What exactly is a HIP?
OK at it’s simplest and in no more than 3 words a HIP is a Home Information Pack. So to twist that round a bit it’s an information pack about your home. The reason that people are asking about them is that they have gradually become a legal requirement over the last 2 years, so that now, if you’re selling your house then you MUST have a HIP in place before you’re allowed to put it on the market (although as long as you’ve ordered your searches you can still market the property – you don’t have to wait until they come back).
What’s in this pack?
It contains certain information about your home that should be useful to buyers. However you can’t just stick any old information in there – there is a strict list of what must be included. Here’s the list:-
1. Energy Performance Certificate
2. Copy of your title deeds
3. Local Authority Search (this is a list of questions that are answered by the local authority and cover things like who maintains the road outside the property and whether anyone’s applied for planning consent on the property in the past).
4. Water (also called drainage) search (Another list of questions – this time answered by the local water authority – covering things like whether the property drains to a main sewer)
5. Property Information Questionnaire (known as a PIQ) – a form filled out by the seller
6. If it’s leasehold then you’ll also need to put in a copy of your lease
There are also rules about how this is presented – there needs to be an index and a ‘statement of sale’ which sets out the main terms on which you’re selling the property
Who prepares the pack?
Anyone can actually – there’s no restriction on who can do it. However you need to know how to get a copy of the deeds, how to order searches – basically everything in the paragraph above. Because of that you’ll need to use someone who does this sort of stuff for a living – most solicitors can provide it, and there are also a number of HIP providers out there. We would be delighted to give you a quote for your HIP – Click here for a HIP quote
What does the pack look like?
When packs were first introduced there was a massive variety in what they looked like – some looked like a scruffy bundle of papers, and some looked like posh magazines. What’s emerged over the last 2 years though is that people are no longer interested in having a printed version – most HIPs now produced are entirely electronic – so you can access them online and print off a copy yourself. This has a number of advantages – firstly there’s no printing cost, and secondly it’s really really easy to let people have a copy of the HIP – without worrying that they will run off with your only printed copy.
Why have they done this – what was wrong with the old system?
Good question. Home information packs were introduced to kill 2 birds with 1 stone. The Government had been promising for a while to introduce changes to the system of house buying and selling in the UK – the public perception was that it was too slow and caused too much stress as a result (no-one mentioned that conveyancing in this country costs about one tenth of what it costs in mainland Europe but there you go). Sensing a vote winner the government decided that ‘something must be done’. They looked around at various systems throughout the world and decided that the idea of preparing a pack in advance was the best one to go for. This system has been in use in Canada and Denmark for a while and seems to have been successful.
The second bird being killed was the Kyoto protocol. The government signed up to this which involved them agreeing to reduce emissions by a certain date. Now in order to reduce emissions you first have to measure them – otherwise how can you say that you’ve reduced them? So a major part of the HIP requirement is the energy performance certificate – which records how energy efficient your property is.
By introducing a Home Information Pack they hoped that it would simultaneously reduce the time taken for conveyancing, and at the same time gather important information about the UK’s housing stock.
Has it worked then?
Well yes and no. There were clear ideas at the start which would in theory have produced a system whereby everything you needed to know about the property was held in one pack that was available when you saw the property. A major part of this was the Home Condition Report. This was basically like a full survey on the property which highlighted the things that needed to be done. In an ideal world you’d get your pack, let your solicitor have a copy, let the mortgage company see the survey, and you’d be ready to exchange contracts within a week (or however long it took the mortgage company to get the mortgage offer out). Sounds nice doesn’t it? Yes that’s what we thought too. However the Mortgage companies didn’t seem to think so and nor did the Royal Institute of Chartered Surveyors (RICS). The Mortgage companies basically said it was all well and good but as there was no element of valuation in the Home Condition Report how could they rely on it to lend a mortgage against? They therefore were going to send their own valuers in as well. Eventually there was a climb-down by the government who agreed that the Home Condition Report would be optional (which in reality means almost no-one ever does one) but the Energy Performance Certificate would be compulsory.
RICS weren’t happy because all their members were basically having to retrain as Home Inspectors, when they’d spent years and years building up their expertise in the area. I can see both sides on this – it’s a bit of a blow to the pride to retrain when you’re so experienced. However the reason they were being asked to retrain wasn’t that they weren’t any good – it was that the most important thing was consistency – you needed to be able to send 10 Home Inspectors into the same property and they would come up with the same 6 points that needed sorting. Without blanket retraining that wouldn’t have been possible.
So what did the RICS do? Well with a couple of weeks to go to the launch date they basically took the government to court saying there wouldn’t be enough home inspectors ready by the proposed launch date. A compromise was agreed that meant that the launch would only be limited to properties with 4 or more bedrooms – other properties would be brought into the system later in the year.
I only wanted to know if it worked or not – I didn’t want war and peace
Yes I’m sorry – I seem to have gone on a bit there. OK well to cut to the chase on this – it should have meant that you’d have a pack which would let you exchange contracts very quickly (which is good). In reality we’ve got something that’s watered down and that few people actually look at. Introducing the PIQ is a good first step towards making it useful.
Are they any use at all then?
Well yes they are – just having the searches and a copy of the deeds up front saves a fair bit of time. Earlier this year (April 6th 2009 to be precise) another change was introduced whereby the sellers have to fill out a Property Information Questionnaire as well. This contains some useful information about the property. However, buyers solicitors will also want other information to be filled out by the seller – so they end up filling out 2 sets of questionnaire. Yes it is stupid and no I don’t know why they weren’t all put into one questionnaire. Hopefully in time the two will be merged so the PIQ starts to become useful.
There are also moves afoot to introduce the ‘exchange-ready HIP’ – which is meant to accomplish the original goals of the HIP – it’s meant to do what it says on the tin. We’re currently taking part in trials of this, as anything that can be done to reduce the time taken for conveyancing is good from our point of view.
Aren’t the Tories going to scrap them?
We don’t know but they are making noises in that direction. This is a pity because although when they were being introduced many people were saying they were a stupid idea, when you actually spoke to them what they actually meant was this is a stupid way of implementing a great idea. Everyone seemed to agree that the idea of producing everything up front was a good idea but each part of the industry (surveyors, estate agents, solicitors etc) all had their own idea on the best way to go about it.
So if the Tories do decide to scrap it they may find they’re walking into a political hot potato (how’s about that for a mixed metaphor!) – it would be better to evolve the existing system to make it deliver on the promises originally made. Taking us back to a system of letting the buyer gather all the information after the sale has been agreed seems incredible – you’d be introducing legislation that slows down the conveyancing system.
The other thing to bear in mind is that there is now a whole industry that has built up on the back of HIPs – Solicitors have employed staff to do the work – there are many many HIP providers who all employ staff just for this work, and finally there are thousands of independent Domestic Energy Assessors (the people who do the Energy Performance certificates) who have retrained to create a new career for themselves (they can’t actually do away with the Energy performance Certificates as we still need to comply with the Kyoto protocol).
Getting rid of all that infrastructure doesn’t make any sense – but in our previous dealings with the government that doesn’t seem to have stopped anyone before.
I’m confused – can we have a summary?
Ok – it started out as a good idea that everyone agreed on. They then argued about the best way to introduce it and a watered down version was phased in. It’s not great but it’s better than nothing. The system is evolving (introducing the PIQ was a good first step), and eventually may become what was originally hoped for – something that makes house buying and selling quicker and less stressful. But then again it may not – no-one knows.
I hope this guide helps, but if you’ve got any questions about it then please do so by adding comments below