Home Information Pack

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Under the provisions of the Housing Act 2004 a Home Information Pack (HIP), sometimes called a Seller's Pack, must be provided before a property in England and Wales can be put on the open market for sale with vacant possession. The pack is a set of documents about the property: an Energy Performance Certificate, local authority searches, title documents, guarantees, etc. The introduction of HIPs has been 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. ^[1][2] As of April 6, 2009, all newly commissioned HIPs must contain a Property Information Questionnaire (PIQ). ^[3]

The Government cited the theory 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 the building industry and estate agents, as well chartered surveyors. There are claims that the packs have contributed to the 2007-09 housing crisis by deterring vendors from marketing their houses due to the extra costs involved in the survey.

Contents 1 History 2 Contents 2.1 Home Condition Report 2.2 Energy Performance Certificate 3 Cost 4 Enforcement 5 Controversy 6 See also 7 References 8 External links

[edit] History

As the idea of the Home Information Pack developed over time, so have the reasons for its introduction. A proposal to address the problem of gazumping was first made in the 1997 Labour Party manifesto.^[4] 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.^[5] The idea is based on similar practice used in Denmark.^{[citation needed]}

Home Information Packs were announced in the Queen's Speech in November 2003.^[6]

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.^{[citation needed]} 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.^{[citation needed]}

In September 2006 the government approved the first Certification Schemes to oversee the work of Home Inspectors. The schemes are set up and run by industry. Government sets the standards that the schemes operate. In September the Home Condition Report Register contract was agreed. A fully operational register was scheduled to follow as soon as possible afterwards.^{[citation needed]}

In June 2007 the government announced they would fund or subsidise 5000 HIPs by £100 prior to the official launch date of August 1, 2007.^[7]

Originally the HIP was going to be required from June 1, 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 September 10.

On November 22, Housing Minister Yvette Cooper announced that HIPs would be rolled out to include one and two bedroom properties as of December 14, 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 a term used to denote 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 can be marketed during this time providing a commitment to pay for a HIP - including the EPC - is made and the necessary documents have a reasonable expectation of being made available within 28 days.

However, on May 8, 2008, Housing Minister, announced a further delay to first day marketing until 31 December 2008.

From April 6th 2009, all properties now require a Home Information Pack before it may be marketed.

[edit] Contents

The pack must contain the following, which must be no more than three months old when the property is first marketed:^[8]

• Index
• Energy Performance Certificate
• Sale Statement
• Property Information Questionnaire
• Title documents for the property
• Local Authority and drainage searches

If the property is leasehold or commonhold, then the pack must also include the following:^[9]

• 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 can market their homes without the searches or leasehold documents as long as the pack contains evidence that they have been commissioned and will be included as soon as practicable but certainly within 28 days.^[9] However the Government announced in December 2008 that with effect from 6 April 2009 this concession will be withdrawn and the HIPS pack must be completely available on the day that the property is first offered for sale.^[10]

The pack may also contain some or all of these authorised documents:^[11]

• Home Condition Report
• Two sellers questionnaire forms called Home Use Form and Home Contents Form
• Legal summary
• Other searches such as a mining search

[edit] Home Condition Report

It was 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 has now been postponed as a result of industry lobbying, with the government keen to avoid risks to consumers from delays and potential late changes to the implementation timetable.^{[citation needed]}

When eventually introduced, Home Condition Reports are 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.^[12]

Mandatory introduction of home condition reports remains on the table, but the Government wants more time to assess consumer demand and the results of further testing. They will also be looking 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.^{[citation needed]}

[edit] Energy Performance Certificate

Similar to EU appliance efficiency ratings, the energy performance ratings on the Energy Performance Certificate will 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.^[13]

An Energy Performance Certificate EPC in the UK needs to be completed by a government qualified Domestic Energy Assessor (DEA). DEAs will 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 hopes that by following the proposals in the energy performance certificate, the average home owner might save £300 a year on fuel bills. Government also hopes that the information could be used to support the growth of green mortgages and other incentives.^[14]

This part of the Home Information Pack is required in order to meet the requirements of the European Energy Performance of Buildings Directive.^[15]

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 ^[16]. 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 ^[17].

[edit] Cost

Initially the cost of a Home Information Pack, including the Home Condition Report, was estimated to be around £600 by the Government.^[18] This was to include the cost the of the postponed Home Condition Report, which is expected by the Department for Communities and Local Government to cost between £250 and £1000.^{[citation needed]}. Industry now expects 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.^[19] Some estate agents are offering HIPs for free, however homeowners should be vigilant and only sign up to these after carefully considering the small print. The Law Society has recommended that you use independent HIP providers to avoid being tied in or triggering penalty clauses.^[20]

The Government point 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.^[21] 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 structural survey would also have to pay extra.^{[citation needed]}

For properties that have been on the market some time, it is likely that there will be additional costs incurred to bring the information in the HIP up to date.^{[citation needed]}

[edit] Enforcement

Failure to provide a Home Information Pack, or supplying an incomplete pack carries a fine of £200 per day the property is marketed.^[22]

Enforcement is to be carried out by local authority Trading Standards Departments, however they claim that this is inappropriate as they normally regulate businesses, and that it would cost them too much to enforce through the civil courts.^[23]

On July 31, 2007 the Office of Fair Trading advised estate agents on their obligations. From August 1, 2007 estate agents in England and Wales that fail to comply with the new Home Information Packs regulations could result in a ban from estate agency work.^{[citation needed]}

[edit] Controversy

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 regards as the department's failure to carry out a full consultation on HIPs.^[24]

Despite their initial objections to the HIPs scheme, RICS now provide courses on Home Inspection and Domestic Energy Assessment, as well as courseware manuals for the professions of Home Inspector & Domestic Energy Assessor.

There are fears that the up-front cost involved may put off some people from putting their house on the market,^[25] which may in turn depress the housing market.

The property industry has been largely against these changes.^[26] but the government says the new system will leave all homeowners better off.^[27]

The Council of Mortgage Lenders report that their members are not yet persuaded that the perceived consumer benefits will be achieved. They believe that the forthcoming introduction of e-conveyancing will have a much more positive impact.^{[citation needed]}

The National Association of Estate Agents hold the view that the legislation is unnecessary, does not cover the important reasons why home sales and purchase transactions fall through,^[28] and that the cost is too high.^[29]

Britain's largest independent estate agency, Spicerhaart, initially called for a boycott of the home information packs scheme, ^[30] although has since revised this position to one of full support. ^[31]

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.^[32] The organisation has since withdrawn its support following the Government's decision to postpone the introduction of Home Condition Reports.^[33]

Should the Conservative Party come to power at the next election, they currently plan to scrap the legislation, calling it 'expensive and deficient red tape'.^[34] 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.^[35]

[edit] See also

• Conveyancing
• British residential property market

[edit] References

[edit] External links

• Home Information Pack - government site
• Home Information Packs - Home Information Packs Providers
• The Home Information Pack - Department of Communities and Local Government
• The Home Information Pack Regulations 2006 - Office of Public Sector Information