How the Home Information Packs (HIPs) will affect the house-buying process in England & Wales
As of the 1st of June 2007 there will be a revolution in the way that we buy and sell homes. It has taken seven years of uncertainty but the Home Information Packs (HIPs for short) will become an integral part of the home-buying process, with the packs being a mandatory condition for putting a property on the market.
HIPs will shift the emphasis from the buyer to the seller to collect information about a property before it is sold. By law the packs will have to contain:
- A sale statement, summarising the terms of sale
- Evidence of title
- Copies of the standard searches such as local authority inquiries, drainage and water searches
- An energy performance certificate
- Where appropriate: leasehold or commonhold information or a new home warranty
Following a U-turn by the government, the pack no longer has to include a home condition report (similar to a survey most homebuyers obtain before purchasing a house). The home condition report is now a voluntary part of the pack and commentators have estimated that if a seller decides to have one prepared it will cost between £300 and £400. It is questionable whether many sellers will bother to obtain a home condition report if they are not required to do so.
How will HIPS change the conveyancing process?
HIPs will change the chronology of the conveyancing process by making the seller provide information that would have been obtained later in the process up front. The purpose behind providing this information early is to speed up the conveyancing process but it remains to be seen whether this will be the case. Critics of the scheme point out that it will still be the case that where a house is purchased and is part of a chain the process will only be a quick as the slowest link. Another concern that has been raised is the fact that the packs have a limited shelf life because the local searches will only be valid for 6 months.
One aspect that will not change in the process is that the buyer (or more to the point their solicitor) will still need to carry out comprehensive searches. A HIP does not contain all the information that a buyer requires so for example it is still necessary for additional searches to be obtained such as environmental, coal and mining searches.
Surviving the Revolution
While many property professionals are not entirely convinced that this June will totally transform the property market, HIPs are here to stay.
Looking at the positives, anything that increases transparency into the conveyancing process should be welcomed. Currently you get more information about what you are purchasing when you buy a car or a hoover then you do when buying a house. After June buyers should have enough information at the right time to make a good informed judgment before making an offer to buy. If everything goes to plan the number of sales that fall through should drop dramatically and the speed of transaction should increase but only time will tell.
Just before this article was published and only two weeks before it was due to be implemented the government has announced that HIPs will be delayed until August 1st and it will initially only affect 4 bedroom houses and larger. The vice president of the Law Society Paul Marsh said “The government has turned the whole process of HIPs into a farce.” We will continue to follow this long running saga in future issues and see if the revolution ever comes!