Know your Hips: Home information packs guide
Tuesday, 8 May 2007 12:00 AM
Whether you think they will make buying and selling homes better, or even do not know what they are, you will still need to have a Hip (home information pack) to sell all properties from December 14th 2007.
Fiercely opposed by some major organisations in the property market, and backed by the government, the new Hip is a set of documents sellers must commission before they can put their home on the market.
So if you are thinking of selling your property but still have lots of unanswered questions about Hips, aboutproperty's guide to the packs should help make things much clearer.
What is a Hip?
Many of the elements of the Hip are documents that buyers and sellers, or at least their solicitors, would need to sell their home under the current system.
However, what the Hip does is bring all these together before the home goes on the market, plus it has some new documents homeowners would not have encountered before, such as the energy performance certificate.
Are Hips compulsory across the UK?
No, they are only for England and Wales. Hips will not be rolled out in Scotland and Northern Ireland.
What goes in a Hip?
- A home information pack index
- An energy performance certificate
- A sale statement
- Standard searches
- Evidence of title
- Additional information for leasehold and commonhold sales, where appropriate.
Do I need to find all this information myself?
No, most people will be buying the packs from estate agents and specific home information pack providers, such as law firms and dedicated Hips specialists.
It is possible to save money and put almost all of it together yourself, but you have to be prepared to spend some time tracking down all the different organisations that provide the information for the pack, and not everything in the pack is straightforward.
A guide to putting together a Hip yourself is available online at www.homeinformationpacks.gov.uk
Why have they been created?
The Hip has been brought in by the government as a way of speeding up the buying process, and stopping sales falling through.
Under the current system, buyers may have been hit by some nasty surprises after their offer was accepted, as solicitors would uncover the information as part of the buying process.
With Hips, most of the documentation is ready ahead of time, in theory making things a lot easier.
What goes into each section of the pack
- The sale statement, has all the basic information about the property, including the seller's name, the address of the property being sold and whether it is a freehold, leasehold or commonhold.
It should also say whether the property is registered or unregistered, and if it is being sold with vacant possession.
- The standard searches are a series of documents pulling together information on the property held by the local authority, the local water company and from the land charges register.
- Evidence of title is obtained from the Land Registry, and proves the seller is the owner of the property.
- Additional information for leasehold sales includes a copy of the lease, service charges, buildings insurance and a summary of any works being undertaken or proposed that will affect the property or building.
- Similarly the additional information for commonhold sales section includes an official copy of the individual register and a title plan for the common parts, copies of payment requests going back 12 months, the name and address of the managing agent, and a summary of any works as before.
A copy of the commonhold community statement is also needed, which is available to download from the Land Registry website (www.landregistry.gov.uk).
- One of the newly-created elements of the packs is the energy performance certificate, which is carried out by a qualified assessor and gives your home two energy ratings, in a similar way to your fridge-freezer or washing machine.
The first rating is based on how efficiently your property currently uses energy and the second gives its impact on the environment. It will also give the assessor's expectation of what band it could go up to if eco-friendly measures were taken to improve the property, though there is no legal obligation to act on the recommendation.
The energy performance certificate will initially be valid for 12 months.
- Finally, there is the Home Information Pack Index - essentially a contents listing, which also explains any documentation that may be missing and why it has not been possible to include them.
How much does a Hip cost?
Home information pack specialist David Marsden, a partner at law firm Matthew Arnold & Baldwin, has put together a costing for a home information pack.
Sellers should note the prices will vary dependent on the costs of the charges from the local authority, and whether agents are involved.
Break down of home information pack costs
- The Hip index (the contents list of what is in the pack) - £0
- The sale statement (summarising terms of sale) - £0
- Evidence of title - £8 to £10
- Standard searches (local authority enquiries) - £120 to £200
- Standard searches (drainage and water enquiries) - £43
- An Energy Performance Certificate - £150 to £200
- Where appropriate, commonhold information - not known
- Where appropriate, leasehold information - £12 (though a £150 admin fee could apply if an agency is involved)
- Where appropriate, a New Homes Warranty - not known
- Where appropriate, a report on a home that is not physically complete - not known
- Home information pack provider's fee - £200
- Total home information pack price - between a minimum of £533 to a maximum of £815
How long is my Hip valid for?
"A Hip is accurate at the date it is prepared," advised David Marsden of Matthew Arnold & Baldwin.
"There is no requirement to refresh searches that go out of date. If a property is not sold for a few months after the Hip is prepared a buyer will want to ensure that they have accurate information and will probably ask their solicitor to re-do the searches and title checks."
"This will lead to extra expense generally," Mr Marsden warned.
How long will it take to get a Hip?
Hip providers such as Matthew Arnold & Baldwin or Hip Homes can get a pack together within five working days.
Pack provider Severn Trent Searches says it can have a Hip ready between three to five days.
"A seller should choose a web based solution rather than a paper based Hip as this is the quickest way of producing one, enables any buyer to view it remotely (with a password) and does not involve cutting down half a rainforest worth of paper," advised David Marsden of Matthew Arnold & Baldwin.
Sellers should also note until the end of the year it is possible to market a property as soon as they commission a Hip, rather than when they receive it.
I have seen estate agents advertising free Hips - is this the best way of avoiding paying for them?
The Royal Institution of Chartered Surveyors warns sellers to make sure they read the small print of what the "free Hip" involves, adding it would not add up for estate agents to bear the costs of every home information pack.
Things to look out for include withdrawal fees that may be charged if the seller chooses to market their home with another estate agent and exclusivity clauses that tie the seller to the estate agent providing the free Hip.
"We advise sellers to be aware of all the costs in marketing and selling the property," a Rics spokesman recommended.
What if I do not want a Hip?
David Marsden of Matthew Arnold & Baldwin explains it is illegal for a residential property to be marketed for sale without a Hip in England and Wales after June 1st 2007.
He explained: "The person marketing the property, i.e. the estate agent, has the legal responsibility to do this.
"Trading Standards Officers from the local council will enforce the regulations and can charge penalties for breaches of the regulations."
There are some exceptions. The government explains sellers do not need a home information pack if they are not marketing the property, for example if they are selling the property to a family member, if it is seasonal or holiday accommodation, or if it is a mixed use residence (such as a shop with a flat above it).
Hips are also not needed for right-to-buy sales, sales of portfolios of properties, properties being sold with occupants, and properties considered unsafe or set for demolition.
Going beyond the basic Hip
You could put more information into your Hip that could give your home's sales potential a boost as buyers will be better informed as to what they are getting, though this will involve spending more money on the packs.
The most important of these is the Home Condition Report - which had originally been a compulsory part of the pack, before being dropped last summer. It is a document giving legally accurate information on the physical condition of a property.
"A home condition report could help you sell your property more quickly if it shows that it is in good condition, or if it highlights any problems straight away for potential buyers, it can avoid nasty surprises for buyers later in the process," the government explains.
There are plans to review whether the home condition report will be a compulsory part of the pack in future, but for now they remain a voluntary addition.
The Royal Institution of Chartered Surveyors (Rics) warns homeowners the home condition report does not offer an alternative for a full structural survey carried out by a chartered surveyor.
Buyers will still require a survey before lenders will provide a mortgage - but the home condition report could help the potential buyer understand basic information about the condition of the property before making the offer.
The home condition report is expected to cost £400.
Where can I get more information about Hips from?
- Official home information packs website - www.homeinformationpacks.gov.uk
- Communities government department dealing with Hips - www.communities.gov.uk
- Directory of local councils - www.direct.gov.uk
