The government has announced a delay to the introduction of Home Information Packs (Hips) in England and Wales
25 May, 2007 | Web design
The whole idea of the packs has been controversial from the outset. Some warn that it will add an unnecessary layer of expense and bureaucracy to the house selling process - but others argue that it brings much-needed transparency. We try explain what the packs will mean for homeowners and the housing market.
I want to sell my house and was told that I will need a Home Information Pack. What are they?
The packs are to contain information that will be useful to any potential buyer. Copies of title deeds, any recent planning permission or building consent given on the property, a local area search and an energy performance certificate will all be in the pack. Under the rules, everyone who puts their property up for sale in England and Wales will eventually be legally obliged to produce a Hip. Failure to produce a Hip can lead to a substantial fine. Scotland is set to get its own version of Hips in 2008.
Do I still need one?
Not quite yet. Hips were meant to become compulsory for all houses put on the market from 1 June onwards. But Communities and Local Government Secretary Ruth Kelly has now announced that the introduction has been pushed back. Now, from 1 August only four-bedroom and larger homes will have to have a Hip. The reason, Ms Kelly told the House of Commons, was that there needed to be more assessors in place to produce enough energy performance certificates - as many as 2,000 more than are currently accredited. Ultimately, once more assessors are trained, the requirement to have a Hip will be extended to smaller properties. Another key change announced by the government is that house sellers will not have to a Hip in place before putting their property up for sale. They will be able to start marketing and then obtain a Hip.
Energy performance certificates - what are they?
The idea of the certificate is that, at a glance, would-be buyers will be able to see the property's energy efficiency - a bit like when they buy a fridge. The homeowner will also be presented with some tips on how the energy efficiency of their home can be improved.
Energy performance certificates kill two birds with one stone - providing information for homebuyers and ensuring the UK complies with an EU directive which comes into force in 2009. However, the cost of having a property's energy performance assessed has been estimated at anything from £100 to £150. Thousands are in training to become energy performance assessors, as the jargon has it, to inspect properties new to the market and issue certificates. But only 500 have so far been accredited.
Hips have been in the offing for a decade. The Labour government went into the 1997 general election promising to introduce Hips, with the express intention of reducing the number of property sales which fall through. The idea is simple: the more information that is presented to the buyer upfront, the slimmer the chance of a nasty surprise scuppering the sale further down the line.
I remember that originally Hips were meant to contain a structural survey - has that plan been dropped?
Yes. Last year the government announced that Hips would, for the time being, not have to include a structural survey. Many thought that dropping the requirement to have a survey would mean that the whole Hip project would be shelved. However, the government has pressed on with Hips.
I have read that these packs could cost up to £1,000 - is this true?
This is probably a bit of an overestimate - but you can probably expect to pay £400-£700 for a Hip. Potential buyers will not have to contribute to the cost of a Hip. However, they may want to get their own local authority searches done and mortgage companies will still insist on a proper valuation.
I am buying a property. How much store should I set on the information in the pack?
The information will be useful but it may soon be out of date. Your solicitor may well advise that you get your own searches done. Your mortgage provider may also want fresh property searches. In other words, they may well disregard Hips.