Everything you need to know about HIPs

Selling your house? You will need a HIP
Everything you need to know about HIPs

On 1st August 2007, the government will introduce the Home Information Pack (HIPs) policy in the UK. Although the initial implementation will only affect larger properties – those with four bedrooms or more – HIPs will eventually impact every home-owner in the country, and anyone who is looking to buy or sell property. Mark Cooper, Managing Director of homeimprovementquotes.co.uk, goes through exactly what you need to know about the packs.

Q: What on earth is a HIP?
A: Home Information Packs (HIPs) are a new government policy designed to regulate the process of property transactions. Basically a HIP is a set of documents that contain specific information about your property such as how energy efficient it is, and records of any actions by your local authorities. You will need to have a HIP if you want to sell your property.

Q: Woh, that’s inconvenient – why is the government introducing them?
A: Apparently, the government reckons that £350 million a year is currently lost through house purchases that fall through because buyers discover problems on the property after they have made an offer, and then cancel the deal. The idea of HIPs is to make all the information about the property available before this can happen. HIPS are also supposedly going to stop ‘gazumping’ from happening – when a seller uses the ten-week period it takes for an agreed buyer to get a survey on a property done to accept better offers from other parties, forcing the price up.

Q: Weren’t HIPS in the news recently?
A: You will probably have heard quite a bit about them in the news recently, and the government has got a fair bit of negative publicity over them. This is mainly because the policy was originally intended to come into effect on 1st June 2007, but at the last minute the government delayed the introduction by two months and announced it would be phased so only people with large properties are to be affected initially.

Q: Okay I’m confused already – when does the policy come into force? Will it affect me?
A: HIPs are going to be a legal requirement for anyone selling a property with four or more bedrooms after 1st August 2007. If your property is smaller than this, you don’t have to worry about HIPs just yet – the government has said that the policy will be extended to cover properties of all sizes, but hasn’t announced when this will come into force yet. The HIPs policy does NOT affect Scotland, but the Scottish parliament is planning to introduce a similar policy in the near future.

Q: So what does a HIP contain?
A: A HIP must contain five basic documents:
1. HIP Index – This basically sums up what is in the pack, giving a brief overview of the information in the form of a checklist. Everyone involved in the sale – buyer, seller, estate agent, authorities – can see the status of the pack and its contents.
2. Energy Performance Certificate (EPC) – This is the most important part of the pack from the government’s point of view, and the most expensive to the seller. It contains your property’s environmental impact rating, on a sale of A to G, as well as recommendations on how to increase your energy efficiency. Has to be done by a registered inspector.
3. Sale Statement – Basic information about the site.
4. Title Documents for the Property – Official evidence of who owns the property.
5. Local Authority and Drainage Searches – This includes records of local land charges, planning decisions and proposals from local authorities, and details of the provision of drainage and water services to the property.

There are additional documents to complete depending on whether the property being sold is a leasehold or a commonhold. Each of the documents must be no more than three months old when you first put your property on the market. The HIP will be valid until the property sells, and you can still use it if the property comes off the market and then goes back on again within 12 months.

Q: Sounds complicated – how much am I going to have to fork out for one of these things then?
A: Estimates say £400 minimum

Q: What! How much?
A: £400, and all of it has to be paid for by the property seller – although the cost may end up being transferred to the buyer because people raise the property price to cover the cost. The most costly part of the HIP will be the EPC, which will cost £150 alone and requires an EPC inspector to carry out an assessment on your property.

Q: How do I get a HIP?
A: If you are about to put your property up for sale, there are a number of options available to you. Your estate agent should be able to provide the pack for you for a fee, or alternatively you can use a solicitor or one of a number of specialist pack providers that are around. You can also compile the pack yourself, which could potentially save you some money.

Q: Will HIPs affect my plans to extend my house?
A: No – unless the new room is a bedroom that will take you over the four-bedroom threshold. It’s important to remember that HIPs will measure energy efficiency, and take into account any new rooms you have built when it comes to putting your property on the market. Your HIP will also keep record of all your dealings with the authorities, such as getting planning permission.

For more information, visit homeimprovementquotes.co.uk