Set of documents about a United Kingdom residential property for sale
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 The Localism Act 2011 formally repealed the Home Information Pack legislation on 15 January 2012.[5]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
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 Partymanifesto.[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
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
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. 14Archived 22 April 2019 at the Wayback Machine
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
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
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
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]
In law, conveyancing is the transfer of legal title of real property from one person to another, or the granting of an encumbrance such as a mortgage or a lien. A typical conveyancing transaction has two major phases: the exchange of contracts and completion.
The National House Building Council (NHBC), established in 1936, is the UK's largest provider of new home warranties. According to NHBC's website, around 80% of new homes built in the UK each year have an NHBC 10-year warranty. NHBC is also the UK's largest single Approved Inspector for Building Regulations. Its other activities include the provision of services linked to house building and general construction; including energy ratings, health and safety, sustainability, and training. It also provides industry statistics and benchmarking services.
An estate agent is a person or business that arranges the selling, renting, or managing of properties and other buildings. An agent that specialises in renting is often called a letting or management agent. Estate agents are mainly engaged in the marketing of property available for sale and contract reassignments, and a solicitor or licensed conveyancer is used to prepare the legal documents. In Scotland, however, many solicitors also act as estate agents, a practice that is rare in England and Wales.
Real estate appraisal, property valuation or land valuation is the process of assessing the value of real property. Real estate transactions often require appraisals because every property has unique characteristics. The location also plays a key role in valuation. Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on. Sometimes an appraisal report is used to establish a sale price for a property.
The Renewables Obligation (RO) was designed to encourage generation of electricity from eligible renewable sources in the United Kingdom. It was introduced in April 2002, both in England and Wales and in Scotland albeit in a slightly different form: the Renewables Obligation (Scotland). The RO was later introduced in Northern Ireland in April 2005. In all cases, replacing the Non-Fossil Fuel Obligation which operated from 1990.
The Royal Institution of Chartered Surveyors (RICS) is a global professional body for those working in the Built Environment, Construction, Land, Property and Real Estate. The RICS was founded in London in 1868. It works at a cross-governmental level, and aims to promote and enforce the highest international standards in the valuation, management and development of land, real estate, construction and infrastructure.
Building regulations in the United Kingdom are statutory instruments or statutory regulations that seek to ensure that the policies set out in the relevant legislation are carried out. Building regulations approval is required for most building work in the UK.
A home inspection is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections. The inspector prepares and delivers to the client a written report of findings. In general, home inspectors recommend that potential purchasers join them during their onsite visits to provide context for the comments in their written reports. The client then uses the knowledge gained to make informed decisions about their pending real estate purchase. The home inspector describes the condition of the home at the time of inspection but does not guarantee future condition, efficiency, or life expectancy of systems or components.
Domestic housing in the United Kingdom presents a possible opportunity for achieving the 20% overall cut in UK greenhouse gas emissions targeted by the Government for 2010. However, the process of achieving that drop is proving problematic given the very wide range of age and condition of the UK housing stock.
The Standard Assessment Procedure (SAP) is the UK government's recommended method system for measuring the energy rating of residential dwellings. The methodology is owned by the Department for Business, Energy & Industrial Strategy, and produced under licence by BRE. The first version was published in 1995, and was replaced by newer versions in 1998, 2001, 2005, 2009, 2012, and 2021. It calculates the typical annual energy costs for space and water heating, and, from 2005, lighting. The CO2 emissions are also calculated. The SAP runs from 1 to 100+, with dwellings that have SAP>100 being net exporters of energy.
Energy performance certificates (EPCs) are a rating scheme to summarise the energy efficiency of buildings. The building is given a rating between A - G (Inefficient). The EPC will also include tips about the most cost-effective ways to improve the home energy rating. Energy performance certificates are used in many countries.
A letting agent is a facilitator through which an agreement is made between a landlord and tenant to rent a residential property. This is commonly used in countries using British English, including countries of the Commonwealth. In the UK, Australia, and New Zealand, the agreement between landlord and tenant is normally formalised by the signing of a tenancy agreement. A letting agency normally charges a commission for their services, usually a percentage of the monthly rent.
An energy performance certificate (EPC) is a rating scheme to summarise the energy efficiency of buildings or devices.
Chartered Surveyor is the description of Professional Members and Fellows of the Royal Institution of Chartered Surveyors (RICS) entitled to use the designation in the (British) Commonwealth of Nations and Ireland. Chartered originates from the Royal Charter granted to the world's first professional body of surveyors. Chartered Surveyors are entitled to use "MRICS" or "FRICS" after their names as appropriate.
A Domestic Energy Assessor (DEA) for efficient energy use is an accredited position in the UK that is approved by the Ministry for Housing, Communities and Local Government (MHCLG). Under the UK's Energy Performance of Buildings Regulations, an Energy Performance Certificate is required for the sale or rent of a domestic dwelling. DEAs are qualified and accredited for the production of RdSAP EPCs - these are specifically for use on existing buildings, which would include a dwelling built after 2008 which had already received an on-construction SAP EPC. As of November 2018, DEAs had produced 16,849,375 RdSAP EPCs since the inception of the industry.
A Chartered surveyor in the United Kingdom is a surveyor who is a member of the Royal Institution of Chartered Surveyors ("RICS"). Until the end of the 20th century, some members were members of the ISVA, but this organisation merged into the RICS in 1999.
The Property Information Questionnaire (PIQ) is a document completed by the seller of property in the United Kingdom containing details of utilities and services to the property, access arrangements, council tax bands, changes to the property parking arrangements, damage to the property and leasehold information. The PIQ is a required part of the Home Information Pack (HIP), a set of documents that must be provided before a property in England and Wales can be put on the open market for sale with vacant possession. In December 2008, the Labour Minister for Housing, Margaret Beckett, announced proposals to improve and simplify the consumer content of the HIP. As of 6 April 2009, all newly-commissioned HIPs must contain a PIQ.
Isurv is an online information service for expertise in natural and built environments. It was launched in September 2003 by the Royal Institution of Chartered Surveyors (RICS) and provides insight from verified legal experts and industry practitioners relating to construction.
The Green Deal was a UK government policy initiative that gave homeowners, landlords and tenants the opportunity to pay for energy efficient home improvements through the savings on their energy bills from 2012 to 2015. At the heart of the Green Deal was the rule that savings on bills would exceed the cost of the work. By meeting this 'Golden Rule', consumers were able to receive energy savings without direct cost. Consumers then paid back the cost of such improvements through the expected savings in their energy bills. However, there is no guarantee that the eventual savings made by consumers will match the cost of the loans they take out to make the improvements and industry bodies recognised there was a risk consumers could end up out of pocket.
The Great British Insulation Scheme (GBIS) is an initiative launched by the UK government to enhance efficient energy use in residential properties. The scheme initially consulted on by the Department for Energy Security and Net Zero labelled as ECO+, reflects the UK's efforts towards environmental sustainability and the reduction of household energy costs.
↑ "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.
↑ "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.
↑ "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.
↑ 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
↑ "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.
↑ "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
↑ "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
↑ "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.
↑ "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
↑ "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
↑ "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
↑ "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.
↑ "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
↑ "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?
↑ "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
↑ "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]
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