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Upfront subscriptions proposed during 2009 for 2010

Submitted by: MikeC (Admin) on 07-Jan-09 07:38:58 PM

As the effects of the housing downturn ripples through the property sector, AHIPP have been forced to issue credit notes to members feeling the squeeze, this site has learnt, and may ask members to cough-up subscriptions for 2010 this year.

According to minutes taken at an Executive Members meeting in November 2008, AHIPP incurred a loss of £31,600 for the month of October, leaving just £7,000 in the coffers (net reserves).

Double whammy

The knock to AHIPP's finances was because some members were issued credit notes which reduced October's income to "only £7,000", against expenditure of £38,600 for its annual conference and dinner, the minutes reveal.

Executive members were informed: "Revision of the cash flow forecast to reflect current circumstances was presented to the Board and all expenditure will be reviewed. Cash flow remains extremely tight in the present circumstances."

Upfront subscriptions

One proposal - the only proposal - to claw-back cash, the minutes suggest, is to ask members to voluntarily pay their 2010 subscriptions during 2009 in ten monthly instalments, for which, in return, they "might receive a small discount on their 2010 subscription."

According to its website, AHIPP currently have ninety eight members collectively contributing around £552,000 per annum.

There are currently three levels of membership:

  1. Executive (28 members) costing £12,000/year
  2. Associate (16 members) costing £6,000
  3. Affiliate (50 members) costing £2,400

But with HIP providers pulling out of the industry altogether (or going bankrupt), and as many others cut costs in reaction to fewer properties coming on to the market, the question is: how many of those remaining will be willing and able to justify expenditure on anything that doesn't produce an income during 2009?

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Posts: 1
AHIPP Cashflow 'extremely tight'
Reply #1 on : Thu January 08, 2009, 12:42:20
1. Upfront payments are a crazy idea in an industry that has got a mere 16 months or so (max) until the next election and the Tories are still committed to killing HIPs stone dead. Yes a compromise might be reached, but every business should think carefully before apportioning funds to a political risk of ending the HIP industry that is not under any HIP companies control

2. Sad to see 2 of the 3 big hitters at AHIPP go, it means Mike will be very busy now and is there some chance that he may be spread too thin?

3. HIP Code costs to rise, linking in the AHIPP news above surely it must happen, its the badge that people are prepared to pay for, despite the evidence that it doesn't necessarily deliver against the expectations people may have of it (auditing for example).

4. AHIPP can raise funds in other ways, providing research, acting as an introducer to other services and so on, but this hasn't yet been exploited. The best example of where AHIPP could have built a residual income was the offering of deferred payment to members. The Executive members, presumably realising it was a risk to their own thrones, decided that the proposal to allow Affiliate and Associate AHIPP members access to the deferred payment option through an AHIPP-specific portal and canned this option. If AHIPP had even been able to earn £5 per HIP put through, it would have provided a good residual income based on the volumes people would have put through, plus it would have acted as an incentive to retain existing members.

5. As AHIPP members buy each other, go out of business or consildate their position, I would predict a fall in membership, perhaps of around 20% by Sept 09- Its good that you have provided a membership tally right now, lets see where it all heads as this tough year rolls on.

We can only watch with baited breathe as to how the industry will continue to struggle with the continuing reduction in fees as well as the introduction of Property Information Questionaires shortly- they alone are going to provide many pack providers with some short-term pain in adjusting their processes, educating the agents and the public and increasing their overheads since the provision and compilation of the PIQ is simply not something that can be shoe-horned in zero cost.
Posts: 2
Re: Upfront subscriptions proposed during 2009 for 2010
Reply #2 on : Thu January 08, 2009, 22:21:37
Interesting points, Neil.

I'd not considered point 1 but it is a consideration. Then again, maybe it's an argument to stump up too - strengthen the voice.
Posts: 2
Re: Upfront subscriptions proposed during 2009 for 2010
Reply #3 on : Sun January 11, 2009, 20:18:07
Update: it seems the issuance of credit notes to member firms also took place in the preceding month of Sept 08 too, indicating a worrying trend.

According to an AHIPP Exec Members' meeting in mid Oct 08, income, after credit notes, was "only £7,400" plus £500 in interest.

All that was against expenditure of £32,000 making a loss of £24,000 for the month, the minutes report.

At the end of September moving into October (the month to which the above blog posting refers) therefore, net reserves stood at £38,700.

This is not good - particularly if this trend continued into December - and will surely handicap AHIPP's activity.

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