Get the lowdown on HIPs
If you want to put your home on the market there's now much more to think about than keeping the lawn tidy and showing as much floor space as possible. Now you have to think about home information packs too. Whatever you think about the controversial new system, the packs are now are reality, so if you are planning to sell your home this year, what do you need to know?
1. Do I need a HIP?
HIPs became law on 1 August 2007 for all four-bedroom homes, on 10 September 2007 for three-bed homes, and were rolled out for the rest of the market to include all homes on 14 December 2007.
2. What if my home has been on the market since before 1 August 2007?
In this case, you do not need to buy a HIP. The law applies only to relevant properties that come onto the market after the pack's respective implementation dates.
3. At what point in the selling process do I need a HIP?
The law states that in order to market your home for sale, you only need to show that a HIP has been applied for, rather than actually have it in your hands. But watch out: this will change from the end of 2008.
4. How do I get a HIP?
You can purchase a HIP through your estate agent, solicitor or mortgage broker. Alternatively, you can use a standalone pack provider. Easier2move.co.uk, for example, supplies its packs through each of these channels.
Karen Babington, marketing director at www.easier2move, says: "In our experience, most people are taking their pack through the estate agent, some are opting to get a pack through their broker, while just a small percentage of packs are ordered direct from us online. But we imagine this will change as people become more HIPs-savvy."
However, if you take the 'free pack' from your estate agent but never complete with the firm, you'll pay over the odds. Essex-based estate agent Quirk Deakin, for example, offers a free pack on successful completion. But if the property never completes, the pack will cost £499 plus VAT as opposed to £399 plus VAT if you pay upfront and receive a refund.
5. What does it contain?
A HIP includes an index of contents, summary of sale, title deeds and other legal documents, local authority searches and an Energy Performance Certificate (EPC) that will rate your home's energy efficiency and set down recommendations for improvement. Optional documents include a Home Condition Report (HCR), guaranties and other types of searches - for flooding or mining, for example.
The HCR, which is the equivalent of a Homebuyer's Report, was downgraded from mandatory to voluntary by the government in July 2006. The move followed widespread concern that potential buyers would not accept a survey on a house provided by the person selling it.
6. How much will it cost?
While HIPs are a Government scheme, the packs are not sold by the Government. In fact, they were presented as an entirely new industry and many people have set up new pack-providing businesses and/or trained to carry out the required surveys and searches. So, the price of HIPs will vary, but market forces dictate that the basic packs cost between £299 plus VAT and £400 plus VAT.
Most pack providers - especially estate agents - will give customers the option to pay for a HIP once the house is completed rather than having to fork out for it upfront. But, like any other form of credit, this approach will cost you more. Easier2move, for example, charges £299 plus VAT for payment upfront, but £349 plus VAT for payment on completion.
7. Are there extra costs?
All optional documents will be charged for separately. The HCR, for example, costs an additional £200 to £250. Leasehold properties are also likely to incur an extra fixed charge of around £25 to £50.
8. Should I use a pack provider that is a member of AHIPP?
The purpose of the Association of Home Information Pack Providers (AHIPP) is to set minimum standards, and ensure regulation and redress for home vendors who obtain their HIPs through a registered member. The code is voluntary, but 90% of the pack-providing industry has subscribed. A list of members can be found at www.propertycodes.org.uk or
9. How do i complain about my HIP?
If you have a complaint about your pack provider, the Domestic Energy Assessor (that carries out EPCs), the Home Inspector (that carries out HCRs), or any of the documents in the pack, contact your pack provider. If the matter is not resolved or you're still unhappy, contact the Property Codes Compliance Board (PCCB) at www.propertycodes.org.uk or 020 7917 1817.
10. Are HIPs working?
This is the million-dollar question. When HIPs were first introduced, the National Association of Estate Agents (NAEA) said that 63% of its members had reported a fall in the number of large properties on their books. It found that homeowners were "staying out of the market to avoid HIPs".
These findings are supported by a more recent web poll conducted by www.iammoving.com. It found that HIPs prevent 15% of people from moving and cause 22% to "think twice about it". And while over a quarter of the British public (27%) said HIPs were "not an issue", 36% were not even aware they needed one.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.
The right to hold or use assets (generally property, but also vehicles) for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. Leasehold ownership of a residential property is simply a long tenancy, the right to occupation and use of the flat for a specified period – the ‘term’ of the lease, which is fixed at the beginning and so decreases in length year by year and the property can be bought and sold during that term. When new, leases are for 99 or 125 years until its eventual expiry, whereupon ownership of the property reverts to the landlord.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.