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Under Part 5 of the Housing Act 2004 a Home Information Pack (HIP, on lowercase letters: hip), sometimes called a Seller's Pack, was to be provided before a property in England and Wales could be put on the open market for sale with vacant possession. There is separate legislation for Scotland that requires anyone selling a property to provide a Home Report.[1] The pack was a set of documents about the property: an Energy Performance Certificate, local authority searches, title documents, guarantees, etc. The introduction of HIPs was subject to delays and reduced requirements, but they became mandatory for homes with four or more bedrooms on 1 August 2007 and were extended to three-bedroomed properties from 10 September 2007.[2][3]

The Government had suggested that Home Information Packs would lead to a reduction in the number of abortive sales as their justification for introducing the scheme, reducing gazumping and gazundering. They were introduced despite very strong opposition from some factions in the building industry (although very many were in favour of them) and estate agents, as well as some chartered surveyors. There were claims that the packs contributed to the 2007-09 housing crisis by deterring vendors from marketing their houses due to the extra costs involved in the survey.

Requirement for the Home Information Pack for property sales was suspended with effect from 21 May 2010 by the incoming government.[4] An exception is that the Energy Performance Certificate is still required. The Localism Act 2011 formally repealed the Home Information Pack legislation on 15 January 2012.[5]

History

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As the idea of the Home Information Pack developed over time, so did the reasons for its introduction. A proposal to address the problem of gazumping was first made in the 1997 Labour Party manifesto.[6] Research after the election revealed that around 28% of sales fell before exchange of contracts, with gazumping occurring in less than 2% of sales. The emphasis subsequently moved to the benefits of increased speed, transparency and consumer friendliness.[7] The idea was based on similar practice used in Denmark.[citation needed]

Home Information Packs were announced in the Queen's Speech in November 2003.[8]

In March 2006 the government gave the go-ahead for multiple certification schemes. By this stage a number of organisations had expressed an interest in running certification schemes and over 3,000 people were already going through training for the home inspector qualification.[citation needed] In June 2006 draft regulations were made setting out the detailed contents of Home Information Packs, rules governing the availability of packs, exceptions from the pack duties and arrangements for enforcement.[citation needed]

In September 2006 the government approved the first Certification Schemes to oversee the work of Home Inspectors. The schemes were set up and run by industry; Government set the standards that the schemes operated. In September the Home Condition Report Register contract was agreed. A fully operational register was scheduled to follow as soon as possible afterwards.[citation needed]

In June 2007 the government announced they would fund or subsidise 5000 HIPs by £100 prior to the official launch date of 1 August 2007.[9]

Originally the HIP was going to be required from 1 June 2007. However, just ten days before that date, Communities Secretary Ruth Kelly announced that they would be phased in from August 2007, and initially only for larger properties. Between 1 August and 10 September only homes marketed with four or more bedrooms were legally required to have an HIP. This was extended to cover homes with three or more bedrooms from 10 September.

On 22 November 2007 Housing Minister Yvette Cooper announced that HIPs would be rolled out to include one and two bedroom properties as of 14 December completing the Government's phased introduction of Home Information Packs to residential homes marketed for sale within England and Wales.

First Day Marketing (FDM) is the mandatory requirement to make available all of the documents required within a HIP on the first day a home is marketed to the public. Initially, the date was set for the requirement to commence on 31 December 2007 but was delayed until 1 June 2008 to allow a period of transition. A home was able to be marketed during that time providing a commitment to pay for a HIP - including the EPC - was made and the necessary documents had a reasonable expectation of being made available within 28 days. However, on 8 May 2008 the Housing Minister, announced a further delay to first day marketing until 31 December 2008.

Since 6 April 2009, every property required a Home Information Pack before it could be marketed. The full HIP is now no longer required, only the Energy Performance Certificate.

Contents

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The pack had to contain the following, and should be no more than three months old when the property is first marketed:[10]

If the property was leasehold or commonhold, then the pack also had to include the following:[11]

  • Copy of the lease
  • Building insurance policy
  • Contact details for the landlord or management and any legal details
  • Regulations that apply
  • Recent service charge receipts and accounts

For a transitional period sellers were able to market their homes without the searches or leasehold documents as long as the pack contained evidence that they had been commissioned and would be included as soon as practicable but certainly within 28 days.[11] However the Government announced in December 2008 that with effect from 6 April 2009 this concession was to be withdrawn, and the HIPS pack would have to be completely available on the day that the property was first offered for sale.[12]

The pack could also contain some or all of these authorised documents:[13]

  • Home Condition Report
  • Two sellers questionnaire forms called Home Use Form and Home Contents Form
  • Legal summary
  • Other searches such as a mining search

Home Condition Report

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A property inspector primary task is to inspect a property to ensure that there are no structural flaws in the property. The inspector's task needs to be only on the surface level and he cannot make an intrusive check on the property.

That is unless the inspector or his team find something that is just too extraordinary to ignore. A home inspection is done using a large number of tools and special equipment to conduct the analysis. The main agenda of the inspection is to check for vulnerable areas in the home that could be a hazard risk. Does the home have any structural flaws? Is the property built with sub-standard materials? These are the kind of questions that need to be answered by the home inspector. 14 Archived 22 April 2019 at the Wayback Machine

Home energy performance rating charts

Energy Performance Certificate

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See also: Energy efficiency in British housing

Similar to EU appliance efficiency ratings, the energy performance ratings on the Energy Performance Certificate provide prospective purchasers with an assessment of the property's energy consumption, together with a list of practical measures that can be taken to cut their fuel bills and carbon emissions.[14]

An Energy Performance Certificate (EPC) in the UK needs to be completed by a government qualified Domestic Energy Assessor (DEA). DEAs offer advice on how to improve the energy performance of the dwelling which might save money. However, in practice, such documents only give general advice of little value to potential purchasers. They frequently exhibit errors since the survey is superficial and non-intrusive. They neglect older and listed buildings where planning consent is needed for structural changes to the property, such as installing double glazed windows for example.

The Energy Saving Trust hoped that by following the proposals in the energy performance certificate, the average home owner might save £300 a year on fuel bills. Government also hoped that the information could be used to support the growth of green mortgages and other incentives.[15]

This part of the Home Information Pack was required in order to meet the requirements of the European Energy Performance of Buildings Directive.[16]

However, the EPC has met with fierce opposition by the Royal Institution of Chartered Surveyors, which in May 2007 began court action against the Government to force a Judicial Review of the implementation, demanding it look again at the lifespan of an EPC in a HIP.[17] The move prompted internal protest within RICS after a number of members petitioned the organisation to withdraw its legal action on the basis it had failed to consult members first.[18]

Cost

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Initially the cost of a Home Information Pack, including the Home Condition Report, was estimated to be around £600 by the Government.[19] This was to include the cost of the postponed Home Condition Report, which was expected by the Department for Communities and Local Government to cost between £250 and £1,000.[citation needed] Industry subsequently expected the Home Information Pack (excluding the HCR) to cost between £300 - £600 for the vast majority of properties in England and Wales. Naturally, for larger or more complex properties, the costs could be significantly higher.[20] Some estate agents were offering HIPs for free.

The Government pointed out, however, that most of the items in the pack already have to be provided during the sale process, so this is not all an additional cost.[21]

Enforcement

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Failure to provide a Home Information Pack, or supplying an incomplete pack carried a fine of £200 per day the property is marketed.[22]

Enforcement was to be carried out by local authority Trading Standards Departments; however they claimed that this was inappropriate as they normally regulate businesses, and that it would cost them too much to enforce through the civil courts.[23]

On 31 July 2007 the Office of Fair Trading advised estate agents on their obligations. From 1 August 2007 failure by an estate agents in England and Wales to comply with the new Home Information Packs regulations could result in a ban from estate agency work.[citation needed]

Reception

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On 15 May 2007 the Royal Institution of Chartered Surveyors (RICS) started Judicial Review proceedings against the Department for Communities and Local Government for what they regarded as the department's failure to carry out a full consultation on HIPs.[24]

Despite the above objections to the HIPs scheme, RICS were already providing courses on Home Inspection and Domestic Energy Assessment, as well as courseware manuals for the professions of Home Inspector & Domestic Energy Assessor.

There were fears that the up-front cost involved may put off some people from putting their house on the market,[25] which may in turn depress the housing market.

The property industry had been largely against these changes.[26] but the government said the new system would leave all homeowners better off.[27]

The National Association of Estate Agents held the view that the legislation was unnecessary, did not cover the important reasons why home sales and purchase transactions fall through,[28] and that the cost was too high.[29]

Britain's largest independent estate agency, Spicerhaart, initially called for a boycott of the home information packs scheme, although then revised this position to one of full support.[30]

In contrast, the introduction of HIPs was originally supported by Which?, who believe that they could reduce the number of failed transactions resulting from problems that can be identified at an early stage.[31] The organisation has since withdrawn its support following the Government's decision to postpone the introduction of Home Condition Reports.[32]

The Conservative Party, when in Opposition, stated that they planned to scrap the legislation, calling it 'expensive and deficient red tape'.[33] Indeed, Conservative opposition to HIPs was instrumental in a defeat in the House of Lords, where peers voted by 186 to 160 in favour of abandoning the packs. This brought them in conflict with the Association of Home Information Pack Providers.[34]

Under Part 3 of the Housing (Scotland) Act 2006, a person who is responsible for marketing a house must provide a Home Report to any prospective purchasers. To do this you will need to commission a Chartered Surveyor (or approved provider) to carry out the Single Survey and Energy Report. You must also complete a Property Questionnaire.[35]

On 12 May 2010 the incoming Conservative – Liberal Democrat coalition government announced an intention to scrap Home Information Packs. The requirement for property sellers to provide HIPs was suspended on 20 May.[36]

See also

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References

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  1. ^ "Homeowners: Home Reports - gov.scot".
  2. ^ "Hips extended to three-bed homes". BBC News Online. 17 August 2007. Retrieved 11 August 2008.
  3. ^ Blackwood, Lorna (17 August 2008). "HIPs to be extended to three bedroom properties". The Times. London. Retrieved 11 August 2008.[dead link]
  4. ^ "Directgov - Home Information Packs". Archived from the original on 23 May 2014. Retrieved 23 May 2014.
  5. ^ UK Legislation - Localism Act 2011
  6. ^ "1997 Labour manifesto". The Labour Party. 1997. Archived from the original on 31 July 2008. Retrieved 15 August 2008. Those who break their bargains should be liable to pay the costs inflicted on others, in particular legal and survey costs. We are consulting on the best way of tackling the problems of gazumping in the interests of responsible home buyers and sellers.
  7. ^ "Background note on the development of home information packs" (PDF). Council of Mortgage Lenders. Archived from the original (PDF) on 27 September 2007. Retrieved 15 August 2008. However, as the now Labour government then discovered via research commissioned after the election, gazumping... occurred in less than 2% of sales. The research concluded that the current home sales process was wasteful and inefficient with around 28% of agreed transactions falling through between acceptance of the offer and exchange of contracts. It was suggested that this was because of a lack of information available to the buyers in the period before an offer is accepted, and the Government then proposed the HIP as a way of tackling this.
  8. ^ "Sixth series, volume 415". Hansard. 26 November 2003. Retrieved 15 August 2008. Legislation will be introduced on housing that will help create a fairer housing market and protect the most vulnerable.
  9. ^ "House of Commons Hansard Written Answers for 25 Jun 2007 (pt 0037)". Hansard, Volume: 462, Part: 111. House of Commons of the United Kingdom. 25 July 2007. pp. Column 159W—continued. Retrieved 15 August 2008. We are also providing 5,000 subsidised EPCs with every HIP commissioned before 1 August.
  10. ^ "Compulsory items". homeinformationpacks.gov.uk. Archived from the original on 9 July 2008. Retrieved 2 August 2008.
  11. ^ a b "Leasehold and commonhold properties". homeinformationpacks.gov.uk. Archived from the original on 29 June 2008. Retrieved 2 August 2008.
  12. ^ "Hips change and OFT targets estate agents - Which? News". Archived from the original on 10 December 2008. Retrieved 9 November 2008.
  13. ^ "Optional items". homeinformationpacks.gov.uk. Archived from the original on 25 June 2008. Retrieved 2 August 2008.
  14. ^ "Energy Performance Certificate". homeinformationpacks.gov.uk. Archived from the original on 9 July 2008. Retrieved 2 August 2008.
  15. ^ "Cooper calls for incentives to improve home energy ratings". Government News Network. 21 September 2006. Archived from the original on 30 September 2007. Retrieved 2 August 2007. Energy Performance Certificates should be linked to incentives such as green mortgages - Yvette Cooper
  16. ^ "Directive 2002/91/EC, on the energy performance of buildings" (PDF). Official Journal of the European Communities. 16 December 2002. Retrieved 2 August 2007.[permanent dead link]
  17. ^ Collinson, Patrick (15 May 2007). "Government faces judicial review over Hips". The Guardian. London. Retrieved 2 August 2007. The Royal Institution of Chartered Surveyors today began court action against the government in a bid to halt the introduction of controversial Home Information Packs
  18. ^ "RICS members in Hips revolt". Building. 8 June 2007. Retrieved 2 August 2007. Never in the history of the RICS has a judicial review been launched, and we were not consulted - SSH chartered surveyors
  19. ^ "Minister defends home info packs". BBC News website. 22 April 2006. Retrieved 2 August 2007. The government says the packs will cost about £600 plus VAT and will make home buying quicker and cheaper.
  20. ^ "Home Information Packs - Timing and Costs". The Partnership Ltd. Archived from the original on 5 March 2007. Retrieved 2 August 2007. Single fees for a home condition report are not practical and larger properties will naturally be higher. Whilst the government has estimated a figure of £300 plus VAT, for larger properties the figure is expected to be between £750-£1000.
  21. ^ "Minister defends home information packs". BBC News website. 22 April 2006. Retrieved 2 August 2007. If you think about it, at the moment if a sale falls through another buyer comes along and pays for exactly the same searches, exactly the same legal requirements, pays for exactly the same surveys. You are paying for all of the same information again and again. That is a huge amount of waste. - Yvette Cooper
  22. ^ "The Home Information Pack Regulations 2007: Procedural Guidance" (PDF). www.homeinformationpack.gov.uk. 11 May 2007. Archived from the original (PDF) on 6 October 2007. Retrieved 3 August 2007. Regulation 35 set the penalty charge initially at £200.
  23. ^ "Home Information Packs Unenforceable, Warns Local Authorities Regulator". lacors.gov.uk. 18 July 2006. Archived from the original on 28 September 2007. Retrieved 2 August 2007. Trading Standards traditionally regulate businesses, not individual private house sellers... this is inappropriate as it would cost too much money to make it worthwhile pursuing such cases. - Geoffrey Theobald, LACORS Chairman
  24. ^ "HIP's - Now the Government is taken to court". Reuters. 15 May 2007. Retrieved 2 August 2007. The government is being taken to court over an alleged failure to consult properly on its controversial home information pack (HIPs) legislation.[dead link]
  25. ^ "Concern grows over 'sellers' packs'". BBC News website. 22 September 2000. Retrieved 2 August 2007. at a likely cost of between £500 and £700, 'sellers' packs' could make people in areas with low property prices more reluctant to sell, a study has found.
  26. ^ "HIP or hype?". Times Online Money blog. 18 November 2005. Archived from the original on 27 September 2007. Retrieved 2 August 2007. This week's announcement from the Government that HIPs will be introduced on June 1, 2007, was met with "disappointment" by the mortgage industry
  27. ^ "HIP or hype?". Times Online Money blog. 18 November 2005. Archived from the original on 27 September 2007. Retrieved 2 August 2007. £1 million a day is lost out of buyers' pockets in valuation, legal advice and searches on transactions that ultimately fall through
  28. ^ "NAEA response to Government implementation on HIPs". 18 July 2006. Archived from the original on 27 September 2007. Retrieved 2 August 2007. The announcement today is something of a U-turn by the Government on legislation it has been working on for over five years. It calls into question the effectiveness of an HIP when the documentation included is now largely available online. The legislation would seem unnecessary and does not cover the important reasons why home sales and purchase transactions fall through
  29. ^ "NAEA comment on reschedule of opposition debate on HIPs". 17 July 2006. Archived from the original on 27 September 2007. Retrieved 2 August 2007. the 14 day delay is unnecessary, the cost is too high and that in its current form, HIPs will not prevent property sale transactions falling through.
  30. ^ "HIPs move a step closer". Spicer Haart. Archived from the original on 9 October 2007. Retrieved 17 July 2007. By reducing the time it takes to sell a property, transactions are far less likely to fall through, reducing the stress considerably for everybody concerned - Stephen Nation, Managing Director for Haart
  31. ^ "HIP or hype?". Times Online Money blog. 18 November 2005. Archived from the original on 27 September 2007. Retrieved 2 August 2007. Despite industry whingeing, we need to embrace HIPs as a way of protecting home buyers. - Louise Hanson, head of campaigns at Which?
  32. ^ "Which? slams government over HIPs backtrack". Which?. 18 July 2006. Archived from the original on 7 September 2008. Retrieved 2 August 2007. The home condition report was an essential part of the HIP. It seems extraordinary that the first major decision by your new department is to reduce the consumer benefits of a flagship policy.... - Nick Stace, in a letter to Ruth Kelly
  33. ^ "Labour climb-down on Home Information Packs". The Conservative Party. 18 July 2006. Archived from the original on 22 November 2006. Retrieved 4 March 2007. [Michael Gove] said the Blair administration had slowly discovered that the HIPs project amounted to 'expensive and deficient red tape'
  34. ^ "HIP rejection 'no bearing on implementation'". Mortgage Finance Gazette. 21 July 2007. Retrieved 15 August 2008. While yesterday's vote in the Lords was not fatal and will not hinder the government's resolve to introduce HIPs as planned, it is disappointing that the Tories have once again made a political football out of HIPs. Clearly, Tory politicising is not going to get in the way of delivering this vital reform to the benefit of consumers and the environment.[dead link]
  35. ^ "Walker Fraser Steele - RICS Regulated Experienced Property & Chartered Surveyors in Scotland".
  36. ^ "Hips scrapped by coalition government". BBC News. BBC. 20 May 2010. Retrieved 23 May 2010.
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