Background on the introduction of HIPs

Every year hundreds of millions of pounds are wasted through buyers paying for surveys, legal advice and searches on property purchases that ultimately breakdown.

With the introduction of HIPs by the Government sellers will pay for a Home Condition Report (HCR) and searches on their own property, as opposed to currently paying for these on the property they are purchasing.  These 2 things together with other important documentation will make up the Home Information Pack (HIP), which will provide key information needed by home buyers and sellers at the start of the buying process, enabling people to be better prepared before they make decisions and negotiate terms, therefore significantly reducing the number of sales that fall through.

What is a HIP?

A HIP is a pack which, although its contents have not yet been finalised by the Government, is likely to contain the following:

●  Terms of sale - the agreed sale fee of the property together with details of fixtures and fitting included.

●  Evidence of title - land registry entries and all title deeds relating to the property.

●  Preliminary enquiries - details of the property in respect of boundaries, utilities, services, arrangements, rights and occupiers of the property.  Planning consents for extensions, conservatories, etc. with building control certificates.

●  Warranties and guarantees - relating to extensions, roofing, loft extensions, double glazing, driveways, damp course, electrical work, rot or infestation, central heating, etc.

●  Local searches - these include a local authority search, drainage and water search, planning report, environmental report and coal mining search (where appropriate).

●  Home Condition Report - a professional survey of the property including an energy efficiency assessment, similar in context to that of the current home buyer survey and valuation; not as detailed as the full structural survey, but more informative than the mortgage valuation survey.

●  Domestic Energy Assessment - the  Energy Performance Certificate will provide prospective purchasers with a guide to the heating, water and lighting costs which they will incur in their new home.

Please note that for leasehold properties, the following will also need to be provided:

●  A copy of the lease.

●  Building insurance policy details and payment receipts.

●  Most recent service charge accounts and receipts.

●  Management company regulations, together with memorandum and articles.

Who will be offering HIP creation?

Many different types of companies could potentially offer this service, from Estate Agents and Solicitors to ‘HIP companies’ formed specifically for this purpose.

How long will it take?

This will vary from company to company, however we estimate that with a clients prompt delivery of any necessary information, a complete HIP could be provided within 5 to 10 working days.  In the case of Leasehold properties, this time may be slightly increased.

How much will it cost?

The price is expected to be between around £300 and £1000.  Most companies are also expected to offer payment either in full, at instruction of the HIP, or in part with the remaining balance payable at completion of the sale (or within a fixed period of time).

What are the benefits?

●  There will no longer be a long wait for the searches or a wait for certain documentation, in order for the draft contract to be prepared by a solicitor.

●  It may be the case that certain mortgage lenders will rely on the HCR, as opposed to instructing an independent surveyor to carry out a property valuation.  This will therefore speed up the receipt of a satisfactory mortgage offer.

●  Generally, the HIP should help all parties involved commit more quickly to the sale and prevent last minute terms being re-negotiated due to late disclosure of information.