In spite of considerable opposition Home Information Packs (HIPs) are here to stay. As from 1 August 2007 any property with 4 or more bedrooms (unless constructed in accordance with Regulation 17C of the Building Regulations 2000) cannot be placed on the market without a HIP. This is being extended to 3 bed homes from 10 September, and the government intends to extend it further to all residential property “as rapidly as possible”.
Currently a HIP is not required for any property built under Regulation 17C of the Building Regulations 2000 (in force from April 2006), which provides for maximum CO2 emission rates for new buildings. This will apply to most newly built plots. This is because the software needed to produce Energy Performance Certificates (EPCs) for properties governed by these regulations is not yet available. However, the government has indicated that HIPs will be brought in for these properties in due course, probably by 1 January 2008. This would coincide with the requirement to produce an EPC for all new dwellings (of whatever size), irrespective of whether a HIP is required, from that date. For the time being, therefore, residential developers will need to prepare HIPs for:
- four bedroom homes built in accordance with previous building regulations where first marketing occurs on or after 1 August 2007;
- three bedroom homes built in accordance with previous building regulations where first marketing occurs on or after 10 September 2007; and
- three and four bedroom properties which have been accepted in part exchange.
The obligation to provide a HIP only arises at the first point of marketing. This is only likely to occur when a potential buyer is able to identify the particular property or plot and the sale price has been allocated. It does not apply to “coming soon” boards or general advertising for new developments if no reservations can be taken. As a transitional measure, until 1 January 2008 the duty to provide a HIP only applies once an EPC is available (as long as it has been commissioned before the property goes on the market). In practice however it is likely to be difficult for developers sourcing HIPs inhouse to utilise this exemption (and, in any event, the relevant energy performance documentation will have to be provided before contracts may be exchanged).
If the property is physically complete at first marketing, an EPC will need to be produced, together with a report recommending means of improving energy efficiency. Otherwise a Predicted Energy Assessment (PEA) will be required. However, if the property becomes complete while it is still being marketed (i.e. before a reservation is accepted), an EPC must be provided. PEAs and EPCs can be produced in-house but an EPC can only be produced by an accredited assessor.
In relation to the searches which must be included in the HIP, a single local authority search and a single drainage search for a whole phase are acceptable, provided that the results of the searches would not differ had the search been in respect of the individual property. This reduces the cost implications for developers.
No documents other than “required” or “authorised” documents can be included in a HIP. In particular, it must not include any advertising or marketing information such as details of options or extras.
If a property is taken off the market but placed back on the market within 12 months of first marketing, the original HIP can be used and does not need to be updated. Even if this 12 month period has expired, there is no obligation to provide a new HIP if the property was originally taken off the market because a reservation or offer was accepted, and the property is remarketed within 28 days of that sale falling through. This will almost always be the case.
A HIP is only required for a four bed property marketed prior to 1 August 2007 (or a three bed property prior to 10 September) if a sale falls through and the property is not remarketed within 28 days. No date has yet been set for the application of HIPs to properties marketed prior to 1 August (or 10 September) and which remain unsold.
The penalty for breach of either HIPs or Energy Regulations is £200. The commercial cost of a HIP is currently £300-700 plus VAT. Many developers will no doubt choose to source HIPs for their own properties in-house, but delegate to an estate agent the production of HIPs for properties accepted in part exchange.