Selling and moving
Home Information Packs (HIPs)
Home Information Packs (HIPs) are due to be introduced in June 2007.
What will they contain and how will they affect you?
- When will HIPs be introduced, and who needs them?
From the 1st June 2007, anyone putting a residential property for sale on the market will first have to arrange for a HIP to be compiled.
- What will a HIP contain?
A HIP, also known as a 'seller's pack', will contain a number of important documents about the property, including local authority searches, leasehold and commonhold documents where relevant, property insurance details, evidence of title, fixtures and fittings, and copies of any current planning applications. Following a U-turn by the Government in July 2006, HIPs will NOT now contain a Home Condition Report.
- Will a HIP contain a valuation of my property?
No. One of the main criticisms of HIPs is that they will not contain the valuation report that every mortgage lender requires before they lend money against the property. Therefore, a valuer or surveyor will also have to visit the property.
- How long will it take to get a HIP together?
As sellers will not be allowed to market property until a HIP is in place, speed is of the essence. The Government reckons that it should not take longer than two weeks. However, some local authorities are quicker than others at compiling searches, so the slower ones could hold up the process. At peak times in the market there may also be delays, as there may not be enough Home Inspectors to do the job in time for the June 2007 launch.
- What is a Home Inspector?
This is a new role and new qualification that is being introduced. The Government estimates that around 8,000 inspectors will be needed to carry out Home Condition Reports. Inspectors will sit exams based on those taken by CORGI gas fitters, rather than degree courses that fully qualified surveyors are required to sit.
- How much will a HIP cost?
Estimates range from £500 to £1,000 per property. Estate agents, mortgage lenders, brokers, conveyancers and others are likely to offer deals to sellers in return for their custom, so the upfront cost may be less than that.
- Who benefits?
In theory at least, first-time buyers should benefit, as the responsibility of gathering and paying for searches will fall on the seller. However, note that first-time buyers will still have to pay a solicitor to look over the HIP and check that it is acceptable, and pay for a valuation of the property.
- What are the downsides?
Elderly people selling their properties to move into retirement homes will have to pay for HIPs, perhaps when they can least afford it. And vulnerable people whose homes are being repossessed because they cannot make their mortgage payments will also suffer, being forced to find hundreds of pounds when they are already broke.
- Are there any other worries about HIPs?
There are a number of creases to be ironed out. For example, searches are only valid for three months, so there are questions about what happens if your home has not been sold within that period. Who pays for the update of the HIP? Also, the introduction of HIPs could give estate agents more power over the buying process. As they are currently unregulated in the UK, this also gives cause for concern.
- Should I sell my house before HIPs are introduced?
It is possible that thousands of people may have this idea, and the result could be that properties will flood on to the market this Spring. This increase in supply could push down house prices. So, if you are thinking of selling, it could make sense to do so earlier, rather than later.
Please see official website for further details http://www.homeinformationpacks.gov.uk/home.aspx