Home buying and selling; A guide to Home Information Packs from the Government.
For most people, buying a home is the most important spending decision in their lives. However, it’s often made with less information and understanding than other purchases, and can be a particularly stressful experience for first-time buyers trying to get on the first rung of the property ladder.
Recent research suggests that nearly half of first time buyers (44%) are uncertain about the questions they should ask when viewing a property, and 85% of first time buyers say that more information would give them greater confidence. (ICM, February 2009)
Changes are being made to the home buying and selling process to help buyers feel more confident about taking this first step and to increase and improve the information available to them right from the start of their home buying journey.
Home Information Packs (HIPs) were introduced from 1 August 2007 to provide more information about a property at the start of the process, in order to help people make informed decisions about viewing or making an offer to buy a home. From 6 April 2009, changes are being made to Home Information Packs so that more and better information is available from the first day a property is put up for sale.
Buyers should make sure a copy of the HIP is passed to their solicitor or conveyancer as soon as possible, so that essential documents, such as the local property searches, are included early in the process of transferring property from one owner to another. It’s worth remembering that the majority of sellers are also buyers, so most people should benefit from getting improved information at the beginning before any decisions are made or time is wasted.
More information and advice is available from www.direct.gov.uk/homeselling and www.direct.gov.uk/homebuying
What are the changes?
All HIPs for properties put up for sale on or after 6 April 2009 must include a new Property Information Questionnaire (PIQ) completed by the seller. This form provides helpful information buyers want to know about a property before making any decisions
First-time buyers, who often have little experience of buying a home, will find this checklist of questions and answers particularly helpful. By answering these straightforward questions before they put their home up for sale, sellers can help avoid unwanted delays or surprises later on.
From 6 April 2009, a HIP must be available to potential buyers on the first day a property is put up for sale. This should mean that sellers can also see what they have paid for from the start.
What will be in the HIP?
From 6 April a property cannot be put on the market until a HIP is available, with the following documents, as a minimum requirement, creating a ‘basic’ pack.
· An index which lists the contents of the HIP and notes any required documents that are outstanding (for example, a local property search).
· A Property Information Questionnaire with simple information that the seller should know about the property including the risk of flooding, electrical safety and car parking.
· An energy performance certificate or predicted energy assessment, which tells you how energy-efficient the property is on a scale of A to G (where ‘A’ is the most efficient and ‘G’ is the least efficient).
· For new homes, sustainability information on the effect a property has on the environment in nine categories including energy and water efficiency.
· A sale statement, which includes basic details about the sale including the name and address of the seller.
· Evidence of the title which for most properties will be official copies of the register and title plan held by the Land Registry.
The following documents, if unavailable when marketing begins, must be included in the HIP as soon as possible, and within 28 days. Two local property searches, which contain important information about the property on issues such as traffic schemes, planning and building decisions that currently affect the property and what might be about to affect it. These searches can be produced by either the relevant local authority or a private search company.
· A drainage and water search must also be included which is usually provided by the relevant water company.
· A copy of the lease (for leasehold properties only).
· Documents showing proof of title (for unregistered properties only).
How do I get a HIP?
There are many organisations, including specialist HIP providers, estate agents and solicitors that prepare HIPs. Sellers should shop around and consider issues such as price, terms and conditions and whether the provider is a member of a voluntary industry code guaranteeing product quality and relevant action if something goes wrong. Sellers can also prepare their own HIP and there is guidance on this at www.direct.gov.uk/compileHIP
How much do they cost?
Costs are set by HIP providers. Costs can vary depending on the size of a property and location and payment terms, and can range from around £200 to £300 (not including VAT).
How long does it take to produce a HIP?
It should take on average five working days to put together the essential information in a HIP to be able to get a property on the market.
What do I need to do with the PIQ?
Sellers should think about the information they need to complete the PIQ as early as possible to make sure their HIP is available on the date they want to put their home on the market. Potential buyers will not be able to view the home until it is on the market with a HIP that includes a completed PIQ. Sellers should also expect to be asked for similar information by their solicitor or conveyancer at a later stage as part of the selling process.
Buyers should think about how best to use the PIQ as a checklist for useful questions before or during a viewing, such as asking about parking arrangements, council tax, central heating maintenance, and service charges for leasehold properties.
You can download a copy of the PIQ from www.direct.gov.uk/homeselling
A seller’s estate agent or HIP provider may also supply a copy of the form.
What about properties on the market before 6 April 2009?
If a property is on the market before 6 April 2009 there is no requirement for the PIQ to be included in the HIP.
Where a property is on the market before 6 April 2009 and the seller changes agent after this date, there is no requirement to update the existing documents in the HIP or for the PIQ to be included. However, the new agent will continue to be responsible for ensuring that the Pack complies with the HIP regulations.
How long will the HIP be valid?
Once all the required documents are included in the HIP, sellers do not have to update the pack unless they get a new version of a document. If a seller decides to take their property off the market, they can put it back on the market with the same HIP as long as this happens within 12 months of the date when the property was first put up for sale. EPCs are valid for three years but searches and proof of title documents cannot be more than three months old when marketing starts.
Who is entitled to see the HIP?
Anyone interested in buying a property can ask for a copy of the pack, or any part of it, and this should be given to them within 14 days by the estate agent (or the seller themselves if they are not using an estate agent). There is no power in the HIP rules to charge for this, but a potential buyer can be asked to pay a reasonable sum to cover the copying and postage costs for making and sending a paper copy. There should be no charge for an electronic copy of a HIP.
Sellers should complete the PIQ and should also check the other documents in their pack to make sure they are complete and accurate. Sellers can get a paper copy of the pack from their estate agent and there is no power in the HIP rules to charge for this.
Who will be responsible for enforcement?
Local authority trading standards officers are responsible for enforcing HIP duties, including a
potential buyer’s right to get a copy of the HIP. They can offer help and advice but can also issue a penalty notice of £200 to anyone each time the HIP duties are broken. The Office of Fair Trading can also ban estate agents who constantly break the HIP rules. Information on how to contact your local trading standards department can be found at www.consumerdirect.co.uk.
Is any redress available?
All estate agents must belong to an approved redress scheme. The scheme must cover all estate agency activities, including their duties to provide a copy of a valid HIP. This means that complaints about estate agents will be dealt with and compensation or other relevant action will be taken where complaints are upheld.
March 2009