Guide to Home Information Packs

What is a HIP? Do I need a HIP as a landlord? When do HIPS come into force? Being armed with knowledge about the Government’s HIPS legislation is a good idea. As a landlord, you own property, and at some stage may come to sell it. This ibuytolet guide arms you, the landlord, with all the information necessary to understand Home Information Packs

HIPS (Home Information Packs) are being introduced in order to make the buying and selling of property a more smooth process. The measures will be put into effect from the 1^st June 2007.

The new measures will come into effect from the 1^st June 2007, by which time all people wishing to sell property will need a HIP before putting the house up for sale. Ruth Kelly claims that: “Home Information Packs will bring together all the information people need to buy and sell a home, to help them make informed decisions about what is probably the most expensive purchase of their lives.  The Packs will especially help first time buyers as they receive the packs for free.”

So, what is the best way to navigate home information packs? What needs to be included? How much are they going to cost?

Home Information Packs: an introduction

From 1^st June 2007, homeowners or selling agents acting on their behalf are required by law to provide a HIP when marketing a property to sell. Prospective buyers are entitled to receive a copy of this pack. Estate agents marketing homes for sale will be required to belong to an approved redress scheme.

The advantages of introducing HIPS are in the flow of information for buyers. Currently, problems with property may come to light once an offer has been made and accepted. In this situation complications with the transaction can occur. The current system is outmoded and doesn’t benefit either buyers or sellers. With HIPS in place, time and expense will be saved and fewer deals will collapse. 

HIPS ensure that details about a house are in the open from the beginning of a transaction. Electronic conveyancing, which is also due to be implemented next year, should complement the HIPS scheme. 

Benefits of Home Information Packs

HIP packs will lower the risk of failed transactions, saving the estimated £1 million lost per day. Most of the items included in a HIP already have to be provided, but costs for the pack are estimated to run to between £600-£700. Something called a Home Condition Report is an integral part, and this will need to be conducted by a qualified Home Inspector, regulated by an approved certification scheme.

First-time buyers should find the revised process more affordable, because they automatically receive information about the house without having to pay for it. Although problems could arise from cash-strapped sellers, apparently many organisations will offer a buy now  and pay later version of the HIP. The seller therefore pays for the pack only after the house is sold or after a set period, whichever falls earlier. Furthermore, some estate agents will offer free packs as part of their usual agency fees.

Home Condition Reports are mid-level surveys. A HIP pack is not a valuation assessment, and operates independently, but it will be still contain useful valuation information. A Home Condition Report will provide details of the condition of a property and how efficient it is on energy. This information can be passed to lenders who can use it for valuation purposes. A Home Condition Report will contain more information than a standard lender valuation survey.

Home Condition Reports

Qualified Home Inspectors will carry out the Home Condition Reports. These professionals will be certified, insured and trustworthy. Only inspectors who have qualified under a certification scheme will be in the position to carry out these reports. The Home Condition Report will be slightly similar to current mid-level surveys (the Homebuyer survey), and no less detailed. It will be the legal right of lenders, buyers and sellers to depend on the information provided for them in the Home Condition Report. Buyers will not need to have their own surveys conducted. Lenders will still be required to carry out valuations, but Home Condition Reports will make their lives easier.

Home Information packs will be required to be under three months old when a property is placed on the market. However, the pack then remains valid throughout the sales process. Updates on the packs will be offered at reduced rates. The packs are expected to only take a few days to complete.

Contents of the Home Information Pack

The contents of the Home Information Pack are expected to be as follows:

Terms of the sale

Evidence of title

Replies to normal preliminary enquiries made by or on behalf of buyers

Copies of planning approvals or consents, listed building information, and building regulations

(If a new property) Copies of Warranty and Guarantees

(If property has been repaired, worked-on) Copies of guarantees for work

Home Condition Report, including Energy Efficiency Assessment

In addition, for leasehold properties:

Copy or copies of the lease

Copies of most recent service charge accounts and receipts

Details of buildings insurance

Any regulations made by landlord or by Management Company on behalf of landlord

Memorandum of landlord or Management Company

Some companies offering HIPs will provide extras, either as incentive for choosing them or as a pay-extra option. These could include planning details for a radius around the house, crime rates, leisure facilities and school ratings.

The consumer redress scheme

With the introduction of HIPs, the government will require estate agents to belong to an approved redress scheme. This means homebuyers will be able take redress against estate agents. The aim of this is to ensure that rogue estate agents are not able to operate in this country. In theory, the redress scheme will also improve standards of service and provide a way for consumers to redress without going to court. The redress scheme will deal with a range of complaints related to home information packs, and award compensation when complaints are upheld.

Refusal on the part of an estate agent to join the scheme will result in a banning order under the Estate Agents Act 1979. The redress scheme will one day be expanded to cover general estates about estate agents. The scheme will only operate in England and Wales to begin with.

Dry run for HIPs

Although uncertainty exists about whether HIPs will be implemented on the estimated start date, the Government is nevertheless planning to introduce a dry run of the scheme, on a voluntary basis, starting from July 2006. This is intended to help the industry test the various processes involved. However, before this dry-run can be initiated, a number of policies and regulations need to be firmed up. There will be no obligation to use HIPs during the dry-run period, and the obligatory start date remains on the 1^st June 2007.