HIPs update

The housing market has been thrown into further confusion following the announcement that the launch of Home Information Packs (or HIPS) is to be delayed, says Angela Hesketh, Head of Residential Property at Homeplus.

HIPS were due to become mandatory for all sellers of residential properties with effect from 1 June, 2007.

The HIP was designed to provide prospective buyers of properties with a useful set of information surrounding the property including energy performance ratings, basic title information and searches to assist them in their decision as to whether to make an offer to purchase the property. It was aimed to bring more certainty to what is a very volatile and often expensive procedure for buyers and sellers alike.

However, only 10 days before their launch a delay was announced to 1 August. Not only that but following 1 August there will be a phasing in programme to add further confusion.

Why the delay? The delay is largely as a result of legal proceedings taken by the Royal Institution of Chartered Surveyors. This application resulted in an order preventing the inclusion of the Energy Performance Certificate in the HIP until such time as resolution of the case. The Energy Performance Certificate was seen as a key document providing buyers with easy to understand information on the energy efficiency of a property and how that could be improved.

So what has changed?
• It will not be necessary to have a HIP on any property until 1 August 2007;
• You will no longer have to wait for the HIP before you can place your property on the market for sale as long as you have ordered a HIP that will be sufficient;
• The age of the Energy Performance Certificate on the property has been extended to up to 12 months old at the time the property is placed on the market for the time being and this may be lengthened further following future debate on this subject
• A HIP will only be required on residential properties with 4 bedrooms or more.

What will be classed as a 4-bedroom property? The full regulations about what will be deemed to be a 4-bedroom property are yet to be determined. The question on people’s lips will be; if I treat one of the rooms as a study is there any need for a HIP. The initial view is that the regulations will ensure that this type of description or approach will be prevented.

In any event to describe your property as one with less bedrooms than it actually has is a false economy. The value of that additional bedroom to the purchase price far outweighs the cost of a HIP which is likely to be in the region of £400-£500.

So what now? Watch this space and see what comes to light over the coming months.

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Peter Bosher, a partner in specialist conveyacing solicitors, Cornish & Co, commented: “The main casualty from the Government’s decision to delay the introduction of HIPS will be the HIPS providers. They will be desperately trying to grab a small proportion of the market, as from 1 August, 2007 HIPS will only apply to 4-bedroom properties plus. This is such a small slice of the market that many HIPS providers may go out of business as they fight for customers. However, from the consumer’s point of view they will be able to get a good deal from the anxious property providers.

“Moreover, there are now strong doubts as to whether HIPS will ever go through. If I were Gordon Brown, would I want to begin my term of office as Prime Minister with a potential disaster in the housing market? I think that we may see a further delay in the introduction of HIPS and eventually all that will be required is the Energy Performance Certificate. That could be brought in quite easily and at minimal cost. Indeed, it may not be long before we are talking in terms of ‘HIPS today, gone tomorrow’.”

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