The HIPS Home Information Pack Explained

The Home Information Pack or HIP as its better known is a package of documents which anyone now selling their home in England and Wales, is required by law to compile. The government has brought in this legislation in the hope it will make buying a home a less stressful and more efficient process. It is also hoped to be beneficial to the housing market by speeding up the procedures involved and reduce the number of both buyers and sellers pulling out of the sale before completion.

There have been various postponements in releasing the Home Information Packs. Initially they were to be introduced for all homes on 1 June 2007, and then it was decided to spread the introduction over a period of time.

The first roll out of HIPS was on 1 August 2007. From that date all homes with four or more bedrooms had to have a Home Information Pack before they could be put on the market. This was followed shortly after by including homes with three or more bedrooms on 10 September 2007 and finally by adding homes with two or less bedrooms on 14 December 2007.

The idea of each property having a Home Information Pack was first suggested in the Housing Act of 1994 and has taken 13 years to be brought into practice.

Initially part of the pack, the Home Condition Report, was intended to be compulsory. However, this idea was scrapped and the report is now voluntary. This has caused some controversy after the government decided this in August of last year.

The Home Condition Report contains important information on the condition of the property and is arguably one of the most important documents in the pack. It allows the prospective buyer to be certain of the state of the property before completing the sale.

Critics say the removal of the Home Condition Report as compulsory makes the pack less worthwhile and decreases any likelihood of the scheme improving the housing market. The government say it may in future reintroduce the reports as compulsory if insufficient buyers voluntarily provide it. The figure of how many sellers are including the report is not yet known. As it can cost up to £1000 there are worries this expense may put people off selling their homes.

Currently the way it stands, all homes must have a Home Information Pack already compiled or at least being compiled before they can be put on the market. On 1 June 2008 all homes must have the pack already compiled before the property can even be placed up for sale. Failure to provide a HIP will result in a fine of at least £200.

If you’re thinking of selling your home, it’s a good idea to keep an eye on the current legislation regarding HIPS in case any changes are made in the future.

Further Information

Everything you need to know about HIPS in detail:

• What’s in the Pack?
• Can I Compile My Own Pack?
• How Can I get a Pack?
• Do I have To Provide a Pack?
• What’s the Point?

What’s in the Pack?

There are two categories of documents contained in the Home Information Pack. The first category comprises of documents which must by law be included and the second holds authorised or voluntary information.

The required documents which must be held in the pack are:

Index

This lists all the contents included in the pack. If an item that should be held within the pack is temporarily unavailable, the index must state this and give a reason why it is missing. It should also give the measures being taken to provide it. If, in the future more items are added or removed from the pack, the index should be updated to record this.

Energy Performance Certificate

This certificate states how energy efficient and environmentally friendly a property is. Both are rated on a scale of A-G, with A being the top rated band. Currently most UK homes fall into bands D or E in both categories and the certificate gives advice on how to improve this. For new build homes still under construction, the seller must give an estimated grade, however a full certificate will be provided once the property is completed.

Sale Statement

This document gives information relating to the terms of the sale and will include the address of the property, the type of property, whether it is being sold as vacant possession or occupied and whether it is being sold by the owner or someone else. It must also include information on whether the property is registered or unregistered at the Land Registry and whether it is Freehold, Commonhold or Leasehold.

Standard searches

This includes documentation held by the Local Authority relating to what are called local enquiries. This contains information on proposed road building and planning applications. Information on drainage and water services should also be included in this section as should the lands charges register relating to the property which is being sold.

Evidence of Title

These documents confirm the seller owns the property and has the right to sell. If the property is registered with the Land Registry, information available from them must be included in the pack. This will include official copies of the register and title plan relevant to the property.

The information included in Home Information Packs is applicable to all properties, however leasehold and commonhold buildings require extra information to be included.

Information on leasehold status

The only compulsory information to be included here is a copy of the lease. Other documents relating to leasehold should however be included if available. These can include any rules or regulations applying to the property or proposed changes to these and statements of service charges for the past three years. The details of the current owner should be included as should details of the agent if there is one. Finally, if necessary there should be information relating to any work which is currently being undertaken or proposed which may affect the property.

Any existing commonhold information

This should include an official copy of the individual register and title plan plus the following documentation if it can reasonably be obtainable. Rules and regulations not included in the commonhold community statement, copies of invoices for assessment, reserve fund levy and insurance for the previous twelve months, details of any manager or agent in charge of the property and any current or proposed work affecting the property.

The second category, authorised information should include the following:

Current guarantees or warranties

Any warranties or guarantees for work which has already been carried out on the property should be included under this section.

A home condition report

This is a legally binding report and gives details on the physical condition of the property. The assessment is carried out by a specialised Home Inspector.

Home Use and Contents

This report gives details on any fixtures and fitting within the home which are included in the sale. There is also information on planning permission, boundaries, services and anything else beneficial for the buyer to know about the property.

Other relevant searches

This can include information on any environmental dangers such as flooding or ground stability. Rights of way or mining searches can be covered in this section also.

Can I Compile My Own Pack?

You can compile the Home Information Pack yourself even if you are selling your home through an estate agent. You must obtain all the necessary documents and have the pack ready as soon as your home goes on the market. These information packs should be made available to all potential buyers except in certain circumstances. You can charge a small fee for each pack to cover the costs of compiling them.

There are several documents which must be included by law and some which are optional. It is up to you whether to include the optional information, however it can make for a quicker sale as the buyer may request these documents before completing the sale.

How Can I Get a Home Information Pack?

Buyers

If you are interested in buying a property and wish to see the Home Information Pack relating to it, you need to contact the person marketing the home. This may be the owner or an estate agent acting on behalf of the owner. The seller must provide you with the Home Information Pack within 14 days of you requesting it, although there are certain exemptions to this.

If the seller believes you have insufficient capital to buy the home, you are not genuinely interested in buying it or if the owner does not wish to sell it to you then the owner is quite within their rights to refuse you a pack. If you feel you are being unlawfully discriminated against you should contact the Trading Standards officer at your local authority.

The seller may charge you a small fee for providing you with a copy of the Home Information Pack. This is to cover the owners costs in copying it and for postage.

Sellers

If you are selling your home on the open market and you live in England or Wales, you are now required by law to provide a Home Information Pack to prospective buyers. There are some exemptions to this but generally a typical residential home will require one. If you think your property may not need one, a solicitor can check this out for you.

Home Information Packs are a government scheme; however the government do not provide the packs. There are several ways in which you can get the necessary documentation put together.

• If you are marketing your home through an estate agent they can provide this service for you.
• You can compile the pack yourself.
• You can hire a solicitor to do it for you.
• You can use a specialist provider. These can be found in your local phone directory or via the Internet. Many new businesses have started up with the sole purpose of providing the packs.

The cost of compiling a pack will vary. A basic pack will cost around £300 – £400 plus VAT. Optional documents will cost extra, with a Home Condition Report adding an extra £200 at least.

Many pack providers will offer the option of paying for the pack once the sale is completed but this is usually more expensive.

Once the pack has been compiled it is the responsibility of the marketer to store it safely

Do I Have To Provide a Pack?

The law states anyone responsible for marketing a residential property in England and Wales must provide a Home Information Pack This can either be you or the estate agent managing the sale. The pack must be available as soon as the property is put on the market.

Currently any home which was placed on the market before the legislation came into place and has still not sold does not require a pack.

For homes with 4 or more bedrooms this date was 1 August 2007, 3 bedroom homes 10 September 2007 and 0-2 bedroom homes on 14 December 2007.

These homes which are currently on the market and are exempt by the implementation date will likely have to provide packs in the future if they remain unsold.

Some residential properties do not need to have a Home Information Pack regardless of the date they went on sale. These are homes which have not been placed on the open market and include properties which are bought under the social housing right to buy scheme, private sales between landlord and tenant and homes which are sold to family or friends.

Other exemptions include:

• Properties which are authorised for business under planning regulations.
• A residential property which has been converted to business use.
• Mixed commercial / residential sales such as a shop with a flat above.
• Dual use such as a doctor’s surgery with living accommodation.
• Portfolios of properties such as a number of homes being sold together as a portfolio.
• Unsafe properties that have been declared unfit for living by the planning authority.
• Any property which has a demolition order placed on it.

Copies of the Home Information Pack must be made available to potential buyers – for a small fee if you wish to cover costs – within 14 days of them requesting it. However, there are some exceptions to this, which are listed below.

• If you believe the person requesting the pack could not afford to buy the property.
• If you believe the potential buyer not to be genuinely interested in the property.
• Or if the buyer is not a person you would wish to sell the property to. Current legislation states the seller can refuse to sell to a particular person without giving a reason. However, discrimination laws still apply here.

From 1 June 2008 all properties must have a Home Information Pack before they can be put on the market.

Failure to provide a pack will result in an initial fine of £200, with further fines imposed if the house remains on the market. If an estate agent is managing the sale and does not provide a pack he could eventually be subjected to a Banning Order which would prevent him from trading.

Home Information Packs – What’s the Point?

Moving home is one of the most stressful situations anyone will face in life. The introduction of Home Information Packs should be seen as a way of easing the stress and making the whole process run as smoothly as possible for both the buyer and the seller. It is hoped the information provided in the pack will make the sale more transparent and the market more efficient.

Before the introduction of the Home Information Packs, almost 9 out of 10 people stated they were unhappy with the way the housing market operated. Almost a third of sales fell through before completion, leaving many consumers out of pocket. The length of time it took to complete a sale was twice the European average and almost two thirds of properties on the market were part of a chain, with any problems with one home having an impact on all the others in the link. Now, with all the information readily available up front, the transaction time should be much quicker, speeding up the market as a whole.

It is hoped the introduction of Home Information Packs will make buying or selling a property a much better experience for everyone involved. The whole process should be less confusing particularly for first time buyers who may be unsure about all that is involved.

The packs will give much clearer information on the property and will be available right from the beginning of the process so there will be no nasty surprises in store further down the line for the prospective buyer. As a result of this there should be less chance of buyers pulling out at the last minute. The buyer has greater peace of mind, particularly if a full Home Condition report has been included.

As sellers will have to pay to compile a Home Information Pack, it is hoped this will reduce the number of people putting property on the market who are not genuinely committed to selling their home. This happened frequently in the past, with sellers changing their minds and taking the property back off the market again.

The information contained in the packs will hopefully make both buyers and sellers aware of energy efficiency and how this can be improved in their homes. The pack will contain detailed analysis of how each individual property can be made more efficient, not only in saving on fuel bills but also the impact it will have on the environment.

Currently it seems homeowners are split on whether the introduction of Home Information packs is a good thing or not. Whether they are beneficial to the housing market remains to be seen.