With effect from 14 December 2007 Home Information Packs will be required for all homes that are marketed for sale in England and Wales. HIPs are already required for 60% of the housing market, but this final stage of the HIPs roll-out is aimed at covering homes with two bedrooms or fewer.
Since September 2007 all properties with three or more bedrooms have been required to have a HIP before being sold. However, to accommodate this final stage, the Department for Communities and Local Government have made two important changes to HIPs legislation:
- The temporary first day marketing provisions timescale will be extended from 1 January 2008 to 1 June 2008.
- The Department has decided that the requirement that a HIP for a leasehold property should include additional leasehold documents as well as the actual lease itself will be phased into the HIP at a later date.
First day marketing provisions
The Department for Communities and Local Government has extended the first day marketing provisions for an extra five months from 1 January 2008 until 1 June 2008. This change has been said to have taken place to allow complete flexibility for the responsible person when compiling the HIP and to ensure the continued smooth implementation of HIPs legislation.
First day marketing provisions allow a property to be marketed without a HIP if the responsible person compiling the HIP cannot obtain an Energy Performance Certificate (EPC) to add to the pack before the property goes on to the market. The seller is required to have used all reasonable efforts to obtain the EPC documents before the property is put on to the market. This concession is compliant with regulation 34 of Home Information Packs No 2 Regulations 2007. This provision only applies until 1 June 2008.
Some sectors of the property industry have tried to portray regulation 34 as a HIPs loophole: a way of marketing a property without having to go to the trouble of compiling a HIP. However regulation 34 only provides limited relief to sellers, as certain other requirements still have to be met in order for the regulation 34 to apply in the first place. These circumstances are set out in regulation 34(2) of the HIPs No 2 Regulations 2007.
According to regulation 34(2) the circumstances that have to be met are that:
- The property has been put on to the market before 1 January 2008, (now 1 June 2008).
- Requests for all the required documents needed to go into the HIP have been made before the property is put on to the market.
- All requests for documents required for the HIP have been made according to regulation 18 of the HIPs No 2 Regulations 2007.
Regulation 18 states that
"(1) In this Part, references to a request for a document are to a request:
(a) which is properly addressed to a person who usually provides or is likely to provide the type of document requested; and
(i) is made in such form;
(ii) contains all such information; and
(iii) is accompanied by such payment or an undertaking to make such payment, as is usually necessary to obtain a document of the type requested.
(2) In this Part, proof of a request for a document means a written statement of the following matters:
(a) which of the required documents has been requested;
(b) the date that a request for the document is delivered in accordance with regulation 19;
(c) the name of the person to whom the request has been addressed;
(d) the date the responsible person believes the document is likely to become available; and
(e) confirmation that the request complies with paragraph (1)."
If all documents cannot be obtained 28 days after the property has been marketed, after all reasonable efforts have been made to obtain them within that time, the responsible person must continue to use all such reasonable efforts to obtain the documents and exchange of contracts cannot take place until all EPC documents have been delivered to the buyer.
As can be seen above, regulation 34 waives the need to collate a full HIP, but it does not waive the right for the buyer of a property to have all EPC documents in their possession before exchange of contracts has taken place. All documents required for the HIP still have to be requested and paid for, as set out in regulation 34(2). Those documents are often not too difficult or expensive to obtain.
Leasehold property documents
The Department for Communities and Local Government have decided to temporarily amend HIP regulations so that only the lease document itself must be included in the pack but other leasehold information, that would also be required in the HIP, will be phased in at a later date.
This change has occurred due to the fact that early monitoring of the introduction of HIPs has highlighted concerns that for some consumers leasehold documents are proving difficult to obtain quickly and in some cases disproportionate charges have been required to obtain those documents.
The government expects that in the majority of cases leasehold documents should be easily and readily available as part of the HIP. However, given the higher number of leasehold properties in the one and two bedroom house bracket, the introduction of additional leasehold information beyond the lease itself will be phased in to avoid any difficulty.
Additional requirements of the EPC
The EPC also contains a green rating from A to G (A being good and G being poor) with homes scoring poor energy ratings F and G being specifically targeted to receive support and grants to carry out home improvements to make the property more energy efficient, improving the green rating and making the home easier to sell.
From April 2008, the government will begin to roll out EPCs for newly built homes in England and Wales, as well as across commercial property for sale, rent or under construction and by October 2008 all public buildings south of the Border will have to display an EPC.
The introduction of HIPs is part of a wider programme of reforms to home buying and selling which includes other initiatives such as e-conveyancing. These initiatives are aimed at making the house buying and selling process easier and more transparent for all involved. HIPs aim to provide consumers with more information about the house they are buying equalling better value for money and helping to tackle climate change. Is this the actual result of HIP? It is too early to tell.