Industry specific information on HIPS: for housing developers
Introduction
Home Information Packs will be compulsory from 1 August 2007 for all four bedroom (or more) homes. Anyone marketing a residential property for sale will be required to have a Home Information Pack for that property from the time the property first goes on the market.
Individuals buying new homes should be entitled to receive the same information about the property they are buying as those buying 'second-hand' homes. They are therefore included in the Home Information Pack scheme.
What’s in a pack?
The content of the Pack for sales of new homes is broadly similar that for sales of second-hand properties. However, most new homes are sold 'off-plan', and this is taken into account.
The required documents are:
An index
A sale statement
Evidence of title
Standard searches
Energy Performance information
Where appropriate, additional information for leasehold and common hold sales.
Standard searches: these comprise:
Local searches (search of the local land charges register, additional enquiries of the local authority);
Standard drainage and water search
However, it is recognised that much of the information that would be contained in the full search will not be available when marketing starts, and that the information that is available often won't be site-specific.
The Regulations provide that the results of a search can be incomplete if the information is not available in any circumstances. These also enable a search to cover a complete development to be included, provided it covers the particular property (although we would strongly advise a search per property if this is practicable and the circumstances suggest that that this would produce a different result).
Energy Performance Certificates: an Energy Performance Certificate gives a building an asset rating that assesses the building's ability to be energy efficient. An Energy Performance Certificate will be required for all newly constructed homes and those marketed for sale from 1 August 2007. For homes not yet built, you will require a predicted energy assessment. This is an energy rating that is assessed based on the design of the property. Note that you are required to obtain a valid Energy Performance Certificate before the building control inspector issues a completion certificate. The certificate will not be issued if an Energy Performance Certificate has not been produced.
An interim energy assessment will be necessary for new homes that are physically complete and put on the market between 1 August 2007 and 16 September 2007. Interim energy assessments are for new homes built in accordance with Part L 2006 of the building regulations. For these homes only the energy efficiency and environmental impact rating graphs will be required and not the full Energy Performance Certificate.
Where the property is still on the market at 1st October 2007, a full Energy Performance Certificate should be added to the Pack and the 'interim energy assessment' removed
Home Information Packs will contain an Energy Performance Certificate (or a "predicted energy assessment" for off-plan sales) and other key documents such as evidence of title, local authority and drainage and water searches and key leasehold documents where appropriate.
Home Information Packs for newly-completed properties marketed for sale will contain an interim Energy Performance Certificate and other key documents such as evidence of title, local authority and drainage and water searches and key leasehold documents where appropriate.
As a developer you should be aware of your duty to provide Home Information Packs for those properties that you are responsible for marketing.
Developer’s obligations
The Pack duties will apply to whoever is responsible for marketing (the 'responsible person'). That will either be the developer or an estate agent marketing on their behalf.
How do I provide a pack?
You could begin a collaboration of all the required documents yourself, or, Net Lawman provides an HIP suitable for new properties. You can find one here.
Will searches have to be complete and plot-specific, or will one search for one development be accepted, as home builders currently conduct searches based on the whole development? The Regulations provide that the results of a search can be incomplete if the information is not available in any circumstances. These also enable a search to cover a complete development to be included, provided that it covers the particular property (although we would strongly advise a search per property if this is practicable and the circumstances suggest that that this would produce a different result).
How do you define who is the 'responsible person' under the legislation - developers sometimes sell homes directly, sometimes instruct an estate agent and sometimes act jointly?
The Pack duties (and the penalties for breaching them) apply to the person who is responsible for marketing the property. There are two categories of person who can be held responsible - the seller himself or someone who is acting as the seller's estate agent. The responsibility of a seller ceases when there is at least one person acting as an estate agent and the seller is no longer marketing the property himself. Where the developer and estate agent are both actively engaged in marketing, they will both be responsible persons, but not where the developer has left marketing entirely to their agent.
Do you need a Pack for each individual property if you are selling more than one home to an investor, and does it make a difference if selling on one contract for a number of units or on separate contracts?
The Regulations provide that sales of 'portfolios' of properties are exempted from the Pack duties. In order for the exception to apply, a number of conditions must be satisfied.
First, the sale must involve two or more properties that would otherwise be subject to the Pack duties (whether under a single contract of sale for all, or under separate contracts for each property included in the sale).
Second all the properties must be available for sale with vacant possession (unless there is partial occupancy in dwellings in a sub-divided building marketed as a single property e.g. a "granny-flat")
Third, the terms of the sale should indicate that the seller would not accept an offer to buy any one of the properties in isolation, and that this is made clear in the marketing material.
Is a Pack required in any circumstances with regards to a) the provision of social housing for Registered Social Landlords? How do Packs apply for sales of properties on shared-equity schemes? Sales of new homes to a Registered Social Landlord are likely to be covered by the 'portfolio' exception described above. Sales of single properties on shared-equity terms to individual purchasers, either by the Registered Social Landlord or the developer, are not exempted from the Pack duties. However, if they aren't marketed to the public or a section of the public, the duties would not arise.
Is a buyer of a new home required to provide a Pack for a home being taken in part exchange?
No. In this example, there would be no marketing 'to the public or a section of the public', and therefore no duty to provide a Pack.
When does a copy of the Pack need to be provided? Can it be an electronic copy?
A copy of the Pack only needs to be provided to a potential buyer when he or she asks for one. If the potential buyer is happy to have an electronic copy, that's fine - but a paper copy must be provided if not. Where the potential buyer insists on a paper copy, the seller is entitled to make a reasonable charge to cover copying and postage costs.
Can a home be sold with elements of the Pack missing?
Marketing can start with an incomplete Pack where certain required items e.g. leasehold documents or searches are expected to be available within 28 days of marketing. In these cases, the missing item should be added as soon as it becomes available.
When and how will the register of Energy Assessors be available?
All persons producing Energy Performance Certificates will need to be members of an accreditation scheme. It will be the responsibility of the accreditation schemes to hold registers of Energy Assessors. Proposals for organisations wishing to run accreditation schemes are currently under review, and successful applicants will be appointed by the Secretary of State following the regulations being passed by Parliament. The accreditation schemes will be operational, with registers of Energy Assessors available, ready for the implementation on 1 June 2007.
If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.
