They have been years in the offing and are now finally here. After two false
starts, home information packs (Hips) became mandatory last week. Initially,
they are only for houses with four or more bedrooms, but are set to be
extended to the rest of the market, perhaps as soon as the end of the year.
Despite all the preparation, confusion remains about just what Hips are, how
they work and what they are designed to do. So here is Home’s guide to all
you ever wanted to know about Hips (but were afraid to ask).
So what does a Hip contain? Prepared by the seller, a Hip must include
an official copy of the individual register and the title plan, to prove you
own the property. It will also contain results of standard local-authority
searches and inquiries into planning decisions and road-building proposals.
Also required are a statement verifying that the house is for sale and an
energy performance certificate (EPC) rating the house’s efficiency. Optional
documents include a home-condition report (HCR), a list of contents and an
optional summary of the legal content of the pack.
This all sounds expensive. Who foots the bill? The seller. And just how
much they will have to pay is one of the biggest areas of contention, given
how expensive it already is to move house these days. The government claims
the cost of an average pack will be £300-£350, although the antiHips lobby
has said the real figure could be more like £1,000.
What is the point of them? The government has long been looking for a
way of improving the house-buying process, and to try to limit the number of
deals that fall through. Hips were foreshadowed in Labour’s 2001 election
manifesto and then included in the 2004 Housing Act. They are also being
introduced to fall in line with an EU directive on home energy assessments,
which must be in place by January 2009.
However, Hips have been opposed by many in the industry and received a
lukewarm response from both buyers and sellers. The Conservatives have said
the packs create unnecessary red tape and don’t reveal crucial details such
as whether a property is liable to flooding or built on contaminated land.
“If buyers trust these packs, I fear they will be lulled into a false sense
of security,” says Grant Shapps, the shadow housing minister. There have
also been claims – denied by the government – that the information gathered
could be used for council-tax valuations.
Has the government listened to its critics? Hips were originally to
include a compulsory HCR, but this was scrapped last year after it became
clear that most buyers wouldn’t trust a report prepared by a seller and
would still want to commission surveys of their own. The government insisted
on keeping the watered-down packs, but was forced, by a shortage of
inspectors, into an another U-turn days before the packs were due to become
compulsory in May. It was then decided that from August 1 Hips should apply,
for starters, to properties with four or more bedrooms – which, according to
the Council of Mortgage Lenders, is only about 17% of owner-occupied homes.
The requirement will be extended to smaller properties as soon as there are
enough accredited energy assessors. Mike Ockenden, the director of the
Association of Home Information Pack Providers (AHIPP), says three-bedroom
properties could be covered by the beginning of September, with the
remainder of the housing stock to follow “soon after”.
Is everyone happy with them now? Far from it. The EPC, the most
substantive document remaining in the pack, has been criticised as being
expensive (about £100) and unlikely to have much influence over buyers. It
also seems environmentally daft to have both surveyors and assessors making
separate trips to a property.
Even the Better Regulation Commission, an arm of government, says the
requirement for a new certificate every time a home is bought and sold goes
far beyond what the forthcoming EU directive requires.
The Royal Institution of Chartered Surveyors (Rics) says efforts to speed up
home sales and make properties more energy-efficient don’t go far enough,
and that blurring the lines between the two is just confusing. Rics was so
angry about the reasoning behind the packs that it finally sought a judicial
review days before their introduction on June 1, resulting in the delay of
the entire scheme for two months.
I’ve got a four-bedroom house to sell. How do I get a Hip? A
property can be marketed, without a Hip in place, before January 1 next
year, if requests for all compulsory documents have been commissioned – they
don’t have to have been completed. Until then, the only item that must
legally be supplied to the buyer on exchange of contracts is the EPC. From
January, a pack must be available to potential buyers as soon as a home
comes on the market.
Many estate agents will now offer Hips as part of their service; solicitors
and specialist pack providers can also compile one (visit
www.propertycodes.org.uk for a list of approved providers).
You could put one together yourself, and maybe even soon pick up one with the
weekly shop: Asda recently launched a property service that included an
offer of a free Hip.
So how long will it take to put it all together? The AHIPP says five
days; critics say in some areas it could be at least a couple of weeks.
This is bureaucracy gone mad – how can I get round it? Government
guidelines say a Hip is not required when a property is not “marketed” as
such – if you sell it to a friend or member of the family, for example. But
the definition of “marketing” is a grey area. Homefinder UK, a
property-finding outfit, claimed recently those using its “sell for free”
service, which puts would-be buyers in touch with would-be sellers (but
whose properties are not formally on the market) would not need a pack. Not
everyone agrees. “If you’re informing sellers about a property that is
available, that counts as selling,” warns the Department for Communities and
Local Government.
What about calling my fourth bedroom a study? A good thought. There is
no legal definition of what constitutes a bedroom, so expect to see plenty
of “three-bed properties with study” for sale, in what agents have dubbed
“Hip replacement”. Supporters of Hips claim vendors following this course
risk missing out on sales – especially as many buyers now begin their search
online, where sites ask them to tick the number of bedrooms required.
Industry experts say buyers will quickly cotton on.
Can’t I just ignore all this and wait for it to go away? Yes, but
it could prove extremely expensive. In theory, anyone flouting the new rules
will face a £200 fine for every day the property is on the market. If you
are marketing it directly yourself, you will be liable; if you are selling
through an agent, they will have to pick up the tab – and will be
understandably reluctant to do so.
What effect is it having on the market? “People have been stung once,”
says Liam Bailey, the head of residential research at estate agency Knight
Frank. “They haven’t wanted to spend the money just in case it didn’t go
ahead.” He believes the introduction of the packs will reduce the large
number of people who put their property on the market to “test the water”,
rather than with a real intention to sell.
