Q&A: Home Information Packs
Updated on 22 May 2007
Heaping on the bureaucracy or providing greater transparency? Today the Lords decide.
What are Home Information Packs?
Home Information Packs, or HIPs, will make information about a property available to prospective buyers.
The packs will include an energy performance certificate; local authority searches; evidence of title; copies of planning; listed building and building regulation consents; warranties and guarantees; terms of sale; and a drainage and water search.
They're put together at the seller's expense. If you fail to provide a pack when selling your house after they become mandatory - from 1 June - you will be fined £200.
Why are they being introduced?
Those in favour of the packs believe HIPs will provide two key benefits: firstly they will reduce the number of transactions which fall through late in the day due to time wasting and the discovery of problems with properties at the survey stage.
Around 30 per cent of transactions collapse between offer and exchange - representing 500,000 failed sales every year. In all £350 million in fees is spent needlessly.
Secondly green groups such as Friends of the Earth, WWF and the Campaign to Protect Rural England, hope the 'green MOT' will encourage homeowners to cut their energy consumption and buyers to make greener decisions about purchases.
And, since energy performance certificates were first suggested 20 years ago and are already an EU requirement, this aspect of the packs is considered by supporters to be long overdue.
Those for the packs fear that a rejection of HIPs in the second chamber will adversely affect public opinion. Those against, however, would say public opinion is already not in favour.
Why are they being opposed?
Whilst those in opposition to the packs say they are not against the green goal, many have reservations about their implications for the housing market in general.
Over the last month there has been an increased amount of property on the market. This has been attributed to sellers rushing to offload property before they are forced to pay for HIPs in June.
As a result, rampant price increases seen over the last few years have slowed noticeably. The Tories believe that after 1 June the introduction of HIPs will lead to further destabilising of an already volatile housing market.
The projected cost is a drop in the ocean compared to the average price of a home in the UK.
Following this hypothesis, the Royal Institute of Chartered Surveyors fears the packs will prove off-putting to the 20 per cent of house sellers that are speculative and, in the process, promote rapidly inflating prices and a rise in gazumping as supply drops off and demand increases.
However, as supporters are quick to point out, the projected cost (probably about £400) is a drop in the ocean compared to the average price of a home in the UK. And some estate agents are making the move to shoulder or reduce the cost of the HIPs to keep speculative sellers interested. It will be a case of shopping around for the best deal.
Is it just about house prices?
There are other concerns besides upsetting the housing market: the Liberal Democrats doubt the energy inspections will be revealing enough and thus prove a waste of time; the Trading Standards Institute doubts there will be enough money in the pot to police the HIPs if the penalty is only £200; and many are concerned that not enough inspectors have been trained - although the government says the 2,500 inspectors needed will be ready and able by 1 June.
What happens if the Lords vote against the packs?
Opposition MPs earlier this month failed to sign up enough support in the Commons for a motion that would have seen current plans thrown out.
And now, even if the House of Lords votes against the HIPS today, ministers will still be able to bypass it.
However today it was announced that there will be a delay to the introduction of the packs. How long this delay will be is not yet known.
But the House of Lords is not the only hurdle HIPs need to clear; there is a legal challenge under way by the Royal Institution of Chartered Surveyors.
