Need a HIP replacement - what next for Home Improvement Pack providers?

Among the raft of immediate changes brought about by the incoming coalition government, one of those that grabbed the most headlines was the scrapping of Home Information Packs.

The Home Information Pack (HIP) had a short and controversial life, having been introduced by the previous Labour government. Property sellers and estate agents have hailed the scrapping of the legal necessity for HIPs – but those who have built businesses on the back of them have been largely forgotten.

There are hundreds of Home Information Pack related businesses across the country, many of whom will now have had their main source of income suddenly removed and are wondering what to do. So, what next for these businesses?

Do you need to give refunds - and will you be compensated?

For many HIP providers, the most pressing concern is the short-term financial hardship caused by having to refund those who have already purchased the packs. But do you actually need to repay customer fees?

Some of the largest providers have chosen to offer refunds to individuals that ordered HIPs within the seven days preceding their suspension. It is up to you whether or not you choose to follow suit; you have no legal obligation to offer a refund. You should, however, be prepared for a fight with customers if you do not offer a refund. Many will presume that they will get their money back; it is up to you to explain to them why this is not the case.

The corollary of this is that HIP providers will not be compensated for their loss of income. The government is offering no support to HIP providers that have suddenly found themselves without work – and in some cases without the necessary skills to find work elsewhere.

Focus on Energy Performance Certificates

Although HIPs have been abandoned, the government has suggested that the requirement for sellers to provide Energy Performance Certificates (EPCs) will be more aggressively enforced. EPCs are now required by law if you are selling a house, and the new government has suggested that the £200 fine for those failing to comply will be applied with more vigour from now on. Landlords are also required to provide an EPC to tenants who request it.

The EPC scheme provides every dwelling with a report into its energy efficiency. This is rated on a scale of A to G. The intention is that the certificate can help tenants and buyers to make a more informed choice when it comes to energy costs, while encouraging landlords and sellers to take steps to reduce their properties’ energy consumption.

In order to draw up an Energy Performance Certificate you need to be qualified as a Domestic Energy Assessor. Many HIP providers have already taken this training and have been providing EPCs at the same time as HIPs. If you are not already a qualified Domestic Energy Assessor (DEA), becoming accredited can provide you with a valuable new income stream that is actually quite closely related to your previous business.

The accreditation process requires you to pass five separate tested modules. There is a range of accreditation schemes, all of which set their own prices. These can vary significantly; among the leading half dozen providers you can expect prices to differ by hundreds of pounds. It is important to remember, though, that you cannot draw up Energy Performance Certificates unless you are accredited by one of these schemes.

HIPs still have a place

It is also worth remembering that Home Information Packs are not being outlawed; rather, there will simply no longer be a legal requirement to have one. There is certainly an argument to say that HIPs should remain an intrinsic part of the selling and letting process regardless; they provide both buyers and prospective tenants with important information about the property, and this can help them to make better decisions.

In addition to investigating Energy Performance Certificates, you may therefore wish to continue marketing HIPs as a product in their own right. You should remember, though, that the impetus will now probably be on the buyer rather than the seller to arrange and pay for the Pack. Your marketing efforts will probably need to change in order to reflect this.

Home Information Packs were controversial from the very beginning, and many people have cheered the changes to the legislation. For Home Information Pack providers, however, the outlook may seem bleak. But, by diversifying into related areas and by changing your marketing efforts, you can help to ensure that your business remains viable.