The Home Information Pack
The Home Information Pack (HIP) was introduced by the UK government to try and improve the process of buying and selling flats and homes. A HIP provides lots of additional information for prospective homebuyers, before they have to commit to undertake searches and surveys. As one in three homes sales collapse, due to unexpected results from surveys, the cost and risk of a sale falling through has traditionally been burdened with the buyer. Using a HIP now means that some of this upfront cost is passed to the seller of the flat or home. The following article looks at the practical processes that support the new Home Information Pack in England and Wales…
When is a HIP Required? – a HIP is compulsory for most residential homes advertised by ‘the responsible person’, throughout England and Wales. You can not market your home or flat without one. It should be provided to the buyer upon request, free of charge, within 14 days. Sellers may refuse to provide copies in very limited cases, where they believe the buyer could not afford the property or was not interested in buying the property. Local authority trading standards officers have the power to give general advice and warnings as well as in force the HIP regulations, with a £200 penalty notice. If a penalty notice issued for on compliance, they will also notify the Office of Fair Trading regarding the conduct of the offending estate agent concerned. This may result in the estate agent receiving a banning order for flouting regulations.
Sale Exclusion Situations – it is not compulsory to produce a HIP, in sale situations where the sale is between family members, neighbours or friends. It does not apply when the property is sold without vacant possession, holiday homes, non-residential properties, properties that included commercial premises, right to buy homes, property portfolios, and unstable and unsafe buildings.
How is it Produced? – it is usually produced by the sellers estate agent and made available upon request for potential home-buyers. The HIP itself can only be produced by obtaining information from the appropriate sources. For instance, only accredited domestic energy assessors can produce the EPC document. Likewise, the local searches can only be obtained via the local authority and water company for drainage and water rates searches. Evidence of title must come from the official Land Registry organisation. If a potential home-buyer asks for a copy of the HIP, the seller is obliged to provide one. This can be done either electronically or via a paper copy.
Who Produces the HIP? as the seller, you should make sure that your HIP provider has signed up to the code of practice for home information pack providers. Although there is no legal requirement to update it, many sellers have praised it’s usefulness in helping to sell the properties, and would advocate keeping it up to date with any relevant changes that may promote the sale.
The Contents of a HIP – a home information pack a series of documents which provides a complete checklist for buyers, sellers, estate agents and property professionals involved in the sale. If any documents are missing, buyers will expect a written explanation as to why this is the case. In particular, you may want to question why optional items have not been excluded. With this in mind, the pack contains the following mandatory items ( unless otherwise stated):-
- Index List – outlining the list of documents that are included or excluded from the pack;
- Energy Performance Certificate – this document summarises the energy efficiency using a standardised environmental impact assessment. It measures the amount of carbon emissions the house or flat will produce. In particular, it provides a standard energy and carbon emission efficiency grade from ‘A’ to’G’ (where’A’ is best). As people become more environmentally aware and are also having to cope with the skyrocketing fuel bills, the energy efficiency of a flat or home, has now become an important selling point. The report also provides advice on cost effective improvements to improve the current rating.
- Predicted Energy Assessment – for new off plan flats or homes that are being sold by property developers, this document will be replaced by the energy performance certificate;
- Evidence of Title – this shows that the seller has the legal right to sell the property;
- Searches – this is a summary of the standard local authority searches and the results, covering water and drainage, road building and any other tripe of planning and building related issues that may impact the sale value;
- Sale Statement – basic contact details of the seller the registered property address, as well as the sale and it’s status as either a common hold or leasehold or freehold property.
- Leasehold and Common hold Properties – if the property has a lease or common hold title (sharing of freehold), associated with it, the seller must also provide a copy of the lease or the individual register and title plan for the common parts and the common hold community statement. They may optionally choose to also include:-
- Any regulations that apply that aren’t mentioned in the lease
- Service charges summary for the last 3 years
- Most recent requests for payment of service charges, ground rent, insurance against damage for the building in which the property is situated
- The name and address of the current or proposed lessor, and details of any managing agent
- A summary of any works being undertaken or proposed that will affect the property
- Home Condition Report – this is an optional document, which outlines the general condition of the flat or building. It must be carried out by a certified Home Inspector, and be written in plain English and not include technical jargon. It also serves as a means by which you can claim against insurance, if something goes wrong. The Home Condition Report gives sellers the opportunity to undertake repair work or get quotes before marketing the sale property. It also reduces the risk of a buyer pulling out later, due to lack of proper information. It also reduces the possibility that buyers will negotiate on the outcome of a traditional survey, in order to reduce their asking price. Buyers and their mortgage lenders have a legal right to rely on the report, as a firm basis for home valuation;
- Legal Summary – this is an optional document that converts legal language into layman’s terms;
- Home Use Form – this document outlines the property permissions, boundaries, fixture and fittings included or excluded from the sale, shared access etc;
For a Home Insurance Quote contact Assetsure. We are able to offer insurance for a wide range of UK property types including nonstandard construction