Mortgages. Big Changes In The Buying And Selling Of Houses

On June 1, 2007, new legislation requires all home sellers to prepare a Home Information Pack (HIP) before listing their property. Failure to do so could result in a £200 fine, and estate agents will likely insist on having the Pack ready before marketing your home. Buyers' solicitors will also require the Pack before proceeding.

Contents of the Home Information Pack

The HIP must include:

• Search results from H.M. Land Registry

• Replies to initial enquiries from the buyer's solicitor

• Copies of planning, listed building, and building regulations consents or approvals

• For new properties, building warranties, electrical test certificates, and other warranties or guarantees

• A draft sale contract

• A Home Condition Report (a mid-level survey) detailing the property's condition, energy efficiency, room count, and parking arrangements

• Replies to local authority searches

For leasehold properties, include:

• A copy of the lease

• Recent service charge accounts and receipts

• Building insurance details and receipts

• Management company or landlord regulations

Costs and Implications

The Government estimates the HIP will cost around £825, including VAT. This cost is not seen as additional since the responsibility for obtaining searches and reports shifts from the buyer to the seller. Although some sellers might face upfront costs, many costs could balance out as most sellers are also buyers.

Concerns include potential creative pricing by estate agents and the possible impact on the property market, with some predicting fewer properties coming to market. The Government hopes HIPs will reduce the number of failed transactions, currently costing around £350 million annually.

The National Association of Estate Agents and other commentators are sceptical, suggesting that HIPs might simply shift problems rather than resolve them. However, having issues identified early in the selling process is generally seen as beneficial.

The success of the new system will depend on effective implementation and the availability of trained inspectors for Home Condition Reports.