COMMENT
Coming Soon - Home Information Packs

By Jane Mack (TMFJane)
November 18, 2005

From 1st June 2007, people selling their homes will be obliged by law to put together a Home Information Pack (HIP) containing detailed information about the property before putting it on the market.

It's a major reform to the way people buy and sell houses and, so the Government claims, it should cut dramatically the £350 million a year that it supposedly costs consumers and the industry in failed transactions. More than one in four transactions currently fails between acceptance of an offer and exchange of contracts and, of these, more than two-fifths fail because of survey or valuation inspection findings.

While the cost of a HIP is estimated at anything between £500 and £1,200, part of that will cover much of the work that solicitors already have to carry out such as Land Registry searches and obtaining copies of the Deeds. The extra will come from the requirement for a Home Condition Report - a survey of the property which will include an at-a-glance guide to any urgent and serious defects.

As I've said before, I think HIPs are a good idea in principle. The cost of them alone will concentrate the minds of vendors about whether they really want to sell, and the information the HIP contains will flag up any potential problems that can be dealt with right from the very start. Buyers will also be able to make their minds up more quickly about whether they want to make a serious offer.

However, I, along with many others, have reservations about how certain aspects will work in practice. For one thing what will happen if a house takes so long to sell that the HIP goes out of date? Who will pay for the update? The Government has indicated that it will expect the buyer to pick up these extra costs although there's no explanation why.

There's also the question of the Home Condition Report and the number of qualified Home Inspectors who will be needed to carry them out.

Initially, it's expected that they'll mostly come from within the property and construction related profession but since only around one in five buyers currently commissions a survey, there are unlikely to be enough inspectors to go around once everyone starts having to have one.

As a result, the Government has introduced a number of courses that will enable anyone to train as a Home Inspector and they say this will give them qualifications equivalent to those of a chartered surveyor. But the Home Inspector is also required to be the 'eyes and ears' of the conveyancing solicitor and will be expected to highlight any problems that might warrant further legal investigation. Will the training be sufficient to enable them to do that?

Crucially, the Home Condition Report will not include a valuation of the property. Which surely means that the buyer will still have to pay his mortgage lender for the cost of them sending out their own surveyor to check the property's worth.

All of the above could result in the very delays that the Government is trying to reduce with the introduction of HIPS. It's planning a six-month 'dry run' of the scheme from next July so it remains to be seen whether this will provide sufficient time for any problems to be rectified in time for the compulsory roll-out in July 2007.

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