So what's all this HIPs business about? If the law comes in on time, from the 1st June 2007, all homes put on the market will need to have a Home Information Pack and about £500 will need to be spent on compiling one. However opinions about the Home Information Pack remain divided!
The person responsible for marketing a property must have a Home Information Pack in their possession whilst the property is on the market and must provide a potential buyer with a copy of the pack, or any document from it, upon request.
What's in a Home Information Pack?
A Home Information Pack must contain :
- Terms of sale
- Evidence of title
- Replies to preliminary inquiries made on behalf of potential buyers
- Any planning, listed building and building regulation consents / approvals
- For new properties, copies of warranties and guarantees
- Any guarantees for work carried out on the property
- Standard searches e.g. local authority inquiries, drainage and water search
- An energy performance certificate
Leaseholders must also provide:
- A copy of the lease
- Their most recent service charge accounts and receipts
- Building insurance policy details and payment receipts
- Copies of any regulations made by the landlord or management company
- Memorandum & articles of association of landlord / management company
- Where appropriate a new home warranty will also be required
The following are optional in the Home Information Pack:
- A home condition report, based on a professional survey of the property
- Other guarantees and warranties
- Other searches
Where do I get a Home Information Pack?
- Use an estate agent
- Get a solicitor to do it
- Use a specialist Pack provider
- Do it yourself
- Enlist the help of other businesses, such as financial advisers
- Some supermarkets have also indicated that they might provide packs
What are the benefits of a Home Information Pack?
The Government makes big claims that the introduction of the Home Information Pack will :
- Improve the process of buying and selling
- Improve the condition and sustainability of housing stock
- Bring a simpler process for first-time buyers
Trials of the Home Information Pack have been carried out in a number of areas in the UK, but even in areas where the packs have been piloted, the public is still largely blissfully unaware that, as of June 1, it will be illegal to put your house up for sale without one and agents can even face a £200 fine if they market a home without it.
The trials are designed to prove that HIPs will work, however they differ in one crucial way from the real thing: £4m in government funding means the initial trial packs are free.
A fortnight ago, the Council of Mortgage Lenders (CML) and the National Association of Estate Agents (NAEA) again warned the government that making HIPs compulsory will dissuade people from putting their houses on the market, thus reducing supply and driving up prices. The CML believes there are too many unknowns about the impact of HIPs and wants their introduction postponed until the results of the three-phase trial have been properly assessed. Bizarrely, the Department of Communities and Local Government says it has no timeframe for the trial, despite setting a date for the packs' introduction.
One of the other main criticisms of the Home Information Pack has been that the cost is constant regardless of the value of the house, so it is more of a deterrent to those considering selling cheaper houses, as it represents a bigger chunk of the cost of their move.
From the initial results of the trial it remains difficult to draw conclusions, given that they are free and that the main barrier for most people from June 1 will be their cost. I will keep you all updated with Home Information Pack progress as this is likely to be a bumpy ride. For more information visit www.homeinformationpacks.gov.uk.