Mortgage and homes news

Getting down to the nitty gritty

25 July, 2007

What is a HIP?

It is an indexed collection of documents including terms of sale, deeds and title documents, related searches including a drainage and water search and local authority enquiries, and an Energy Performance Certificates that has to be ordered before a property is marketed.

Who needs one?

Anyone who wants to put their four or more bedroomed property on the market in England and Wales after 1 August 2007.

Who is responsible for ordering one?

The 2004 Housing Act defines “the responsible person” as being either the estate agent or the owner if an agent is not employed. Failure to order one could result in a fine and/or a possible ban for an estate agent.

What will it cost?

At the moment a full HIP will cost anything over £299.00. Leasehold properties will cost more due to the increased information that is necessary. Figures of £1,000.00 have been quoted, although costs are highly likely to go down and most estate agents and specialist companies are offering attractive deals to limit costs – although it is always advised to explore all the options first and then have a throurough read of the smallprint before accepting one.

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Where do I get one and how long do they last?

Responsibility for producing the HIP will most likely fall to the person marketing the property, usually the estate agent, developer or auctioneer unless the house is being sold privately, and the pack itself will be valid for at least six months. Some lawyers acting on behalf of a buyer may recommend that elements like searches be refreshed earlier than this six month expiry date, however most sellers with realistic expectations are likely to sell before this point.

What are HIPs for exactly?

The Government hopes that the introduction of Home Information Packs will help speed up the homebuying and selling process through the provision of more upfront information from the outset. They are also designed to minimise the risk that a sale will fall through, whether through gazumping or simply the buyer changing their mind.

What are they really for?

As part of the Kyoto Protocol we signed up to we will be obliged to introduce Energy Performance Certificates (EPC) for all residential property in 2009. In addition to owner-occupier properties, all rented accommodation will require EPCs from August next year.

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What is an EPC and how much will it cost?

To start with, an EPC will cost about £130.00, hopefully becoming more affordable as the country adapts to the new regulations. It is a fridge style rating A-G produced by a Domestic Energy Assessor who will visit each property and take measurements to determine how energy efficient a property is, e.g. the depth of lagging in the loft.

Do I get to see the report?

Yes, it will be available to anyone who asks for it together with the Home Information Pack and can be viewed online via the LandMark website. You cannot challenge it nor can you have it withdrawn. It is therefore essential that you get a suitable Assessor who understands your type of property.

Top tips for sellers affected by the new law:

• Buying a home without a HIP has been compared to buying a car without test-driving it first. If you have your doubts, keep this reasoning in mind. You might be loathe to stump up the cash, but it is highly likely that you’ll be buying another house so you will see the benefit first hand
• Don’t see the non-compulsory Home Condition Report (HCR) as a hindrance, but rather as a help. The Report has been praised as an ‘early warning sign’ enabling homeowners and potential buyers to spot future problems before they arise
• As a seller you need to be clear about all that is required of you – an incomplete HIP, or none at all, will cost your estate agent a £200 fine on top of the extra costs you will incur to complete it
• As a buyer you need to be aware of what information to look for. If the seller has chosen to omit an optional but useful component like an HCR you need to question why, as there could be underlying issues
• The Association of Home Information Pack Providers (AHIPP) has introduced the ‘HIP Code of Practice’ which sets standards that Pack providers have to conform to. Approved providers’ Packs will carry insurance and are identifiable by a unique logo
• Leading by example, 60 per cent of homes for sale in the HIP trial areas have included an HCR in their Pack, something to keep in mind when deciding whether to do so yourself or not and the large majority of sellers have found the whole pack a very useful selling tool.