The Home Information Pack

Introduction

It’s official: Home Information Packs (HIPs) – subject of much comment and speculation among the media, politicians and property people since they were announced in the 2004 Housing Act – were introduced on 1st August 2007.

Since that date, vendors have been required by law to have a HIP before putting a residential property up for sale, and to provide potential purchasers with a copy.

Initially, the law applied only to houses of four or more bedrooms, with the scheme being extended to cover three bedroom properties from 17th September. As the system of obtaining and using a HIP was accepted, the law was extended to cover all properties for sale in the UK.

Why HIPs?

The system of property sale and purchase in England and Wales enjoys the dubious distinction of being Europe’s slowest. HIPs are being introduced in an effort to speed it up, and to reduce the number of transactions that collapse before exchange of contracts for one reason or another.

Previously, important facts about a property only become available to purchasers once a sale is agreed. Under the new scheme, preliminary legal and other information is obtained before the property goes on the market. This enables transactions to proceed more swiftly and smoothly, and sellers to have a fuller picture of the property they are buying before any sale is agreed.

What does a HIP contain?

Mandatory components

• A contents list (officially referred to as the index)

• Evidence of title

• A summary of the terms of sale

• Local authority searches, plus drainage and water searches (or proof that they have been initiated)

• Copies of any planning, listed buildings and/or Building Regulations consents

• An Energy Performance Certificate (EPC). This rates a property’s energy efficiency on a scale of A–G and contain advice on energy-saving measures

Plus, where relevant:

• Leasehold documents (or proof that they have been requested)

• Commonhold documents (or proof that they have been requested)

• A structural warranty

Home Information Packs now only need to be commissioned before you are able to market your property – meaning that there is no need to wait for the completed pack before you start accepting viewings. Once you have received the completed HIP it is valid for 12 months, regardless of whether you continuously market your property or not.

Optional components

• A Home Condition Report (HCR). Roughly the equivalent of the current Homebuyer Survey (see A Guide to Surveys), this was a compulsory component of HIPs as they were initially envisaged and trialled. Many hope that it will become mandatory in the future.

Though, for the present, HCRs will no longer be essential, vendors may be wise to obtain them, to help prevent potentially deal-breaking information from emerging further into the sale

• Guarantees (for example, for damp or timber treatments)

• Warranties (for example, for double glazing)

• Additional searches

Requirements will vary in the case of properties that are sold off plan – see www.homeinformationpacks.gov.uk

If a property is marketed continuously, the vendor is not obliged to update the pack’s contents, however long it takes to effect a sale. However, he will probably wish to do so if the information becomes very out of date, in case it puts off potential purchasers.

Who is responsible for compiling a HIP?

The person or organisation marketing a property is responsible for obtaining a HIP. This may be an estate agent, an auctioneer, a developer, an independent Home Information Pack provider, or in the case of a private sale, the vendor himself.

Much of the work of compiling HIPs is often done by specialist pack providers, who commission Domestic Energy Assessors to prepare Energy Performance Certificates and Home Inspectors to produce Home Condition Reports. Some solicitors and financial advisers also provide packs, and several supermarkets are considering doing so.

Those selling privately have a choice between instructing a pack provider and putting together their own HIP. However, the latter looks likely to be a lengthy task, as they have to find and instruct the relevant assessors, inspectors and solicitors themselves.

Home Inspectors advertise their services, and inspector certification schemes provide details of members in different areas. Such schemes are run by BRE (Buildings Research Establishment), the RICS (Royal Institution of Chartered Surveyors) and SAVA (Surveyors and Valuers Accreditors).

The time taken to prepare a HIP varies from less than a week to a fortnight or more. However, as long as you have commissioned a HIP you can start marketing your property - there is no need to wait for the completed pack.

How much does a HIP cost?

The government’s position is that the market will dictate the price of HIPs. At the moment, the cost to a vendor seems likely to be between £300 and £500 (not including a Home Condition Report). However, it will probably depend, in part, on the method of sale. Someone selling privately may pay more than someone using an estate agent, since agents should be able to arrange advantageous bulk-buying deals with pack providers. In fact, some estate agents may even provide the packs for free.

There is no direct cost to purchasers, who should, indeed, be quids in if they are not also selling, since, under the new system, the vendor pays for information the purchaser used to pay for. However, since most vendors are also purchasers, things look likely to even themselves out.

Hip Hip Hooray?

Throughout the property industry and beyond, HIPs have both ardent admirers and determined detractors. The success of the new scheme still remains to be seen, though there does appear to be a grudging acceptance of the importance of the concept of HIPs at least.