Home Information Packs have been with us for larger houses for almost a year and for most other residential properties for almost 6 months. Whilst some properties are still being sold without a HIP, largely because the property was first marketed before a HIP was required for that type of property, the majority of properties are now sold with one.
The HIP provides a prospective buyer with evidence of title, local and drainage searches and the Energy Performance Certificate. Whilst additional information can be included, such as the seller’s replies to standard enquiries and a list of contents, most HIPs do not include these – often the seller does not know at this stage what is going to be left. The Energy Performance Certificate rates the energy efficiency of the property and the effect of the property on the environment through CO2 emissions, with recommendations on ways to improve the property’s energy efficiency (and reduce fuel bills).
Before making an offer, if buyers are not sure of the extent of the property they are hoping to buy, a HIP can be useful to check the copy of the Land Registry plan included in it, assuming the property is registered. Even if prospective buyers do not check the HIP, it is useful for the buyer’s solicitor to have the HIP available to examine at an early stage and to raise additional questions, as the HIP rarely contains everything the buyer’s solicitor needs.
To date, HIPs have proved to be cheaper than was initially anticipated, although they are more expensive for leasehold properties and have to cover any charge by the landlord or managing agent for providing information. Where a seller is also buying another property, the cost of the HIP leaves the seller about £200 worse off than before because a HIP will also be provided on the property he is buying, saving the cost of the local and drainage searches on the purchase. However, where a HIP includes a personal search, a buyer may end up paying for a local search from the local authority as many solicitors are not prepared to rely on personal searches.
So far HIPs have not particularly delayed or slowed the selling process, possibly because there has been a concession permitting marketing as soon as the HIP has been ordered. There have been some problems with this as some properties have been marketed contrary to the legislation where the HIP has not been ordered or where it has only been partially ordered – such as without the request for the searches. This concession was due to end on 1st June. Fortunately, the Government has announced that this concession will continue until the 31st December 2008. After that a HIP will have to be available prior to marketing taking place which could cause delays and may slow the housing market down.
There has been an additional concession for leasehold properties in that only a copy of the lease needs to be included in the HIP rather than all the leasehold information, accounts, etc. When this concession ends, full leasehold documents will need to be supplied. Again, fortunately, the Government has extended this concession until the end of the year as well.
If and when these concessions end, there will be delays before properties can be marketed, especially for leasehold properties. Even now it is important that sellers instruct their solicitor as early as possible. There can be delays in obtaining information from some landlords and managing agents.
Hopefully, the Government will continue to take into account the fragile nature of the residential market in reviewing the end of the concessions but the underlying message is that if you are a seller you should aim to instruct your solicitor as early as possible.
Mike Sheldon is a partner and head of Raworths’ residential property unit. To contact Raworths telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate, HG1 1HF. Alternatively you can email Mike - mike.sheldon@raworths.co.uk
