If the HCR is robust and easily accessible, then over time fewer physical valuations may be needed. But as at the "go live" date, most properties will still need a valuation inspection.
• The CML is urging the Government to also consider the possible impact HIPs will have on the housing market. The CML has already identified the likelihood of a "feast and famine" in the flow of properties coming onto the market as a result of HIPs going live. But, according to the CML, HIPs might also create other unintentional consequences. The CML are disappointed that as yet the Government has done little to simulate the potential impact of HIPs, and is urging them to do so urgently.

Commenting on today's report CML Director General Michael Coogan said:

"With only 16 months to go, there is still a huge amount of work to do to make HIPs a reality. The Government must urgently publish a detailed timetable of action, so that the market and consumers can know what to expect and when.

"The Government must also work to dispel the myth that the HCR element of the pack will stop the need for lender valuations. This is simply incorrect and sends out a confusing message to consumers.

"Finally, it is vital that government addresses the potential consequences the implementation of HIPs might have. HIPs represent a huge change in the process of buying and selling a house and will undoubtedly impact upon the market – possibly in unintentional ways. The Government must examine what impact the packs will have so that all stakeholders can be prepared for their onset."

However, Mike Ockenden, director general of the Association of Home Information Pack Providers, disputes many of the CMLs claims believing the introduction of HIPs will not skew the housing market.

He said: “We do not subscribe to the view that the introduction of HIPS will lead to a feast and famine of houses on the market. There may be a small flurry of sellers putting their homes on the market before the compulsory introduction of HIPS. But what about the buyer?

“Buyers are not so stupid as to accept a house for sale without a Home Condition Report which will be free to them and is of considerable benefit to a purchaser. They surely will demand one and any house for sale post-HIPS, without a survey, will be at a distinct disadvantage.

“For first time buyers, presently a rare breed in the housing market, the pack offers free information which otherwise which might cost as much as £1,000. It is a clear incentive for them to enter the market.

“The market fluctuations that came about with Miras Relief and Stamp Duty holidays generated buyer activity which put prices up. The mandatory introduction of HIPS may generate seller activity but sellers do not dictate the market - buyers do. 

“As to the Council of Mortgage Lenders (CML’s) point that the HIPS will not remove the need for lenders to conduct valuations is a little disingenuous. Many so-called valuations are simply “drive-by” exercises and with automated valuation models or desktop valuations being increasingly used the need for an additional survey is totally unnecessary. In time the Home Inspector will be qualified to undertake such valuations.”

The CML's members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK.

The Association of Home Information Pack Providers (AHIPP) is a newly formed trade body representing a wide constituency of members from the fields of conveyancing, estate agency, search providers and surveying firms who will be providing Home Information Packs. AHIPP is a central stakeholder at the ODPM who are charged with the implementation programme of HIPS.

There are 11.6 million mortgages in the UK, with loans worth around £942 billion.