Home Information Packs (HIPs) required for all

Despite moans of protests from the house flogging fraternity, Home Information Packs (HIPs) become compulsory for all property sellers from 14 December 2007. From 1 August 2007 (postponed from 1 June), HIPs applied to properties with four bedrooms or more but, from mid-December, they now apply to all properties including studio flats. However, like many things these days (university top-up fees, prescription charges, nursing homes charges for the elderly), the HIP does not apply in Scotland. Or Northern Ireland. HIPs are only compulsory if the property you're selling is in England or Wales.

Home information packs, also known as HIPs or home seller packs, were a manifesto commitment by the Government (in 1997 and 2001) in a bid to improve the home buying process. The pack - to be compiled by the seller and offered free to the prospective buyer - contains an evaluation of the property's energy efficiency, evidence of ownership, information from local searches, and copies of any planning or building consents. It was originally declared that a HIP would also contain a surveyor's report on the property but, when it was pointed out this was akin to buying a business and basing the due diligence process only on accounts drawn up by the seller's accountants, the survey aspect was dropped. It may yet return, but there are no immediate plans to reinstate it.

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So keen is the Government to ensure co-operation on HIPs that it has warned estate agents - who may be prone to cut corners to ensure a sale goes through and their commission gets paid - that they risk losing their jobs if they encourage home sellers to bend the rules. The Office of Fair Trading has cautioned agents that failure to ensure sellers have packs could mean the agents face the prospect of losing their right to perform estate agency work.

Predictably, the National Association of Estate Agents (NAEA) is hostile not only to the introduction of HIPs and their efficacy in speeding up the house buying process, but has warned that they might help precipitate a shortage of properties on the market. The Association's survey of members in September revealed that, following the first phase launch on 1 August, the number of four bedroom plus properties on the market decreased in many areas with agents reported average drops of 37% below the seasonal norm.

"Our concerns have always been that the introduction of HIPs would lead to a lack of supply following implementation," says Peter Bolton King, Chief Executive at the NAEA. "This does indeed seem to be the case with four bedroom homes and is now likely to be replicated in the three bedroom homes market. The next few months will prove crucial in seeing whether HIPs are going to cause the sort of problems we feared."

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Therefore if you're selling a property in England and Wales, it looks like there's no escape: no HIP, so sale. The first question in your mind is probably, "Who's responsible for compiling this pesky pack?" According to the Government's official Home Information Pack website, "The person responsible for marketing a property (in most cases, the estate agent) must have commissioned a Home Information Pack by the time that the property is on the market."

So the pack means delaying marketing your property until it's compiled and your estate agent will compile it for you. So, how much will one cost to assemble? This is the strange bit - no one knows for sure (the Government website offers no guide prices). The pat figure is £500; but some estimates are as low as £250 while some put the eventual price of compiling a HIP at over £1,000! Estate agent Dreweatt Neate, which has branches across the southern England, is charging a flat rate of £300 + VAT, while some are charging different rates for leasehold and freehold properties.

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So what should your HIP include? There are two parts: the compulsory and the additional voluntary. Laughably (well, I laughed), the first bit of compulsory information is... an index to tell a prospective buyer what's in the rest of the pack.

The next compulsory item is the Energy Performance Certificate . This certificate tells the buyer how energy efficient a home is on a scale of A-G. The most efficient homes - which should have the lowest fuel bills - are in band A. Basically, it's an energy consumption audit of the property. Before you sell your house, an inspector will rate how efficient it is - he or she will look at your boiler, light bulbs, windows, loft and cavity wall insulation. The inspector will then complete the report and rate the property accordingly. The inspector's report is likely to be the single most expensive item to compile for the HIP.

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Martin Fagan
05 December 2007 © Moneyextra.com

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