HIP’s (Home Information Pack)

From 1st June 2007, most homeowners will be required to have a Home Information Pack (HIP) before they put their property on the market.

SO WHAT IS A HIP?

A Home Information Pack provides information to a buyer about a property which they may wish to purchase. The pack must be provided by the home seller or the seller's agent. The pack is intended to improve the home buying and selling process in England & Wales, which is currently very slow and subject to a 30% failure rate.
Under the current system, key information is withheld from both buyers and sellers until a sale is agreed. This often results in costly issues arising later than necessary in the sale process. The Government intends that by using a HIP, information will be provided up front enabling buyers to make an informed decision early on and avoid delays, uncertainties and unnecessary expense. The aim is that this new system will be simple and more efficient.

WHAT’S IN A HOME INFORMATION PACK?

The Home Information Pack contains important information that buyers and sellers need to know. From 1 June 2007, anyone marketing a property, or their representative, will be legally required to have a Home Information Pack and make it available to potential buyers of the property.

Compulsory Items Include :-

Home Information Pack Index

The Index provides a checklist for sellers, buyers, estate agents and enforcement authorities. Where a document that must be included in the Pack is unavailable, the Index must say so, give the reason it is missing, and indicate what steps are being taken to obtain it. Where documents are added to or removed from the Pack at a later stage, the Index should be revised accordingly.

Energy Performance Certificate

Energy Performance Certificates tell you how energy efficient a home is on a scale of A-G. The most efficient homes - which should have the lowest fuel bills - are in band A.

The Certificate also tells you, on a scale of A-G, about the impact the home has on the environment. Better-rated homes should have less impact through carbon dioxide (CO2) emissions.

The average property in the UK is in bands D-E for both ratings. The Certificate includes recommendations on ways to improve the home's energy efficiency to save you money and help the environment.

Sale Statement

The sale statement should provide some basic information about the site, including:

• The name of the seller and the address of the property being sold
• Whether the property is freehold, leasehold or commonhold
• Whether the property is registered or unregistered
• Whether or not the property is being sold with vacant possession

Standard Searches

The Home Information Pack must include :-

The local land charges register relating to the property being sold. If the search is carried out by the local authority, an official search certificate will be provided. Alternatively a personal search company can be used.

Other records held by the local authority on matters of interest to buyers, such as planning decisions and road building proposals. These are referred to as local enquiries in the Home Information Pack regulations. A local authority or a personal search company can be used.
The provision of drainage and water services to the property. The local water company or a personal search company can be used (however, the search must comply with the HIP Regulations).

Evidence Of Title

These documents prove that the seller owns the property and therefore has the right to sell it. Where the property being sold is registered, certain documents that are available on request from the Land Registry must be included in the Pack. These provide an up-to-date official record of who owns the land, and consist of:

Official copies of the individual register (made up of a property register, proprietorship register and, typically, a charges register)

An official copy of the title plan

For sales of unregistered land, the Pack must include copies of a certificate of an official search of the index map (obtained from the Land Registry), and those documents that the seller intends to rely on to provide evidence of title to the property, and thus the right to sell it.

Additional Information For Leasehold Properties Include

A copy of the lease

Any regulations or rules that apply to the property that aren't mentioned in the lease and any proposed amendments to same

Statements or summaries of service charges covering the previous 36 months

Where appropriate, the most recent requests for payment of service charges, ground rent, insurance against damage for the building in which the property is situated, and insurance in respect of personal injury caused by or within the building during the 12-month period before marketing began

The name and address of the current or proposed lessor, and details of any managing agent that has been appointed or proposed by the lessor to manage the property

A summary of any works being undertaken or proposed that will affect the property or the building in which it's situated.

Optional Items Include :-

Home Condition Report

A Home Condition Report contains information about the physical condition of a property, which sellers, buyers and lenders will be able to rely on legally as an accurate report.

The Report is an important part of the Pack, and can be included by sellers on a voluntary basis.
Sellers who provide a Report will have an early opportunity to carry out repair work on the property or obtain quotes prior to marketing.

Legal Summary

Home Information Packs will contain some complex documents that can be difficult to understand. The optional summary of the legal content of the pack could therefore be very helpful to buyers, although it will not remove the need for buyers to take their own legal advice as well.

Home Use Contents Form

Home Use and Home Contents Forms let sellers give buyers information on a range of matters relating to the property.

These include information on boundaries, notices, services, sharing with neighbours, planning permissions and other matters of interest to potential buyers.

It is usual for sellers to declare which fixtures and fittings and other contents of the property are included in the sale, are excluded from the sale, or are subject to negotiation.

Other Documents

Sellers could speed up the sale if they include non-standard searches in the Home Information Pack where appropriate.

For example, it's standard practice to obtain a mining search in areas where coal mining has taken place. Sellers in these areas will save time if they provide this search in the Pack.
Other searches cover rights of way, ground stability and actual or potential environmental hazards such as flooding and contaminated land.

Sellers will also want to include guarantees and warranties for work already carried out on their homes.

HOW MUCH WILL A HIP COST?

As of writing no firm costs have been set however the general figure which at the moment depends largely on the availability of qualified Domestic Energy Assessors is set to be around £400 + vat.

Various payment options will be available including up front payment, deferred payment and credit options.

WHAT DO I DO NOW?

Anyone seriously thinking of selling now should contact an Agent and arrange for their property to be marketed immediately before June 1st to avoid the HIP.

After 1st June it would make sense to choose an Agent who is using one of the top four National HIP Providers, Choose an Agent that has a HIP which is transferable should you choose to change agents and be wary of HIP inclusive fee packages where the Agent has a tie in period and will not only keep your HIP if you withdraw the property but will charge you a hefty withdrawal fee for the pleasure.