Home Information Pack
Under Part 5 of the Housing Act 2004 a Home Information Pack (HIP, on lowercase letters: hip), sometimes called a Seller's Pack, was to be provided before a property in England and Wales could be put on the open market for sale with vacant possession. There is separate legislation for Scotland that requires anyone selling a property to provide a Home Report. The pack was a set of documents about the property: an Energy Performance Certificate, local authority searches, title documents, guarantees, etc. The introduction of HIPs was subject to delays and reduced requirements, but they became mandatory for homes with four or more bedrooms on 1 August 2007 and were extended to three-bedroomed properties from 10 September 2007.
The Government had suggested that Home Information Packs would lead to a reduction in the number of abortive sales as their justification for introducing the scheme, reducing gazumping and gazundering. They were introduced despite very strong opposition from some factions in the building industry (although very many were in favour of them) and estate agents, as well as some chartered surveyors. There were claims that the packs contributed to the 2007-09 housing crisis by deterring vendors from marketing their houses due to the extra costs involved in the survey.
Requirement for the Home Information Pack for property sales was suspended with effect from 21 May 2010 by the incoming government. An exception is that the Energy Performance Certificate is still required. The Localism Act 2011 will formally repeal the Home Information Pack legislation on 15 January 2012.
As the idea of the Home Information Pack developed over time, so did the reasons for its introduction. A proposal to address the problem of gazumping was first made in the 1997 Labour Party manifesto. Research after the election revealed that around 28% of sales fell before exchange of contracts, with gazumping occurring in fewer than 2% of sales. The emphasis subsequently moved to the benefits of increased speed, transparency and consumer friendliness. The idea was based on similar practice used in Denmark.
In March 2006 the government gave the go-ahead for multiple certification schemes. By this stage a number of organisations had expressed an interest in running certification schemes and over 3,000 people were already going through training for the home inspector qualification. In June 2006 draft regulations were made setting out the detailed contents of Home Information Packs, rules governing the availability of packs, exceptions from the pack duties and arrangements for enforcement.
In September 2006 the government approved the first Certification Schemes to oversee the work of Home Inspectors. The schemes were set up and run by industry; Government set the standards that the schemes operated. In September the Home Condition Report Register contract was agreed. A fully operational register was scheduled to follow as soon as possible afterwards.
In June 2007 the government announced they would fund or subsidise 5000 HIPs by £100 prior to the official launch date of 1 August 2007.
Originally the HIP was going to be required from 1 June 2007. However, just ten days before that date, Communities Secretary Ruth Kelly announced that they would be phased in from August 2007, and initially only for larger properties. Between 1 August and 10 September only homes marketed with four or more bedrooms were legally required to have an HIP. This was extended to cover homes with three or more bedrooms from 10 September.
On 22 November 2007 Housing Minister Yvette Cooper announced that HIPs would be rolled out to include one and two bedroom properties as of 14 December completing the Government's phased introduction of Home Information Packs to residential homes marketed for sale within England and Wales.
First Day Marketing (FDM) is the mandatory requirement to make available all of the documents required within a HIP on the first day a home is marketed to the public. Initially, the date was set for the requirement to commence on 31 December 2007 but was delayed until 1 June 2008 to allow a period of transition. A home was able to be marketed during that time providing a commitment to pay for a HIP - including the EPC - was made and the necessary documents had a reasonable expectation of being made available within 28 days. However, on 8 May 2008 the Housing Minister, announced a further delay to first day marketing until 31 December 2008.
Since 6 April 2009 all properties required a Home Information Pack before it may be marketed, the full HIP is now no longer required only the Energy Performance Certificate.
The pack had to contain the following, and should be no more than three months old when the property is first marketed:
- Energy Performance Certificate
- Sale Statement
- Property Information Questionnaire
- Title documents for the property
- Local Authority and drainage searches
- Copy of the lease
- Building insurance policy
- Contact details for the landlord or management and any legal details
- Regulations that apply
- Recent service charge receipts and accounts
For a transitional period sellers were able to market their homes without the searches or leasehold documents as long as the pack contained evidence that they had been commissioned and would be included as soon as practicable but certainly within 28 days. However the Government announced in December 2008 that with effect from 6 April 2009 this concession was to be withdrawn, and the HIPS pack would have to be completely available on the day that the property was first offered for sale.
The pack could also contain some or all of these authorised documents:
- Home Condition Report
- Two sellers questionnaire forms called Home Use Form and Home Contents Form
- Legal summary
- Other searches such as a mining search
Home Condition Report
It had been originally planned that the Home Information Pack would also include a Home Condition Report (HCR), detailing the general condition of the property in plain English. The intention was that these reports would make buyers aware of problems initially, thus avoiding shocks later in the process that may result in either delay while the price is renegotiated, or cancellation of the sale. Their mandatory inclusion was later postponed, with the government keen to avoid risks to consumers from delays and potential late changes to the implementation timetable.
When eventually introduced, Home Condition Reports were to be carried out by qualified Home Inspectors, and in particular it was feared by the industry that neither the certification schemes for the inspectors nor the database to hold their reports would be ready in time.
Mandatory introduction of home condition reports remained on the table, but the Government wanted more time to assess consumer demand and the results of further testing. They were to also be look at costs, the savings from avoiding waste and duplication, consumer attitudes to the Packs, failed transactions and transaction times, and people's willingness to sell with HIPs in place.
Energy Performance Certificate
Similar to EU appliance efficiency ratings, the energy performance ratings on the Energy Performance Certificate provide prospective purchasers with an assessment of the property's energy consumption, together with a list of practical measures that can be taken to cut their fuel bills and carbon emissions.
An Energy Performance Certificate (EPC) in the UK needs to be completed by a government qualified Domestic Energy Assessor (DEA). DEAs offer advice on how to improve the energy performance of the dwelling which might save money. However, in practice, such documents only give general advice of little value to potential purchasers. They frequently exhibit errors since the survey is superficial and non-intrusive. They neglect older and listed buildings where planning consent is needed for structural changes to the property, such as installing double glazed windows for example.
The Energy Saving Trust hoped that by following the proposals in the energy performance certificate, the average home owner might save £300 a year on fuel bills. Government also hoped that the information could be used to support the growth of green mortgages and other incentives.
This part of the Home Information Pack was required in order to meet the requirements of the European Energy Performance of Buildings Directive.
However, the EPC has met with fierce opposition by the Royal Institute of Chartered Surveyors, which in May 2007 began court action against the Government to force a Judicial Review of the implementation, demanding it look again at the lifespan of an EPC in a HIP. The move prompted internal protest within RICS after a number of members petitioned the organisation to withdraw its legal action on the basis it had failed to consult members first.
Initially the cost of a Home Information Pack, including the Home Condition Report, was estimated to be around £600 by the Government. This was to include the cost of the postponed Home Condition Report, which was expected by the Department for Communities and Local Government to cost between £250 and £1000.. Industry subsequently expected the Home Information Pack (excluding the HCR) to cost between £300 - £600 for the vast majority of properties in England and Wales. Naturally, for larger or more complex properties, the costs could be significantly higher. Some estate agents were offering HIPs for free.
The Government pointed out, however, that most of the items in the pack already have to be provided during the sale process, so this is not all an additional cost. However the Council of Mortgage Lenders reported that their members were planning to insist on a separate valuation in addition to the Home Condition Report, while those purchasers requiring a building survey would also have to pay extra.
Failure to provide a Home Information Pack, or supplying an incomplete pack carried a fine of £200 per day the property is marketed.
Enforcement was to be carried out by local authority Trading Standards Departments; however they claimed that this was inappropriate as they normally regulate businesses, and that it would cost them too much to enforce through the civil courts.
On 31 July 2007 the Office of Fair Trading advised estate agents on their obligations. From 1 August 2007 failure by an estate agents in England and Wales to comply with the new Home Information Packs regulations could result in a ban from estate agency work.
On 15 May 2007 the Royal Institution of Chartered Surveyors (RICS) started Judicial Review proceedings against the Department for Communities and Local Government for what they regarded as the department's failure to carry out a full consultation on HIPs.
Despite the above objections to the HIPs scheme, RICS were already providing courses on Home Inspection and Domestic Energy Assessment, as well as courseware manuals for the professions of Home Inspector & Domestic Energy Assessor.
There were fears that the up-front cost involved may put off some people from putting their house on the market, which may in turn depress the housing market.
The Council of Mortgage Lenders reported that their members were not persuaded that the perceived consumer benefits will be achieved. They believed that the forthcoming introduction of e-conveyancing would have a much more positive impact.
The National Association of Estate Agents held the view that the legislation was unnecessary, did not cover the important reasons why home sales and purchase transactions fall through, and that the cost was too high.
In contrast, the introduction of HIPs was originally supported by Which?, who believe that they could reduce the number of failed transactions resulting from problems that can be identified at an early stage. The organisation has since withdrawn its support following the Government's decision to postpone the introduction of Home Condition Reports.
The Conservative Party, when in Opposition, stated that they planned to scrap the legislation, calling it 'expensive and deficient red tape'. Indeed, Conservative opposition to HIPs was instrumental in a defeat in the House of Lords, where peers voted by 186 to 160 in favour of abandoning the packs. This brought them in conflict with the Association of Home Information Pack Providers' Mike Ockenden.
On 12 May 2010 the incoming Conservative – Liberal Democrat coalition government announced an intention to scrap Home Information Packs. The requirement for property sellers to provide HIPs was suspended on 20 May.
- "Hips extended to three-bed homes". BBC News Online. 2007-08-17. Retrieved 2008-08-11.
- Blackwood, Lorna (2008-08-17). "HIPs to be extended to three bedroom properties". London: The Times. Retrieved 2008-08-11.
- Directgov - Home Information Packs
- UK Legislation - Localism Act 2011
- "1997 Labour manifesto". The Labour Party. 1997. Retrieved 2008-08-15. "Those who break their bargains should be liable to pay the costs inflicted on others, in particular legal and survey costs. We are consulting on the best way of tackling the problems of gazumping in the interests of responsible home buyers and sellers."
- "Background note on the development of home information packs". Council of Mortgage Lenders. Retrieved 2008-08-15. "However, as the now Labour government then discovered via research commissioned after the election, gazumping... occurred in less than 2% of sales. The research concluded that the current home sales process was wasteful and inefficient with around 28% of agreed transactions falling through between acceptance of the offer and exchange of contracts. It was suggested that this was because of a lack of information available to the buyers in the period before an offer is accepted, and the Government then proposed the HIP as a way of tackling this."
- "Sixth series, volume 415". Hansard. 2003-11-26. Retrieved 2008-08-15. "Legislation will be introduced on housing that will help create a fairer housing market and protect the most vulnerable."
- "House of Commons Hansard Written Answers for 25 Jun 2007 (pt 0037)". Hansard, Volume: 462, Part: 111. House of Commons of the United Kingdom. 2007-07-25. pp. Column 159W—continued. Retrieved 2008-08-15. "We are also providing 5,000 subsidised EPCs with every HIP commissioned before 1 August."
- "Compulsory items". homeinformationpacks.gov.uk. Archived from the original on 2008-07-09. Retrieved 2008-08-02.
- "Leasehold and commonhold properties". homeinformationpacks.gov.uk. Archived from the original on 2008-06-29. Retrieved 2008-08-02.
- "Optional items". homeinformationpacks.gov.uk. Archived from the original on 2008-06-25. Retrieved 2008-08-02.
- "Jackie Bennett - Council of Mortgage Lenders". epolitix.com. 2006-06-07. Retrieved 2007-08-02. "We think that the timetable looks very challenging - Jackie Bennett"
- "Energy Performance Certificate". homeinformationpacks.gov.uk. Archived from the original on 2008-07-09. Retrieved 2008-08-02.
- "Cooper calls for incentives to improve home energy ratings". Government News Network. 2006-09-21. Retrieved 2007-08-02. "Energy Performance Certificates should be linked to incentives such as green mortgages - Yvette Cooper"
- "Directive 2002/91/EC, on the energy performance of buildings" (PDF). Official Journal of the European Communities. 2002-12-16. Retrieved 2007-08-02.
- Collinson, Patrick (2007-05-15). "Government faces judicial review over Hips". London: The Guardian. Retrieved 2007-08-02. "The Royal Institution of Chartered Surveyors today began court action against the government in a bid to halt the introduction of controversial Home Information Packs"
- "RICS members in Hips revolt". Building. 2007-06-08. Retrieved 2007-08-02. "Never in the history of the RICS has a judicial review been launched, and we were not consulted - SSH chartered surveyors"
- "Minister defends home info packs". BBC News website. 2006-04-22. Retrieved 2007-08-02. "The government says the packs will cost about £600 plus VAT and will make home buying quicker and cheaper."
- "Home Information Packs - Timing and Costs". The Partnership Ltd. Archived from the original on 2007-03-05. Retrieved 2007-08-02. "Single fees for a home condition report are not practical and larger properties will naturally be higher. Whilst the government has estimated a figure of £300 plus VAT, for larger properties the figure is expected to be between £750-£1000."
- "Minister defends home information packs". BBC News website. 2006-04-22. Retrieved 2007-08-02. "If you think about it, at the moment if a sale falls through another buyer comes along and pays for exactly the same searches, exactly the same legal requirements, pays for exactly the same surveys. You are paying for all of the same information again and again. That is a huge amount of waste. - Yvette Cooper"
- "The Home Information Pack Regulations 2007: Procedural Guidance" (PDF). www.homeinformationpack.gov.uk. 2007-05-11. Archived from the original on 2007-10-06. Retrieved 2007-08-03. "Regulation 35 set the penalty charge initially at £200."
- "Home Information Packs Unenforceable, Warns Local Authorities Regulator". lacors.gov.uk. 2006-07-18. Retrieved 2007-08-02. "Trading Standards traditionally regulate businesses, not individual private house sellers... this is inappropriate as it would cost too much money to make it worthwhile pursuing such cases. - Geoffrey Theobald, LACORS Chairman"
- "HIP's - Now the Government is taken to court". Reuters. 2007-05-15. Retrieved 2007-08-02. "The government is being taken to court over an alleged failure to consult properly on its controversial home information pack (HIPs) legislation."
- "Concern grows over 'sellers' packs'". BBC News website. 2000-09-22. Retrieved 2007-08-02. "at a likely cost of between £500 and £700, 'sellers' packs' could make people in areas with low property prices more reluctant to sell, a study has found."
- "HIP or hype?". Times Online Money blog. 2005-11-18. Archived from the original on 2007-09-27. Retrieved 2007-08-02. "This week's announcement from the Government that HIPs will be introduced on June 1, 2007, was met with "disappointment" by the mortgage industry"
- "HIP or hype?". Times Online Money blog. 2005-11-18. Archived from the original on 2007-09-27. Retrieved 2007-08-02. "£1 million a day is lost out of buyers' pockets in valuation, legal advice and searches on transactions that ultimately fall through"
- "NAEA response to Government implementation on HIPs". 2006-07-18. Archived from the original on 2007-09-27. Retrieved 2007-08-02. "The announcement today is something of a U-turn by the Government on legislation it has been working on for over five years. It calls into question the effectiveness of an HIP when the documentation included is now largely available online. The legislation would seem unnecessary and does not cover the important reasons why home sales and purchase transactions fall through"
- "NAEA comment on reschedule of opposition debate on HIPs". 2006-07-17. Archived from the original on 2007-09-27. Retrieved 2007-08-02. "the 14 day delay is unnecessary, the cost is too high and that in its current form, HIPs will not prevent property sale transactions falling through."
- "Get Ready for HIPs". Better Money Advice. Retrieved 2007-01-17. "“The most ill-conceived, ill-researched and ill-tested change to property sales law and practice that England and Wales has ever experienced." - Trevor Kent, the former President of the National Association of Estate Agents on the introduction of HIPs"
- "Boycott home packs, say agents". thisismoney.co.uk. 2006-07-21. Retrieved 2007-08-02. "without the mandatory inclusion of the home condition report... home information packs... will be of no value to consumers."
- "HIPs move a step closer". Spicer Haart. Retrieved 2007-07-17. "By reducing the time it takes to sell a property, transactions are far less likely to fall through, reducing the stress considerably for everybody concerned - Stephen Nation, Managing Director for Haart"
- "HIP or hype?". Times Online Money blog. 2005-11-18. Archived from the original on 2007-09-27. Retrieved 2007-08-02. "Despite industry whingeing, we need to embrace HIPs as a way of protecting home buyers. - Louise Hanson, head of campaigns at Which?"
- "Which? slams government over HIPs backtrack". Which?. 2006-07-18. Retrieved 2007-08-02. "The home condition report was an essential part of the HIP. It seems extraordinary that the first major decision by your new department is to reduce the consumer benefits of a flagship policy.... - Nick Stace, in a letter to Ruth Kelly"
- "Labour climb-down on Home Information Packs". The Conservative Party. 2006-07-18. Archived from the original on 2006-11-21. Retrieved 2007-03-04. "[Michael Gove] said the Blair administration had slowly discovered that the HIPs project amounted to 'expensive and deficient red tape'"
- "HIP rejection ‘no bearing on implementation’". Mortgage Finance Gazette. 2007-07-21. Retrieved 2008-08-15. "While yesterday’s vote in the Lords was not fatal and will not hinder the government’s resolve to introduce HIPs as planned, it is disappointing that the Tories have once again made a political football out of HIPs. Clearly, Tory politicising is not going to get in the way of delivering this vital reform to the benefit of consumers and the environment."[dead link]
- "Hips scrapped by coalition government". BBC News (BBC). 20 May 2010. Retrieved 23 May 2010.