Home Information Packs (HIPs) - A Brief Explanation

A HIP is a Home Information Pack which the Government introduced in August 2007 as a measure to improve the transactional process of both buying and selling property in England and Wales. On August 1st 2007 it became compulsory for all home owners in England and Wales with a property containing 4 or more bedrooms to commission a Home Information Pack before being able to put their property on the market for sale.

The Home Information Pack consists of several documents that provide information about the seller’s property. The UK Government anticipates that by having this information available from the offset of putting your property on the market, the selling process will be much quicker with fewer sales at risk of falling through.

The only new document listed in a HIP is the Energy Performance Certificate which provides information on the energy efficiency rating of the property and its impact on the environment. An Energy Performance Certificate will not only outline the costs of heating, hot water and lighting in homes, but will also give practical advice to potential buyers on how to cut these costs and reduce emissions. This document can only be produced by a fully qualified and licensed ‘Domestic Energy Assessor’. The other items listed in a HIP are all in fact current procedure in the course of property transactions.

Of the documents included in a Home Information Pack there are 2 basic types

Required documents: which legislation requires as a minimum:

An index (i.e. a list of the contents of the Pack)
A sale statement (summarising terms of sale)
Evidence of title
Standard searches (i.e. local authority enquiries and a drainage and water search)
An Energy Performance Certificate
Where appropriate common hold information (including a copy of the common hold community statement)
Where appropriate, leasehold information (including a copy of the lease, information on service charges and insurance)
Where appropriate, a New Homes Warranty
Where appropriate, a report on a home that is not physically complete
Home Condition Report*

Authorised documents which may be included at the seller’s discretion:

Guarantees and warranties
Other searches

Sellers can use an authorised document to top up their HIP voluntarily, by including any additional material they consider to be of interest to a prospective buyer.

* Although the Government has indicated it will make Home Condition Reports voluntary, it strongly believes that these are likely to prove valuable to both sellers and buyers by dramatically speeding up the sales process of any home.

The Home Condition Report (HCR) acts as a ‘health check’ for your home and is similar to the report carried out by a surveyor, which many buyers request once they have actually put in an offer. Therefore a HCR is an objective report on the condition of the property that buyers, sellers and lenders will have a legal right to rely on. The Home Condition Report must be completed by a qualified, certificated Home Inspector. The main elements of the property, roof, walls, foundations etc are then classified into ratings. These correspond to

1. Good condition. 2. In need of repair. 3. Serious Defect.

By providing a HCR upfront, sellers will have a competitive advantage by making their property stand out from the rest of the market. Buyers also have the confidence to commit to the property as soon as an offer is put in; something they are unable to do when waiting for a survey to be completed. Therefore the time taken to complete a sale can be greatly reduced as all legal searches will already be present in the Home Information Pack and the Home Condition Report will prevent any unexpected surprises from cropping up and potentially threatening the sale.

Published on September 20, 2007