Of course, we’re a prominent HIP provider in Bristol — so we’re bound to be against it, right?

Not necessarily. The abolition of HIPs will be a blow but a move such as this could have much wider implications for the economic recovery, as you’ll see below.

Why do the Conservatives want to abolish HIPs?

They’ve always opposed the introduction of HIPs from the opposition benches, arguing that they add cost and bureaucracy to the housing market. So now they want the opportunity to kill them off.

However, it doesn’t look like they expect this promise to be much of a vote winner. It merits only one sentence in their manifesto:

We will also abolish Home Information Packs, which have made a significant contribution to problems in our housing market.

That’s all. It doesn’t define the ‘significant contribution’, or the ‘problems’ — nor does it say whether any alternative measures are planned.

HIPs are not mentioned in the other parties’ manifestos, so it’s clear this is not a raging political battleground. Still, if the Conservatives are voted in on May 6th, what are the likely consequences if Home Information Packs are consigned to history?

Will abolishing HIPs harm, not help the housing market?

If the Conservatives thought the introduction of HIPs has cost the housing market money, abolishing them could backfire in the same way.

To see why, look back to what happened when HIPs were introduced. Vendors rushed to market their homes before the HIP deadline arrived. The market was then eerily quiet for a while afterwards.

The side effect of pledging to do away with HIPs is that many sellers will wait a month or so to market their homes without one, in order to avoid the typical £368 cost.

In other words, scrapping HIPs could impose another lurch in the housing market at a far more sensitive time.

What people don’t realise about HIPs…

Aside from whether it will rock the boat in the housing market, abolishing HIPs won’t make as much of a difference to sellers as the Conservatives are claiming. Here’s why:

1. HIPs don’t cost as much as politicians think

Conservative opposition to Home Information Packs was based on the cost of obtaining a HIP being a significant deterrent to vendors.

However, the Home Condition Report—the structural survey that would have accounted for most of the mooted £700 cost—was later cancelled.

Had this component been included, it would also have added much more meaning to HIPs and made them much more important from a buyer’s point of view. True, HIPs would have been more expensive—but also in my view a lot more successful (more on this in a future post).

2. You’ll still need an EPC

The only part of a HIP that’s new to the home selling process was the requirement to include an Energy Performance Certificate in the information provided to buyers.

Even if  HIPs are cancelled tomorrow  you’ll still need to get an EPC—they’re part of different legislation at a European level.

The rest of the paperwork still needs to be obtained anyway; HIPs merely moved this requirement from the end of the homebuying process to the beginning to try to speed things up a little.

Why cancelling HIPs won’t change what we see on the Horizon

Home Information Packs are currently the product that has to be wrapped around our domestic EPCs. However, the requirement for both domestic and commercial EPCs will stay even if HIPs are cancelled and as we all are feeling with the recent rises in the price of petrol the burden that fuel places on our budgets is steadily increasing. We are leading providers of EPCs throughout Bristol and the surrounding area and people are beginning to be a little more mindful of the information they contain. The EPC has always been our primary focus and this is why we are market leaders.

From our point of view, once the EPC has been delivered, the rest of producing a HIP is office work: putting together pieces of paper, administration. That’s why this piece isn’t exactly a rant at the anti HIP lobby; after all it’s hard to be passionate about administration, however, energy is a very different matter!

What do you think?

Are HIPs just a Tory bugbear? Would you keep them—or improve them?

Or will the pledge to scrap HIPs be a vote winner?

From April this year, a scheme will be launched that encourages British homes and small businesses to generate renewable electricity by paying you to produce it.

That means paying you for every unit you produce, up to 5 MWh a year — even what you use yourself.

It makes £0 energy bills a reality, and turns solar panels and wind turbines into an investment that can potentially generate you an 8% return.

“Clean Energy Cashback” is what Ed Milliband calls it. It’s not a new idea: elsewhere it’s called a Feed-In Tariff, and has boosted wind and solar electricity production in Germay, Spain, Denmark and elsewhere. Many said it wouldn’t happen in the UK: with 63 other schemes in place worldwide, we’re playing catch-up. But a look at the plans reveals that we’re getting a scheme with a few differences.

So let’s look at our new way of selling energy to ourselves. Is it good for homes, for businesses, and if not, why do we need it?

First, some basics.

What is a Feed-In Tariff?

Feed-In Tariffs (FITs) are a way to encourage low-carbon electricity to be generated by users.

They work by rewarding your upfront investment in renewable generation technology by paying you back for each unit you produce.

Yes, you get paid even when you use it all. When you make surplus electricity, you can sell it to the National Grid at a slightly higher rate. When you don’t produce enough, you can still use grid electricity produced elsewhere.

Why are feed-in tariffs necessary?

They’re necessary to make renewable energy growth happen.

Whereas fossil-fuel and nuclear power need large centralised plants to feed the grid, renewables are the opposite. The most obvious renewable resources, wind and solar energy, are spread out. You need a network of small producers to capture it all.

By incentivising those of us willing to invest in clean energy, and providing a way to interconnect our production capacity and store the surplus, it solves a national problem of how to produce more clean energy. On a technological level it works too, because renewable energy needs to be stored. Batteries aren’t feasible on that scale, so where better to store it than the National Grid?

You could compare it to the Internet and cloud computing: many small users forming an interconnected two-way network with huge power.

British feed-in tariff: particulars

Our “clean energy cashback” scheme will be introduced for qualifying renewable electricity generation from April 2010. Here’s a rundown of what we know so far:

• Install a qualifying system:
• solar PV, wind power, hydro power or anaerobic digestion biomass, with a capacity up to 5MW, or
• a domestic CHP (combined heat & power) plant up to 2kW capacity
• Earn a guaranteed rate of payment for all generated electricity
• Earn an optional guaranteed export price for surplus electricity sold to the National Grid.

There are differing bands of payments, depending upon the technology and installed capacity, of up to 36.5 pence per kWh. An additional 5 pence per kWh could be paid for any surplus exported to the grid.
» View the tariff details (downloads a .doc file)

Small businesses: how does a zero electricity bill sound?

Since the scheme allows capacities up to 5MW, this should appeal as much to businesses as to domestic customers.

The eye catching part is the opportunity not just to weigh the savings on electricity bills against the
The feed-in tariffs would be payable for 20 years (25 for solar), which in theory should give you a return on investment.

Questions:

There are lots of questions to tie up before the launch, though. Here are some of mine:

• Will the return on investment be high enough for businesses to consider the upfront cost?
• Will we need two meters? This means paying tax twice (VAT on power in, Income tax on power out) compared to using one (net metering)
• Will the cost of technology come down as the scheme gets going, benefiting those who wait — or will the incentives decrease over time, as they have done elsewhere in Europe, benefiting the early adopters?

Now, it’s getting a bit more serious. There’s a law change on the way, with tougher penalties and easier triggers on the way. And there really isn’t long to comply (although it’s not as bad as… see bottom of this post…)

Compliance on commercial EPCs is amazingly low

For a whole year now, it’s been a legal requirement to have an EPC available on any commercial property for sale or rent. So everybody must be doing it, right?

Well, according to the NHER’s report, there’s plenty of “anecdotal evidence” from assessors that not everybody is. Far from it. As shown by research carried out by Quidos, compliance on commercial EPCs could be as little as 17%.

Fast-track changes to the EPBD

That’s all set to change with the news this week that the EPBD…

the main Community legal tool that provides for […] effective improvement of the overall energy performance of buildings

…is due for a fast-track update. Details are still being finalised, but agents in breach of their EPC responsibilities will face stricter fines and more likelihood of penalties.

This will impact on agents in several ways, not just the ones who are already lax in getting their commercial EPCs in place.  No agents want Trading Standards Officers peering over their shoulders – it’s bad for business even if they are squeaky clean. So an increase in across-the-board compliance is in everyone’s interests.

First… how bad is current EPC compliance?

Point of law: all commercial buildings being marketed for sale or rent should have an EPC available to inform prospective buyers and tenants about the energy performance of the building.

However, in research carried out by Quidos (no direct link to the report available, although ask me and I’ll forward it), the number of lodged commercial EPCs compared to the number of commercial properties advertised for sale in Bristol, Bath, Wiltshire and Cornwall was between 17% and 27%.

Agents in Bath (26.75%) fared a lot better than those in Wiltshire (17.39%), but when that still leaves nearly 3 out of 4 commercial properties on the market without an EPC, that’s not saying a lot…is it?

Why aren’t more agents compliant?

Mainly because nobody thinks the buck stops with them.

Using a mystery shopper approach, the NHER decided in June 2009 to find out why so few agents could offer a commercial EPC when asked:

• Almost half (47% – 41 agents) said they believed an EPC was not necessary, or that they just didn’t know.
• A further third (36% – 32 agents) said that they would only get an EPC at the point of sale.
• 17% (15 agents) said that they believed the EPC was in the process of being undertaken.

Response 2 suggests ignorance of the precise rules, i.e. that an EPC should be available from when the property is first marketed. Responses 1 and 3, though, highlight the main underlying cause of the lack of EPC compliance: the belief that it’s someone else’s issue.

How will the EPBD update change this?

The update clarifies that the agent is responsible, and makes two new provisions:
1. Anyone — i.e. Trading Standards Officers as well as potential purchasers — can ask to see the EPC

2. Increased penalties: a full 12.5% of the rateable value, much higher than before.

So now, a “forgotten” commercial EPC means what?

A fine worth avoiding; an unwelcome trading standards spotlight on the agency; and all for lack of a certificate that’ll be valid for 10 years anyway.

When’s the new law coming in? 

Feburary: it’s being fast-tracked as I write.

That leaves just a few weeks to comply if you don’t want Trading Standards nosing around.

Thankfully though, that’s neither as brief nor as bad as this Robocop moment.