Home Information Packs
Home Information Packs ( HIPs ) will become compulsory from 1st June 2007. From that date nobody will be able to market the property they hope to sell unless a HIP is available.
A HIP will contain a mixture of compulsory documents such as copies of the legal title, replies to enquiries and a list of contents, and those which are optional such as guarantees, invoices etc.
Their introduction changes the current legal position in two important ways.
Firstly a HIP must include up to date conveyancing searches which traditionally have been paid for by the buyer and not the seller.
Secondly a HIP must also include a Home Condition Report (HCR). This will summarise the state and condition of the property being sold, itemise what repairs are needed to it, state how urgent those repairs are and will include an Energy Performance Certificate.
Home Inspectors will produce the HCR and there is a worry that not enough of them will be licensed by 1st June 2007. The HCR will not be a formal valuation of the property being sold and it remains to be seen whether a buyer’s mortgage lender will accept an HCR, prepared on behalf of a seller, instead of their own valuation/survey that they have relied upon previously.
The government justifies the introduction of HIPs on the grounds of openness - a buyer will have more relevant information about the property they hope to buy before they make an offer to buy it. Speedier conveyancing and a reduction in the number of sales failing due to adverse surveys are other stated benefits.
The cost of producing a HIP has been estimated to be between £660 and £1000 depending on the cost of the conveyancing searches and the type of property being sold. The cost will inevitably deter some prospective sellers.
Spratt Endicott already has the technology to source and collate the documents needed to create a HIP and have formalised links with Home Inspectors who can produce HCRs.
We have also carried out extensive market research of those organisations that are offering to produce HIPs in their entirety. We’ll be happy to advise you which organisation we think is best suited for your particular circumstances.
Sellers will be pleased to hear that many of these organisations have stated they will be happy for the cost of collating a HIP to be paid on legal completion of the sale rather than upfront as originally envisaged.
It has always been good practice for a seller to notify their solicitor of their decision to sell their property as soon as that decision has been made as the solicitor can do much preparatory work on their client’s behalf before a buyer is found. For the reasons set out above, from 1st June 2007 it will be even more essential for a seller to notify their solicitor of their pending sale. Your solicitor can organise a HIP on your behalf immediately after that notification. Those sellers organising HIPs early will give themselves a considerable marketing advantage against those that do not.
If you would like more information about HIPs then please ring David Inch on 01295 204100 who will be happy to discuss them with you.
