HIP’s – the full story

By: Michael Challiner

Ready, steady, go! With just three months to sell your home using the
forthcoming and compulsory information pack, you need to get your act
together. Here we face the facts.

Home owners will soon have just three months to sell their homes or be
forced to re-issue the seller’s information pack at an estimated cost of
£1000 for the average semi-detached home. This would be in addition to
the original £1000 paid out for the original sales pack. Much has been
written about the Home Information Packs (HIP’s). Here we aim to examine
the final details, just released.

 From June 2007 it will be compulsory for all sellers to produce a
dossier containing certain basic facts regarding the sale of the
property. Ministers estimation of the costs of this survey are £776, a
figure that the experts dispute. They say the figure is much more likely
to be £1000. These figures are based on an average semi.

The information given in the dossier includes searches, deeds,
description of the property and an energy efficiency rating. However, it
appears that there are some rather worrying exclusions in the list. For
example, there is no reference to rights of access, ground stability,
natural subsidence or effects of mining. Risks of flooding are not
included; neither is contamination from radon gas or other substances.
Telecommunication links seem to have been overlooked too.

Despite this cost to the seller, it appears that if a buyer is borrowing
in excess of 80% of the property value, they’ll still be expected to
commission and pay for valuations. With regard to the three month time
limit on sales, it appears that mortgage lenders will refuse to advance
cash to buyers where the HIP is over three months old. Also, if house is
taken off the market for over 28 days within those three months, a new
HIP will have to be obtained. Where the reason for the property being
off the market for 28 days was connected with a sale, the rule would not
apply.

Where a property is marketed for sale on a private website or even by a
for sale sign in the garden, the failure to supply a HIP will result in
a fine of £200 per day.

In reaction to the announcement of these regulations, a Tory spokesman
was quoted as saying the packs were “expensive, deficient and dangerous.
The refusal to tell families whether the back garden will be safe for
their children or of potential flood risks, delivers a serious blow to
the credibility of these packs.”

The Law Society are concerned that there may be significant defects in
the scheme in the there is no provision in the regulations for
information within the HIP to be authenticated or confirmed by the
seller. They are of the opinion that there should be a warning that
reinforces to the buyer the risk of taking on substantial liabilities
and commitments.

When you take into consideration the fact that the VAT alone from these
packs will bring in £111m per year into the treasury you realize why the
Government has been accused of yet another stealth tax implementation.

So there you have it. It appears to be that, for better or worse, HIP’s
are here to stay.

Resource Box

Express have extended their product range to include mortgage quotes and remortgages.