UK Home Information Packs (HIPS)
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UK Home information packs (HIPS) contain documents to help speed up the selling process of a house. A pack will consist of various documents such as local searches and a Energy Performance Certificate (EPC) that the buyer can view before deciding whether they wish to purchase the property. As of 1st August 2007 only four bedroom or larger properties In England and Wales are required to have a HIP.
In a dramatic U-turn the Government was forced to delay the introduction of The Home Information Pack by 2 months from 1st June 2007 to 1st August 2007. The delay was a direct result of the Royal Institute of Chartered Surveyors (RICS) winning a judicial review of Energy Performance Certificates (EPC) which has prevented EPCs becoming law on 1st June 2007.
However, HIPS became law for properties with 4 bedrooms or more from 1st August.
The Law now states:
The Introduction of HIPS and Energy Performance Certificates (EPCS) will start on the 1st August 2007 in a phased approach.
Only properties with four bedrooms or more require a HIP from 1st August 2007.
Properties with three bedrooms or less currently do not require a HIP. These properties will be phased in at a later date, however no date has been given.
Until the end of 2007, four bedroom properties and larger can be marketed as soon as a HIP has been ordered. Previous a seller had to wait for a completed HIP.
A Four bedroom property on the market BETWEEN 1st June 2006 and 31st July 2007, does not require a HIP unless the property is still on the market on or after 1st January 2008.
Can I avoid a HIP by marketing my 4 bed home as 3 beds plus study?
We strongly advise against this. Firstly this may be illegal although there is no legal definition of a bedroom. Secondly there are 2 very good financial reasons to market your property as 4 bedrooms.
These are:
Buyers looking for 4 bedroom houses will not find your property, thus you could loose a potential buyer. All the major property websites display the bedrooms, and buyers use this to filter out homes they are not interested in.
On average across the UK, 4 bedroom homes are worth an extra £100,000 over 3 bedroom homes, and even more in the South East.
Are 4 bedroom homes which were on the market before 1st August Exempt?
Yes, The Home Information law states (Note: commencement date means when HIPS start e.g. 1st August 2007 for 4 bedroom homes) the property is put on the market by or on behalf of the seller before the commencement date; action taken at any time during the period starting with 1st June 2006 and ending before the commencement date by or on behalf of the seller, made public the fact that the property was on the market; such action was taken with the intention of selling the property before the commencement date; and such action was sustained to a reasonable extent after it was put on the market, during the period stated with 1st June 2006 and ending before the commencement date.
This means as long as your property is on the market BEFORE 1st August you do not require a HIP (unless it is still on the market on of after 1st January 2008). You can even change agents or advertise privately and still not require a HIP as long as there is no break in the marketing.
What about 3 bedroom or smaller properties?
On 1st August 2007 3 bedroom or smaller properties do not require a HIP. These will be phased in at a later date. Currently this is estimated to be either September or October. However from 1st January 2008, most properties will require a Home Information Pack.
How do I get a HIP?
You can either:
Create a pack yourself, which will still cost you over £350 once you have paid for the local searches and the EPC
Pay £400 to £800 to a 'HIP Provider' to create the pack for you.
Allow an Estate Agent to Supply the pack - never do this!!
Why You Should NEVER Let An Estate Agent Supply The HIP?
The Third Option, and worse financial option, is to let your Estate Agent supply the Home Information Pack. Be aware!, your Estate Agent may lead you into one or more of the following traps:
Offer a Free HIP - Then simple raise the commission level to Pay For It.
Offer a Free HIP - But if you leave, they will charge you under the clause 'You will pay any reasonable marketing expenses'. Expect a bill for £500 to £1000.
You will NOT be able to use multiple Estate Agents - You will be tied.
You will NOT be able to sell privately, thus pay £1000s in commission.
The Agent will own the HIP, so you will not be able to transfer it to another Agent. The HIP will have the agents logo and name printed on it.
You pay for the HIP at an inflated costs - Agents make large commission on every HIP they sell.
If you change agent, you will need to pay for another HIP, at another inflated price
The best option is to simply purchase your own HIP independently. This gives you the freedom to market your property how you want, use any or multiply Estate Agents, and purchase your HIP for the cheapest Price.
What is to be included in a pack?
An Energy Performance Certificate (EPC). This will provide an A - G ratings on the energy efficiency of a home, plus advice on how to make further energy savings. Only those who are fully qualified and certificated will be allowed to prepare an Energy Performance Certificate.
A sale statement which summarises terms of sale.
Standard searches (i.e. local authority enquiries and a drainage and water search)
Evidence of title: An official copy of the individual register and an official copy of the title. If one is not available, provide proof that you have tried to obtain one.
An index (i.e. a list of the contents of the pack) . This has to be updated when you amend the pack, that is include/ remove or update any documents accordingly.
The above has to be fulfilled by everyone, and in addition to this the following has to also be done where appropriate.
Commonhold information such as name and address of managing agents, regulations and rules etc if known or have access to.
Leasehold information such as copy of the lease, regulations and rules etc if known or have access to.
A New Homes Warranty.
A report on a home that is not physically complete.
The following documents are optional.
Home contents form.
Home use form.
Guarantees and warranties such as double glazing.
Home Condition Report (HCR). See below to find out more about HCRs'.
What is a Home Condition Report (HCR)?
These are optional
The Home Condition Report contains information about the physical condition of the property which sellers, buyers and lenders will be able to legally rely on as an accurate report.
Home Inspectors responsible for preparing Home Condition Reports will hold a qualification at NVQ Level 4 (equivalent to degree level), and will require in-depth knowledge and practical understanding of residential building construction and defects across a range of properties as set out in the approved National Occupational Standards for Home Inspectors.
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