Three-Bedroom Houses Need HIPs
Anyone selling a home with three bedrooms or more will have to supply to prospective buyers a HIP - also known as a "seller's pack".
Home Information Packs (HIPs) are compulsory for three-bedroom properties
(as of Monday, 10 September 2007).
The pack will need to include information about the property, such evidence of
title, copies of planning, listed building or building regulations consents;
local searches and guarantees for any work on the property and, crucially, an
energy performance certificate.
Failure to provide a pack could leave sellers open to a fixed-penalty charge of
£200 for each day the property is marketed without one, or one has not been
commissioned.
At present, around 30% of prospective sales collapse between offer and exchange
of contracts - the equivalent of around 500,000 transactions a year - leading to
£350 million being wasted in fees. Supplying all the information needed to make
the sale in one pack was supposed to help to stop this waste.
However, critics claim the "waste" has now been transferred to the seller, and
that an estimated £200 million will be spent on HIPs compiled for the 500,000
properties on the market that fail to sell each year. The critics add that this
is of little concern to the Government, which will collect more than £100
million in VAT revenue on HIPs compiled for the failed sales.
Key Feature Now Missing From HIPs
When the packs were first mooted, it was intended that they should be compulsory for all homes being put on the market after 1 June 2007, and their key feature would be a survey of the structural condition of the property. This feature, known as the "home condition report", which was supposed to make buyers aware of possible problems, was scrapped at an early stage, when it was realised that mortgage lenders would still require their own valuation, which would include some kind of structural inspection, and buyers would also probably want a survey done for their own peace of mind, by someone they employed themselves rather than relying on a document supplied by the vendor.
It was further feared that, unless the home condition report was carried out by a qualified surveyor, it would be pretty much worthless, and there would not be enough qualified surveyors available to do the work. It is still the Government's intention that a home condition report should be included in the seller's pack eventually, but consultation is continuing on how this can be achieved.
It has also been claimed that the introduction of HIPs without the home condition report has rendered them a barely concealed strategy for enforcing by stealth compliance with an EU directive from 2002, which requires all homes to have an Energy Performance Certificate (EPC). By 2020, producing EPCs is expected to have cost UK consumers £4.7billion.
Not only were home condition reports ditched, there was then a shortage of energy inspectors to provide the EPCs. Just ten days before the packs were due to become compulsory, the then Communities Secretary Ruth Kelly announced that introduction would be delayed until 1 August 2007, and then only phased in, starting with properties of four bedrooms or more. Smaller properties would be included later.
How HIPs will actually work in practice remains to be seen. They are supposed to speed up the buying process, and mean that fewer sales fall through because of unnecessary delays in collating information needed to make the sale.
HIP-Inspired Property Famine On The Way?
At the same time, the National Association of Estate Agents (NAEA) says its latest survey of members has shown that 63% of agents reported decreases in the number of larger properties on their books compared with the seasonal norm. The average drop was 37%.
The main reason cited for the fall in properties being marketed was homeowners staying out of the market to avoid HIPs. Industry experts said the wish to avoid HIPs was not just the cost but also uncertainty about the law.
Peter Bolton King, chief executive at the NAEA, says, "Our concerns have always been that the introduction of HIPs would lead to a lack of supply following implementation. This does indeed seem to be the case with four-bedroom homes and is now likely to be replicated in the three-bedroom homes market. The next few months will prove crucial in seeing whether HIPs are going to cause the sort of problems we feared."
Another factor for the fall in the number of four-b
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