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The Government estimates that £ 350 million is currently lost through house purchases that do not go ahead because of problems found by buyers during the house-buying process. The government expects that, by providing the purchaser with more initial information, fewer people will change their mind later, and that the time it takes for the buyer's Conveyancer to carry out the legal work should also be reduced. HISTORY As the idea of the Home Information Pack developed over time, so have the reasons for its introduction. A proposal to address the problem of Gazump ing was first made in the 1997 Labour Party Manifesto .1 Research after the election revealed that around 28% of sales fell before exchange of contracts, with gazumping occurring in fewer than 2% of sales. The emphasis subsequently moved to the benefits of increased speed, transparency and consumer friendliness.2 The idea is based on similar practice used in Australia and Denmark . Home Information Packs were announced in the Queen's Speech in November 2003.3 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. 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. In September 2006 the government approved the first Certification Schemes to oversee the work of Home Inspectors. The schemes are set up and run by industry. Government sets the standards that the schemes operate. In September the Home Condition Report Register contract was agreed. A fully operational register was scheduled to follow as soon as possible afterwards. In June 2007 the government announced they would fund or discount 5000 HIPs by £100 prior to the official launch date of August 1 2007 . Originally the HIP was going to be required from June 1 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 1st August and the 10th of September only homes marketed with four or more bedrooms were legally required to have a HIP. This will be extended to cover homes with three or more bedroom from September 10th.4 CONTENTS The pack must contain the following, which must be no more than three months old when the property is first marketed:5
If the property is Leasehold or Commonhold , then the pack must also include the following:6
For a transitional period sellers can market their homes without the searches or leasehold documents as long as the pack contains evidence that they have been commissioned and will be included as soon as practicable but certainly within 28 days. The pack may also contain some or all of these authorised documents:7
Home Condition Report It was originally planned that the Home Information Pack would also include a Home Condition Report (HCR), detailing the general condition of the property in Plain English . The intention was that these reports would make buyers aware of problems initially, thus avoiding shocks later in the process that may result in either delay while the price is renegotiated, or cancellation of the sale. Their mandatory inclusion has now been postponed as a result of industry lobbying, with the government keen to avoid risks to consumers from delays and potential late changes to the implementation timetable. When eventually introduced, Home Condition Reports are to be carried out by qualified Home Inspector s, and in particular it was feared by the industry that neither the certification schemes for the inspectors nor the database to hold their reports would be ready in time.8 Mandatory introduction of home condition reports remains on the table, but the Government wants more time to assess consumer demand and the results of further testing. They will also be looking at costs, the savings from avoiding waste and duplication, consumer attitudes to the Packs, failed transactions and transaction times, and people's willingness to sell with HIPs in place. Energy Performance Certificate See Also: Energy efficiency in British housing Similar to EU Appliance Efficiency Ratings , the energy performance ratings on the Energy Performance Certificate will provide prospective purchasers with an assessment of the property's energy consumption, together with a list of practical measures that can be taken to cut their fuel bills and Carbon Emissions .9 The Energy Saving Trust estimates that by following the proposals in the energy performance certificate, the average home owner will save £300 a year on fuel bills. Government also hopes that the information could be used to support the growth of green mortgages and other incentives.10 This part of the Home Information Pack is required to meet the in order to meet the requirements of the European Energy Performance of Buildings Directive.11 COST Initially the cost of a Home Information Pack, including the Home Condition Report, was estimated to be around £600 by the Government.12 This was to include the cost the of the postponed Home Condition Report, which is expected by the Department For Communities And Local Government to cost between £250 and £1000.. Industry now expects 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.13 The Government point 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.14 However the Council Of Mortgage Lenders reported that their members were planning to insist on a separate valuation in addition to the Home Condition Report, while those purchasers requiring a structural survey would also have to pay extra. For properties that have been on the market some time, it is likely that there will be additional costs incurred to bring the information in the HIP up to date. ENFORCEMENT Failure to provide a Home Information Pack, or supplying an incomplete pack carries a fine of £200.15 Enforcement is to be carried out by local authority Trading Standards Departments , however they claim that this is inappropriate as they normally regulate businesses, and that it would cost them too much to enforce through the civil courts.16 On July 31 2007 the Office Of Fair Trading advised estate agents on their obligations. From August 1 2007 estate agents in England and Wales that fail to comply with the new Home Information Packs regulations could result in a ban from estate agency work. INDUSTRY AND PUBLIC REACTION On 15 May 2007 the Royal Institution Of Chartered Surveyors started Judicial Review proceedings against the Department for Communities and Local Government for what they regards as the department's failure to carry out a full consultation on HIPs.17 There are fears that the up-front cost involved may put off some people from putting their house on the market,18 which may in turn depress the housing market. The property industry has been largely against these changes.19 but the government says the new system will leave all homeowners better off.20 The Council of Mortgage Lenders report that their members are not yet persuaded that the perceived consumer benefits will be achieved. They believe that the forthcoming introduction of E-conveyancing will have a much more positive impact. The National Association Of Estate Agents hold the view that the legislation is unnecessary, does not cover the important reasons why home sales and purchase transactions fall through,21 and that the cost is too high.22 Britain's largest independent estate agency, Spicerhaart , initially called for a boycott of the home information packs scheme, 23 although has since revised this position to one of full support. 24 In contrast, the introduction of HIPs was originally supported by '' Which? '' magazine, who believe that they could reduce the number of failed transactions resulting from problems that can be identified at an early stage.25 The organisation has since withdrawn its support following the Government's decision to postpone the introduction of Home Condition Reports.26 Should the Conservative Party come to power at the next election, they currently plan to scrap the legislation, calling it 'expensive and deficient red tape'.27 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' Mike Ockenden.28 SEE ALSO REFERENCES EXTERNAL LINKS
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