Home Information Packs (HIPS)

Home Information Packs- HipsHome Information Packs aka. “HIPS” were initially announced in the U.K. during the Queen’s Speech in November 2003. The pack had to contain:

  • Index
  • Energy Performance Certificate
  • Sale Statement
  • Property Information Questionnaire
  • Title documents for the property
  • Local Authority and drainage searches

and the data should be no more than three months old when the property is first marketed:

If the property was leasehold or commonhold, then the pack also had to include the following:

  • Copy of the lease
  • Building insurance policy
  • Contact details for the landlord or management and any legal details
  • Regulations that apply
  • Recent service charge receipts and accounts

For a transitional period sellers were able to market their homes without the searches or leasehold documents as long as the pack contained evidence that they had been commissioned and would be included as soon as practicable but certainly within 28 days.

The pack could also contain some or all of these authorised documents:

  • Home Condition Report
  • Two sellers questionnaire forms called Home Use Form and Home Contents Form
  • Legal summary
  • Other searches such as a mining search

The Home Condition Report

It had been 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 Home Condition Reports were to be carried out by qualified Home Inspectors, and so a certification process was inplemented but inclusion of the report became voluntary until enough inspectors could be trained and certified. Mandatory introduction of home condition reports remained on the table, but the Government wanted more time to assess consumer demand and the results of further testing. They were also 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

An Energy Performance Certificate (EPC) in the UK needs to be completed by a government qualified Domestic Energy Assessor (DEA). DEAs offer advice on how to improve the energy performance of the dwelling which might save money. However, in practice, such documents only give general advice of little value to potential purchasers. They frequently exhibit errors since the survey is superficial and non-intrusive. They neglect older and double glazed windows for example.

The Energy Saving Trust hoped that by following the proposals in the energy performance certificate, the average home owner might save £300 a year on fuel bills. Government also hoped that the information could be used to support the growth of green mortgages and other incentives.

This part of the Home Information Pack was required in order to meet the requirements of the European Energy Performance of Buildings Directive.

Cost

Initially the cost of a Home Information Pack, including the Home Condition Report, was estimated to be around £600 by the Government.

The Government pointed 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.[23] 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 building survey would also have to pay extra.

Enforcement

Failure to provide a Home Information Pack, or supplying an incomplete pack carried a fine of £200 per day the property is marketed.

Enforcement was to be carried out by local authority Trading Standards Departments; however they claimed that this was inappropriate as they normally regulate businesses, and that it would cost them too much to enforce through the civil courts.

On 31 July 2007 the Office of Fair Trading advised estate agents on their obligations. From 1 August 2007 failure by an estate agents in England and Wales to comply with the new Home Information Packs regulations could result in a ban from estate agency work.

Controversy

On 15 May 2007 the Royal Institution of Chartered Surveyors (RICS) started Judicial Review proceedings against the Department for Communities and Local Government for what they regarded as the department’s failure to carry out a full consultation on HIPs.

Despite the above objections to the HIPs scheme, RICS were already providing courses on Home Inspection and Domestic Energy Assessment, as well as courseware manuals for the professions of Home Inspector & Domestic Energy Assessor.

There were fears that the up-front cost involved may put off some people from putting their house on the market, which may in turn depress the housing market.

The property industry has been largely against these changes.

The Council of Mortgage Lenders reported that their members were not persuaded that the perceived consumer benefits will be achieved. They believed that the forthcoming introduction of e-conveyancing would have a much more positive impact.

The Conservative Party, when in Opposition, stated that they planned to scrap the legislation, calling it ‘expensive and deficient red tape’. On 12 May 2010 the incoming Conservative – Liberal Democrat coalition government announced an intention to scrap Home Information Packs. The requirement for property sellers to provide HIPs was suspended on 20 May.