Since 1 August 2007 a part of the way we buy and sell properties has changed. Almost every residential property now being marketed requires, by law, a Home Information Pack and the Seller will have to pay for this. The law has been phased in and from 6 April 2008 even brand new properties were affected.
Although HIPs are not required for commercial properties, an Energy Performance Certificate is now required for the sale or rent of commercial properties with a floor area of over 10000 square metres. As from 1 July 2008, this will apply to commercial properties over 2500 square metres.
The Property Team at Charlesworth Nicholl & Co, Solicitors in Crediton, are providing comprehensive advice on HIPs and in this article they answer some of the most commonly asked questions.
The aim of HIPs is to increase transparency in the homebuying and selling process as well as make it faster, easier to understand and ultimately, more consumer-friendly. Whether they will do so or not remains to be seen. The only new information provided is the Energy Performance Certificate. At present residential properties affected can be marketed so long as a HIP has been applied for.
What is a Home Information Pack? (HIP)
A Home Information Pack provides key selling information about a house, upfront and in a standard format, enabling buyers to make an informed decision before they put in an offer. The information buyers really need is currently available only after an offer has been accepted, which can cause sales to be re-negotiated or collapse entirely. The information in the HIP is what the Seller's solicitor normally provides apart from the Energy Performance Certificate and the Local Search. The Local Search used to be carried out by the Buyer's solicitor but the seller must now provide it.
What must go in a HIP?
A HIP must contain:
For Leasehold properties there are additional required documents to include a copy of the Lease and up to date receipts for payments made under the terms of the Lease.
It may also contain (plus other authorised documents):
Note: A HIP cannot contain unauthorised documents
Who provides it?
In most cases the seller's solicitors will compile the Pack either by themselves or through a HIP company.
What will it cost?
The sellers have the additional expense in providing the Energy Performance Certificate (EPC) and the local and drainage searches. The cost of providing these is approximately £350 including VAT. The sellers may be able to claim back the cost of the local and drainage searches from the buyers, but not the whole cost of the HIP.
The sellers need to either pay these expenses upfront to their solicitor or sign a credit agreement with a HIP provider so the costs will be paid from the sale proceeds. Some estate agents are suggesting a larger commission rate is paid on the sale to cover all the agents fees, legal costs and the cost of the HIP - sellers should look carefully into the costs and obtain a breakdown as this may be an expensive way of selling their house.
What should sellers do?
Most sectors of the property industry are of the view that you should visit your solicitor to order a HIP as soon as you know you want to put your house on the market!
Charlesworth Nicholl & Co Solicitors provide HIPs and advice. You can apply online for a Home Information Pack or a Conveyancing Quote.
For more information on our service please telephone 01363 774706 or e-mail rf@charlesworthnicholl.co.uk