In the last week Promise Home Packs, one of the HIP providers highlighted in last month’s Which? report on HIP costs has ceased trading. Naturally, this has sparked a debate in the industry press as to whether or not other cheap HIP providers are going to follow suit.
Fridaysmove were identified as the cheapest HIP provider in the UK, with a freehold HIP costing just £165 plus VAT. So are they next? Fear Not !!
Many HIP providers make a margin on cross-selling 'panelled out' services like conveyancing, however Fridaysmove are unique amongst the firms compared in the Which? report as they are the only regulated law firm licensed to actually carry out conveyancing services.
I am not surprised that some cheap HIP providers are running in trouble especially given the Conservative’s stance on ditching HIPs once they come into power. Why would any HIP provider invest further in a product on death row?
If Fridays’ business relied entirely on HIPs we would have gone bust a long time ago as we don’t make any money on HIPs.
Over 90 percent of Fridays' HIP clients also choose us for their conveyancing. The high take up rate of is primarily due to our reputation as innovative and proactive conveyancing lawyers, as well the fact that we refund the cost of the HIP to the client on successful completion of their sale. This effectively means that the client is receiving a free HIP.
Although clients must use Fridaysmove for the conveyancing to qualify for the HIP refund, they are completely at liberty to go elsewhere. The average conveyancing fee at Fridaysmove is £495 plus VAT. After deducting the £165 plus VAT HIP refund then a home seller will typically pay a combined total fee of £495 plus VAT for conveyancing and the HIP, a highly competitive fee in the current climate.
I make no bones about the fact that our model works on the basis that the majority of our HIP clients also use us for their conveyancing. There is certainly no arm twisting involved although we do explain to clients, as is our conviction, that it is in their best interests to source the HIP and conveyancing services from the same place.
As an established legal practice we have always advised clients to prepare in advance the documents now contained in a HIP. For a number of years, even before the inception of HIPs, we routinely supplied ‘sellers packs’ to prospective purchasers. Our deep rooted understanding of the core benefit of HIPs underpins our assertion that law firms are best placed to collate and supply this crucial legal documentation.
Is it likely that other cheap providers will disappear over the next year?
HIP providers that offer additional services such as conveyancing will survive as they will no doubt concentrate on conveyancing once HIPs are abolished. Unfortunately, if the Conservatives have their way, it looks as the standalone HIP providers and their regulator will all but disappear.