On 22 May the government announced that Home Information Packs (HIPs), due to be compulsory from 1 June, would be put back. This followed the initial hearing of a judicial review by the Royal Institution of Chartered Surveyors at which the judge issued an order which effectively prevented Energy Performance Certificates being included in HIPs from 1 June pending full consideration of the RICS application. Latest figures also indicated that insufficient numbers of energy assessors would be fully accredited in time for the original date for implementation.

At the time of writing, the details of the latest developments in the long-running HIP story are still far from clear. We outline the main changes announced by Communities Secretary Ruth Kelly.

  • Implementation of HIPs has been put back to 1 August 2007. The existing regulations governing HIPs will be repealed and a new set of regulations brought in.
  • As from 1 August, HIPs (including Energy Performance Certificates) will be compulsory for properties with four or more bedrooms.The government states that these are the properties where there is the greatest potential to make energy efficiency savings. It is not known at this stage whether there will be “anti-avoidance” provisions (to deal, for example, with properties marketed as three bedrooms with a study or playroom), or whether the government is simply intending to rely on the fact that most properties are marketed in the way which maximises their value. This usually means stating the maximum number of bedrooms.
  • There is no date as yet for the implementation of HIPs in relation to smaller properties, i.e. those with three or fewer bedrooms, although this is apparently to be done “as rapidly as possible”. The press release from the Department of Communities and Local Government states that HIPs will be phased in for these properties as sufficient energy assessors become ready to start work.
  • However, this gradual extension of HIPs to other properties would seem to depend on more than just the number of available energy assessors. This is because the Minister’s statement also said that further consultation would take place on the next steps in implementing HIPs and Energy Performance Certificates (see below). Lack of consultation was the main ground of the RICS challenge.
  • Until the end of the year, properties may be marketed as long as a pack has been commissioned. Under the existing regulations, certain core requirements of the HIP had to be present before a property could be put on the market; namely, the index, sale statement and official copies (for registered titles) or an index map search (for unregistered titles). Other items had to have been requested prior to marketing and most needed to be available within 28 days. We wait for the new regulations to see whether they contain similar provisions governing the timing of inclusion of documents although it is assumed that they will.
  • Energy Performance Certificates may be up to 12 months old when the property is first put on the market (as opposed to the three-month age limit under the current regulations). This is stated to be a “temporary measure” and the government has announced that it intends to consult further on the longterm arrangements for the “life” of EPCs. Under the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007, an EPC is valid for ten years from the date of issue - this is however overridden where the EPC is being included in a HIP.
  • The existing regulations provided for transitional arrangements in relation to EPCs; allowing developers, for example, to produce “Interim Energy Assessments” in relation to certain properties marketed prior to 16 September 2007. The regulations also provided for a “Predicted Energy Assessment” where properties were marketed prior to physical completion. Interim Energy Assessments and Predicted Energy Assessments could be produced in-house by developers and did not have to be carried out by an accredited assessor. Whether these arrangements are reproduced in the new regulations presumably partly depends on whether the number of assessors receiving accreditation increases in accordance with the government’s expectations.
  • Towards the end of this year the government will assess the implementation of HIPs, based on the operation of the market from 1 August, the results of the area trials which have been taking place, and a further consultation on the next steps in implementing HIPs and EPCs which is to begin in the summer.

Summary

Residential developers who release plots before 1 August should avoid the requirement to provide a HIP. After 1 August a HIP will be required in relation to every property with four or more bedrooms. Where possible, developers should therefore consider prioritising the release of larger plots in advance of this date. The proposed lengthening of the maximum age of an Energy Performance Certificate at first point of marketing from three to 12 months is unlikely to be of much assistance to residential developers.

As further details of the new rules become available we will include them in forthcoming briefings.