Home Information Packs (HIPs) - Sellers/Buyers & Home Information Packs

"Is this yet another bureaucratic imposition from a Nanny State that means I have to fork out somewhere in the region of £250-£1000 to simply market my house?"

Well….er….Yes, although the Government has recently ‘watered down’ the HIP by making the Home Condition Report (Survey) voluntary.

We’ll try to set out the positive aspects to this that could actually save you money overall.

1. How many of us have been through the following nightmare:-

We’ve agreed the sale on own house, found the house we want, paid our mortgage application fee, mortgage valuation fee, paid for a Homebuyers Report and Valuation and paid our solicitor to prepare contracts ready to exchange (say £800)

...then...

the 183rd person in the chain gets a last minute survey saying the house they’re buying is sitting on a mine shaft, structurally unstable and painted a nasty shade of purple in the bathroom which has completely put them off.

THE DEAL IS OFF and everyone in that chain is back to square one minus the money they have already spent.

The estate agents call this ‘fall through’ and the rate of fall through in a traditionally operated agency system is around 30%, which we certainly think is pretty awful.

The trial of the new system, with the legal enquiries and Home Condition Report provided to purchasers up front, reduces the fall through rate to around 8%.

That means that the chance you sell your own house and buy the house you want goes up from 70% to 92%. That sounds a whole heap less stressful for everyone concerned.

Another favourite with some purchasers at the point of exchange.....'We've just spoken to our surveyor who says she's seen better properties on 'Homes from Hell' and we're reducing our offer by 10%'

Absolutely guaranteed to notch up the blood pressure gauge, but not so easy to do, if the purchaser has had the Home Condition Report from day one and any remedial works have been properly costed and reflected in the agreed purchase price.

A recent study of the American residential market has shown that a savvy 10% of sellers are commissioning Home Condition Reports voluntarily because they’ve discovered that fixing any problems is usually much cheaper than negotiating a price reduction.

Under the new rules, you now have the choice whether to include a Home Condition Report or not, but a Home Inspector or Domestic Energy Assessor will still need to visit your home to compile an Energy Performance Certificate.

The difference in cost between a HIP with and without the Home Condition Report is likely to be an average of £200-£300.

From what we’ve outlined above, we feel the advantages of a HIP including a Home Condition Report are clear.

2. OK you’ve paid out to have a Home Information Pack, but now you’ve found the house of your dreams, there is the Home Information Pack sitting at the estate agents office waiting for you with open arms and available to view at no cost.

When you’ve read the Home Information Pack and decide to proceed to purchase, the ownership of the Pack transfers to you and you are entitled to rely on the contents of the Home Information Pack.

This means that if there are any errors or omissions in the legal enquiries then insurance will be in place to provide compensation.

The Home Condition Report may or may not be included in the HIP for the property you want to buy.

If it’s not included, you can either make an offer subject to the vendor providing the Home Condition Report or commission your own report and reflect this in your offer.

Frankly, its not as good a system as knowing that a Home Condition Report is always going to be available, but thats Government for you!


3. Market competition is likely to mean that the fees for the Home Information Pack are deferred until completion of the sale in a similar way that Estate Agency fees are at present.

The Home Information Pack fee is therefore likely to be deducted from the sale proceeds and effectively then rolled up with your new mortgage.

The Consumer Association has supported the proposed changes from the start, citing informed consumer choice, improved transparency and reduced stress as the main benefits. However, support has now been withdrawn from the revised scheme that makes the Home Condition Report voluntary.

The Consumer Association is also unhappy with the lack of regulation that applies to Estate Agents which is also being addressed by the Government under the Housing Act. See their Which Magazine Move It campaign

Its also worth pointing out that we are not the first to dip our toe into this particular pool. Denmark and the Aussies of New South Wales seem to have systems that work well and have general consumer approval.

There have been encouraging opinion polls by Which and N.O.P which suggests around 80% approval for the changes.

In the spirit of objective reporting and for those still ‘anti’ take a look a the SPLINTA campaign site for details of the opposing arguments.

If, however, you’re feeling in a pioneering mood and think a Home Information Pack may help you sell your house, fill out our Online Quotation form and we'll get straight back to you.