Some Home Information Pack
Myths Exploded
Q: A seller can market their property indefinitely without a HIP, if it was already on the market before 1 June 2007.
A: No - this is not true - the regulations laid on 14 June state that all homes for sale will need to have a Home Information Pack by 1 November 2007 - irrespective of whether they put it on the market before or after 1 June 2007.
Q: Sellers can market a property for up to 14 days even if they don't have a HIP?
A: No - sellers must have a complete Pack at time of marketing - unless a certain document cannot be obtained in time, in which case they may market the property with an incomplete Pack 14 days after the request for the document in question, so long as they can demonstrate they have made reasonable efforts to obtain the document. The seller will need to add the document to the Pack as soon as it becomes available.
Q: Is it true that the Packs will cost up to £1,000 for a detached house and £800 for a semi-detached property?
A: Estimates based on the current costs of the components of Home Information Packs suggests an average cost of around £600 - 700 plus VAT to compile. Most of this cost is not new and is being met at present by both buyers and sellers. Some organisations have said they would offer the Packs at reduced cost or even for free - market forces will apply.
Q: If the home is off the market for more than 28 days, sellers will have to pay for a second Pack or update the original one?
A: No - if you take your property off because you're negotiating a sale and that falls through then you'll have 28 days AFTER THE SALE FALLS THROUGH to put it back on the market and the whole HIP will still be valid.
If you take property off market for longer than 28 days for any other reason you will need to check that certain elements on the Pack, such as the Home Condition Report, the searches and the land registry documents, are no more than 3 months old.
Q: Packs will only have a shelf life of six months, after which the whole process must be begun again. Mortgage lenders say the Home Condition Report will have to be renewed every three months?
A: There is no shelf-life for the Packs. Certain documents, such as the Home Condition Report and searches, must be no more than three months old when marketing begins.
Q: Buyers will not trust the survey
A: The Home Condition Report has been designed to be objective – Home Inspectors will work to high standards specified by Government. Buyers (as well as sellers and lenders) are able to legally rely on it – this is specified in the Regulations.
Q: Packs will not contain information on flood risk, natural subsidence, radon gas, land contamination, rights of access, or telecommunication links.
A: It is important to strike a reasonable balance between comprehensive Packs, and the cost of providing this information. Requiring everything would just heap unnecessary extra costs on the majority of sellers. The Regulations authorise the inclusion of information on potential hazards like contamination and flooding, and it is strongly encouraged that these are included where relevant.
There are a very small percentage of properties in England and Wales that are at risk of flooding, so it would be unfair to expect everyone who is selling their homes to provide a flood risk report. However, the Home Condition Report will provide information on the risk of flooding if there is visual evidence of flooding or a reason to believe it is a risk. During the dry run we will be monitoring the number of flood risk reports undertaken by sellers and provided to buyers.
In respect of subsidence, there is no search currently available on the market which offers definitive property-specific information - but Industry are developing a new search and when this becomes available we will seriously consider making it a requirement for the Home Information Pack.
Q: There will not be enough Home Inspectors qualified in time to carry out all the necessary Home Condition Reports. 7,000 inspectors needed for introduction, but only 196 so far approved for the task
A: Between 5,000 and 7,400 Home Inspectors will be needed by 1 June 2007. Currently 4,400 Home Inspectors are training for the Home Inspector qualification and we expect this figure to rise significantly as jobs become available to them during the Dry-run and as we head towards implementation.
Q: The Home Condition Report (HCR) will only replace a valuation in about half of cases. If the loan-to-value ratio exceeds 80 per cent, a separate valuation is still likely to be required. That would mean most first-time buyers still having to pay for valuations.
A: There will be cases where a mortgage valuation is still required. However, we expect that the HCR, which gives lenders more comprehensive information than their current valuation inspections, will increasingly be used to provide these valuations through methods other than a physical inspection. This will help lenders to reduce costs to consumers and first time buyers will still get the rest of the information for free.
Q: Packs will destabilise the housing market, as sellers rush to put their homes on the market before next June, with a dramatic fall off afterwards.
A: Home Information Packs will make the market more efficient and certain. They will make home buying more affordable and sustainable for first time buyers, who will receive full details about the property at no cost to them.
Major players are now investing heavily in Home Information Pack systems and intend to market these well in advance of Packs becoming mandatory. This means sellers and buyers will not have to wait until June 2007 before they can benefit from Packs.
Q: Why did Government slip out the details about the Regulations?
A: The Government laid the Regulations in Parliament on 14 June 2006. This included providing a written statement to the House of Commons. This was followed by a news release and the publication of the Regulations on the DCLG website and the dedicated Government's Home Information Pack website www.homeinformationpacks.gov.uk.
Information courtesy of the Department for Communities and Local Government
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