Sellers warned about 'free' HIPs

By Bob Howard
BBC Radio 4's Money Box

Everyone now needs to commission a HIP before selling a house

Many home sellers who sign up for a free or discounted home information pack find they must pay a withdrawal fee if they change estate agent.

Radio 4's Money Box has found these fees are often between £400 and £500.

Estate Agents say the charges reflect the costs they incur producing the packs.

But the Ombudsman for Estate Agents has warned these fees may not be payable unless they are clearly stated in the agency agreement.

The small print

Money Box listener Graham, from Reading, was offered a HIP for about £200, if he agreed to give one agent the sole rights to sell his house.

But when he asked what would happen if he wanted to change agents, he was told he would have to pay a substantial withdrawal fee:

"It was suggested that another £300 to £400 would be added to the price I had already paid.

If it has been advertised as a free pack and the seller's understanding is based on that, then it has to be a free pack Christopher Hamer, Estate Agents' Ombudsman

"If I did change agent, I would expect to be able to take it with me and offer the same HIP through another agent."

Paul Broadhead, from home information pack providers group, AHIPP, says these fees are justified as estate agents incur costs in producing the packs:

"Clearly, if the estate agent that you are not using anymore has paid for the HIP, he will want reimbursing.

"We see these things about free HIPs, but as we know there is no such thing as a free lunch."

Trading Standards confirmed to Money Box that estate agents can charge whatever withdrawal fee they like, as long as they clearly tell you in advance.

How much?

Peter Bolton King, from the National Association of Estate Agents, says the fees should be proportionate and his members should not be making a profit:

"Where we would have a problem, is if... I am going to charge you £600 or £700, when the HIP itself only cost £300."

There are no rules or regulations to determine the price of a HIP.

So far, most sellers are being charged between £300 and £400 for a freehold property.

The Estate Agents' Ombudsman, Christopher Hamer, says anyone selling a property - whose agent does not list the pack as having a separate fee in their agency agreements - may not have to pay any withdrawal fee at all if they change agent, because they are only liable to pay when they have sold the property:

"My view is that if it has been advertised as a free pack and the seller's understanding is based on that, then it has to be a free pack."

BBC Radio 4's Money Box was broadcast on Saturday, 15 December 2007 at 1204 GMT.