Home information pack
Encyclopedia
Under Part 5 of the Housing Act 2004
Housing Act 2004
The Housing Act 2004 is an Act of the Parliament of the United Kingdom. It introduces Home Information Packs, which came into force for homes of four or more bedrooms on 1 August 2007. It also significantly extends the regulation of houses in multiple occupation by requiring HMOs to be licensed...

 a Home Information Pack (HIP), sometimes called a Seller's Pack, was to be provided before a property in England and Wales
England and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...

 could be put on the open market for sale with vacant possession. There is separate legislation for Scotland that requires anyone selling a property to provide a Home Report. The pack was a set of documents about the property: an Energy Performance Certificate
Energy Performance Certificate
Energy Performance Certificates were introduced in England and Wales on 1 August 2007 as part of Home Information Packs for domestic properties with four or more bedrooms . When the requirement for HIPs was removed in May 2010, the requirement for EPCs continued. The scheme for HIPs was extended...

, local authority searches, title documents, guarantees, etc. The introduction of HIPs was subject to delays and reduced requirements, but they became mandatory for homes with four or more bedrooms on 1 August 2007 and were extended to three-bedroomed properties from 10 September 2007. Since 6 April 2009 all newly commissioned HIPs must contain a Property Information Questionnaire
Property Information Questionnaire
The Property Information Questionnaire is a document completed by the seller containing details of utilities and services to the property, access arrangements, council tax bands, changes to the property parking arrangements, damage to the property and leasehold information...

 (PIQ).

The Government had suggested that Home Information Packs would lead to a reduction in the number of abortive sales as their justification for introducing the scheme, reducing gazumping
Gazumping
Gazumping is a term used in the UK and Australia when a seller accepts a verbal offer of the asking price from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price at the last minute, after previously verbally agreeing to...

 and gazundering
Gazundering
Gazundering is the practice of demanding a reduction in price to secure the sale of a property. This is usually done during contract negotiation...

. They were introduced despite very strong opposition from some factions in the building industry (although very many were in favours of them) and estate agent
Estate agent
An estate agent is a person or business that arranges the selling, renting or management of properties, and other buildings, in the United Kingdom and Ireland. An agent that specialises in renting is often called a letting or management agent...

s, as well as some chartered surveyors. There were claims that the packs contributed to the 2007-09 housing crisis by deterring vendors from marketing their houses due to the extra costs involved in the survey.

Requirement for the Home Information Pack for property sales was suspended with effect from 21 May 2010 by the incoming government. An exception is that the Energy Performance Certificate is still required. The Localism Act 2011 will formally repeal the Home Information Pack legislation on 15 January 2012.

History

As the idea of the Home Information Pack developed over time, so did the reasons for its introduction. A proposal to address the problem of gazumping
Gazumping
Gazumping is a term used in the UK and Australia when a seller accepts a verbal offer of the asking price from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price at the last minute, after previously verbally agreeing to...

 was first made in the 1997 Labour Party
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...

 manifesto
Manifesto
A manifesto is a public declaration of principles and intentions, often political in nature. Manifestos relating to religious belief are generally referred to as creeds. Manifestos may also be life stance-related.-Etymology:...

. Research after the election revealed that around 28% of sales fell before exchange of contracts, with gazumping occurring in fewer than 2% of sales. The emphasis subsequently moved to the benefits of increased speed, transparency and consumer friendliness. The idea was based on similar practice used in Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...

.

Home Information Packs were announced in the Queen's Speech
Speech from the Throne
A speech from the throne is an event in certain monarchies in which the reigning sovereign reads a prepared speech to a complete session of parliament, outlining the government's agenda for the coming session...

 in November 2003.

In March 2006 the government gave the go-ahead for multiple certification schemes. By this stage a number of organisations had expressed an interest in running certification schemes and over 3,000 people were already going through training for the home inspector qualification. In June 2006 draft regulations were made setting out the detailed contents of Home Information Packs, rules governing the availability of packs, exceptions from the pack duties and arrangements for enforcement.

In September 2006 the government approved the first Certification Schemes to oversee the work of Home Inspectors. The schemes were set up and run by industry; Government set the standards that the schemes operated. In September the Home Condition Report Register contract was agreed. A fully operational register was scheduled to follow as soon as possible afterwards.

In June 2007 the government announced they would fund or subsidise 5000 HIPs by £100 prior to the official launch date of 1 August 2007.

Originally the HIP was going to be required from 1 June 2007. However, just ten days before that date, Communities Secretary Ruth Kelly
Ruth Kelly
Ruth Maria Kelly is a British Labour Party politician of Irish descent who was the Member of Parliament for Bolton West from 1997 until she stood down in 2010...

 announced that they would be phased in from August 2007, and initially only for larger properties. Between 1 August and 10 September only homes marketed with four or more bedrooms were legally required to have an HIP. This was extended to cover homes with three or more bedrooms from 10 September.

On 22 November 2007 Housing Minister Yvette Cooper announced that HIPs would be rolled out to include one and two bedroom properties as of 14 December completing the Government's phased introduction of Home Information Packs to residential homes marketed for sale within England and Wales.

First Day Marketing (FDM) is a term used to denote the mandatory requirement to make available all of the documents required within a HIP on the first day a home is marketed to the public. Initially, the date was set for the requirement to commence on 31 December 2007 but was delayed until 1 June 2008 to allow a period of transition. A home was able to be marketed during that time providing a commitment to pay for a HIP - including the EPC - was made and the necessary documents had a reasonable expectation of being made available within 28 days.

However, on 8 May 2008 the Housing Minister, announced a further delay to first day marketing until 31 December 2008.

Since 6 April 2009 all properties required a Home Information Pack before it may be marketed, the full HIP is now no longer required only the Energy Performance Certificate.

Contents

The pack had to contain the following, and should be no more than three months old when the property is first marketed:
  • Index
  • Energy Performance Certificate
    Energy Performance Certificate
    Energy Performance Certificates were introduced in England and Wales on 1 August 2007 as part of Home Information Packs for domestic properties with four or more bedrooms . When the requirement for HIPs was removed in May 2010, the requirement for EPCs continued. The scheme for HIPs was extended...

  • Sale Statement
  • Property Information Questionnaire
  • Title documents
    Deed
    A deed is any legal instrument in writing which passes, or affirms or confirms something which passes, an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions sealed...

     for the property
  • Local Authority and drainage searches


If the property was leasehold or commonhold
Commonhold
Commonhold is a system of property ownership in England and Wales. It involves the indefinite freehold tenure of part of a multi-occupancy building with shared ownership of and responsibility for common areas and services. It has features of the strata title and the condominium systems, which...

, then the pack also had to include the following:
  • Copy of the lease
  • Building insurance policy
  • Contact details for the landlord or management and any legal details
  • Regulations that apply
  • Recent service charge receipts and accounts


For a transitional period sellers were able to market their homes without the searches or leasehold documents as long as the pack contained evidence that they had been commissioned and would be included as soon as practicable but certainly within 28 days. However the Government announced in December 2008 that with effect from 6 April 2009 this concession was to be withdrawn, and the HIPS pack would have to be completely available on the day that the property was first offered for sale.

The pack could also contain some or all of these authorised documents:
  • Home Condition Report
  • Two sellers questionnaire forms called Home Use Form and Home Contents Form
  • Legal summary
  • Other searches such as a mining search

Home Condition Report

It had been originally planned that the Home Information Pack would also include a Home Condition Report (HCR), detailing the general condition of the property in plain English
Plain English
Plain English is a generic term for communication styles that emphasise clarity, brevity and the avoidance of technical language – particularly in relation to official government communication, including laws.The intention is to write in a manner that is easily understood by the target...

. The intention was that these reports would make buyers aware of problems initially, thus avoiding shocks later in the process that may result in either delay while the price is renegotiated, or cancellation of the sale. Their mandatory inclusion was later postponed, with the government keen to avoid risks to consumers from delays and potential late changes to the implementation timetable.

When eventually introduced, Home Condition Reports were to be carried out by qualified Home Inspectors, and in particular it was feared by the industry that neither the certification schemes for the inspectors nor the database to hold their reports would be ready in time.

Mandatory introduction of home condition reports remained on the table, but the Government wanted more time to assess consumer demand and the results of further testing. They were to also be look at costs, the savings from avoiding waste and duplication, consumer attitudes to the Packs, failed transactions and transaction times, and people's willingness to sell with HIPs in place.

Energy Performance Certificate

Similar to EU appliance efficiency ratings
European Union energy label
EU Directive 92/75/EC established an energy consumption labeling scheme. The directive was implemented by several other directives thus most white goods, light bulb packaging and cars must have an EU Energy Label clearly displayed when offered for sale or rent...

, the energy performance ratings on the Energy Performance Certificate
Energy Performance Certificate
Energy Performance Certificates were introduced in England and Wales on 1 August 2007 as part of Home Information Packs for domestic properties with four or more bedrooms . When the requirement for HIPs was removed in May 2010, the requirement for EPCs continued. The scheme for HIPs was extended...

  provide prospective purchasers with an assessment of the property's energy consumption, together with a list of practical measures that can be taken to cut their fuel bills and carbon emissions.

An Energy Performance Certificate (EPC) in the UK needs to be completed by a government qualified Domestic Energy Assessor (DEA). DEAs offer advice on how to improve the energy performance of the dwelling which might save money. However, in practice, such documents only give general advice of little value to potential purchasers. They frequently exhibit errors since the survey is superficial and non-intrusive. They neglect older and listed buildings where planning consent is needed for structural changes to the property, such as installing double glazed windows for example.

The Energy Saving Trust
Energy Saving Trust
Energy Saving Trust is a non-profit organisation jointly funded by the British Government and the private sector in order to help fight climate change by promoting the sustainable use of energy, energy conservation and to cut carbon dioxide emissions in the United Kingdom.-Background:The Energy...

 hoped that by following the proposals in the energy performance certificate, the average home owner might save £300 a year on fuel bills. Government also hoped that the information could be used to support the growth of green mortgages and other incentives.

This part of the Home Information Pack was required in order to meet the requirements of the European Energy Performance of Buildings Directive.

However, the EPC has met with fierce opposition by the Royal Institute of Chartered Surveyors, which in May 2007 began court action against the Government to force a Judicial Review of the implementation, demanding it look again at the lifespan of an EPC in a HIP. The move prompted internal protest within RICS after a number of members petitioned the organisation to withdraw its legal action on the basis it had failed to consult members first.

Cost

Initially the cost of a Home Information Pack, including the Home Condition Report, was estimated to be around £600 by the Government. This was to include the cost of the postponed Home Condition Report, which was expected by the Department for Communities and Local Government
Department for Communities and Local Government
The Department for Communities and Local Government is the UK Government department for communities and local government in England. It was established in May 2006 and is the successor to the Office of the Deputy Prime Minister, established in 2001...

 to cost between £250 and £1000.. Industry subsequently expected the Home Information Pack (excluding the HCR) to cost between £300 - £600 for the vast majority of properties in England and Wales. Naturally, for larger or more complex properties, the costs could be significantly higher. Some estate agents are offering HIPs for free, however homeowners should be vigilant and only sign up to these after carefully considering the small print. The Law Society has recommended the use of independent HIP providers to avoid being tied in or triggering penalty clauses.

The Government pointed out, however, that most of the items in the pack already have to be provided during the sale process, so this is not all an additional cost. However the Council of Mortgage Lenders
Council of Mortgage Lenders
The Council of Mortgage Lenders is an industry body representing mortgage lenders in the United Kingdom.Its members consist of banks, building societies and specialist lenders and represent 98% of mortgage lending in the UK....

 reported that their members were planning to insist on a separate valuation in addition to the Home Condition Report, while those purchasers requiring a building survey would also have to pay extra.

Enforcement

Failure to provide a Home Information Pack, or supplying an incomplete pack carried a fine of £200 per day the property is marketed.

Enforcement was to be carried out by local authority Trading Standards Departments; however they claimed that this was inappropriate as they normally regulate businesses, and that it would cost them too much to enforce through the civil courts.

On 31 July 2007 the Office of Fair Trading
Office of Fair Trading
The Office of Fair Trading is a not-for-profit and non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator...

 advised estate agents on their obligations. From 1 August 2007 failure by an estate agents in England and Wales to comply with the new Home Information Packs regulations could result in a ban from estate agency work.

Controversy

On 15 May 2007 the Royal Institution of Chartered Surveyors
Royal Institution of Chartered Surveyors
The Royal Institution of Chartered Surveyors is an independent, representative professional body which regulates property professionals and surveyors in the United Kingdom and other sovereign nations....

 (RICS) started Judicial Review proceedings against the Department for Communities and Local Government for what they regarded as the department's failure to carry out a full consultation on HIPs.

Despite the above objections to the HIPs scheme, RICS were already providing courses on Home Inspection and Domestic Energy Assessment, as well as courseware manuals for the professions of Home Inspector & Domestic Energy Assessor.

There were fears that the up-front cost involved may put off some people from putting their house on the market, which may in turn depress the housing market.

The property industry has been largely against these changes. but the government says the new system will leave all homeowners better off.

The Council of Mortgage Lenders reported that their members were not persuaded that the perceived consumer benefits will be achieved. They believed that the forthcoming introduction of e-conveyancing would have a much more positive impact.

The National Association of Estate Agents
National Association of Estate Agents
The National Association of Estate Agents is a membership organisation for estate agents . It is based in and covers the UK.It was founded in 1962 by estate agent Raymond Andrews....

 held the view that the legislation was unnecessary, did not cover the important reasons why home sales and purchase transactions fall through, and that the cost was too high.
Britain's largest independent estate agency, Spicerhaart
Spicerhaart
Spicerhaart is an English estate agency and Financial Services group, based in Colchester, Essex, and operating throughout the United Kingdom.- Estate agency brands :Spicerhaart currently trade under the following brands:*Spicer McColl*Darlows...

, initially called for a boycott of the home information packs scheme, although then revised this position to one of full support.

In contrast, the introduction of HIPs was originally supported by Which?
Which?
Which? is a product-testing and consumer campaigning charity with a magazine, website and various other services run by Which? Ltd ....

, who believe that they could reduce the number of failed transactions resulting from problems that can be identified at an early stage. The organisation has since withdrawn its support following the Government's decision to postpone the introduction of Home Condition Reports.

The Conservative Party, when in Opposition, stated that they planned to scrap the legislation, calling it 'expensive and deficient red tape'. Indeed, Conservative opposition to HIPs was instrumental in a defeat in the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....

, where peers voted by 186 to 160 in favour of abandoning the packs. This brought them in conflict with the Association of Home Information Pack Providers' Mike Ockenden.

On 12 May 2010 the incoming Conservative – Liberal Democrat coalition government
Conservative – Liberal Democrat Coalition Agreement
The Conservative – Liberal Democrat Coalition Agreement was a policy document drawn up following the 2010 general election in the United Kingdom...

 announced an intention to scrap Home Information Packs. The requirement for property sellers to provide HIPs was suspended on 20 May.

External links

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