Introduction
Home Information Packs (HIPs) are as new concept as of 2007. They aim to bring together all the information needed during the sale / purchase of a home (i.e. property for residential purposes) so as to minimise cost and time of all parties involved.
Of course the new rules will take some getting used to and might not reduce costs or time in the first instance. This Net Lawman article is an introduction to how the packs work. We have many more articles on Home information pack. You can also buy and download a pack template to use today.
The relevant Acts of Parliament and regulations associated with HIPs are:
- Housing Act 2004; and
- the Home Information Pack Regulations 2007
The Home Information Pack will change the way you do business. Make sure you're prepared.
Their aim
Home Information Packs are intended to improve the home buying and selling experience for consumers and to reduce the carbon emissions from homes. The current home buying and selling process is slow, expensive and uncertain. Moreover, most buyers are provided with little or no information about the energy efficiency of the home they are considering buying.
Some interesting research has been conducted by the Building Research Establishment and Ipsos MORI. Some conclusions were:
- the average (mean) transaction time from marketing to completion was over 6.5 months. Median transaction times were nearly 5 months. 1 in 4 takes 9 months or longer;
- the average time from "offer agreed" to "exchange of contract" was 81 days - about 10 days longer than in 1998;
- the average cost of a completed transaction was £1,546, with first-time buyers paying slightly more;
- 23% of buyers who had completed a transaction experienced at least one failed transaction during the course of their most recent house buying and selling experience;
- where a transaction fails at a sufficiently late stage between offer and exchange the buyer's wasted costs are typically over £1000
When do they apply?
The law took effect from 1st August 2007 for all four bedroom homes (or larger).
The Pack must be prepared by the person marketing the property or their representative and made available to buyers.
For sellers, providing a Pack upfront should reduce the likelihood of any nasty surprises in the selling process that could delay the sale, as buyers will be able to make more informed decisions about purchasing their home.
For buyers, the Pack provides essential information about properties they are considering buying, free of charge.
Do the rules apply to me?
Whether you are buying or selling, marketing, doing the conveyancing, developing or almost anything else involved in the sale of residential property, you will need to know about HIPs. However, the legal obligations associated with HIPs only apply to whoever is responsible for marketing the property (this will be either an estate agent (including a solicitor acting as estate agent) or the seller if he or she decides to market the property themselves). The rules are set out in Part 5 of the Housing Act 2004 and the Home Information Pack Regulations 2007.
What is an HIP?
A HIP is a collection of documents that provide extensive information abut the property being bought / sold. It helps all parties to find out and know about what they are buying / selling.
What does it include?
As a minimum, a HIP includes only documents that are compulsory (i.e. “required” and must be included in the pack).
Compulsory documents are:
- an Index (listing the content of the Pack);
- an Energy Performance Certificate;
- a sale statement (a summary of the interest being sold);
- evidence of title (Land registry documentation or other if unregistered);
- standard searches (i.e. equivalents of LLC1, CON.29 Part 1 and CON.29
D&W);
where appropriate, additional information for leasehold/commonhold sales
(e.g. copy of lease, management rules, details of service charges etc)
The compulsory information must be in the Pack from the first day of marketing with the
exception of searches and leasehold / commonhold information.
Optional (“authorised”) documents may also be included. These are:
- Home condition reports
- Legal summary
- Home use / contents form
- Other documents (only those that are authorised)
Does my home need a pack?
You will need a pack if you are buying or marketing a four or more bedroom home from 1st August 2007.
You do not need a Home Information Pack for:
- properties where there is no marketing (e.g. sale to member of your family);
- non-residential properties;
- where the property has less than four bedrooms 9although this will change in due course)
- seasonal and holiday accommodation;
- mixed sales (e.g. shop with flat);
- right to buy and similar sales;
- sales of portfolios of properties;
- properties not being sold with completely vacant possession;
- unsafe properties and properties to be demolished.
Does the pack remove the need for further advice?
The pack does not remove the need for legal assistance. Buyers are still advised to seek professional help and advice. However, the contents of the Pack should be reliable and there should be no need to recommission documents in the majority of cases.
Who is responsible if the HIP is defective?
The person responsible for marketing the property is responsible for the provision of the HIP. The provider of any specific document within the HIP is responsible for the accuracy of that document.
Why should a buyer trust searches provided by the seller?
Searches should be provided by the relevant local authority or a private search company and must meet the requirements of the HIP regulations; therefore there is no room for sellers to ‘con’ their prospective buyers. Minimum standards that must be met. Additionally, the search provider and the information they provide must be backed by insurance and buyers and
their mortgage lenders will have a legal right to rely on the searches required to be in the Pack.
Penalties for non-compliance
You could face a penalty notice of £200 if you do not comply with the Home Information Pack regulations.
They will usually provide advice and warnings in the first instance but will have the power to issue penalty notices where they think it is appropriate.
Trading Standards Officers must notify also the Office of Fair Trading when a penalty charge notice is issued to an estate agent and this could result in a banning order for the agent in question.
Relevant Net Lawman document templates:
PR499 Home Information packs
PR500 Home condition report
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