Home Information Packs

The Government is set to introduce home information packs - handy bundles of information intended to make buying a house a swifter and more transparent process. It also hopes to reduce costs incurred by prospective buyers and cut down on the number of sales that fall through.

Downing Street estimates that nearly a third of sales collapse before completion because buyers, after having their offers accepted, discover off-putting facts about the properties they wanted to buy.

Home Information Packs (HIPs) will be compiled by a property’s owners (or their estate agent) and be made available to potential buyers to peruse before they make an offer.

This will come as good news to people who have been gazumped: made an offer on a house and begun the process of surveys only for the seller to accept a higher offer from a third party. HIPs will speed up the sales process, giving far less time for gazumpers to raise their heads.

HIPs’ documents will include the house’s title deeds, results of local authority searches, a report based on a professional structural survey, guarantees for new boilers, new double glazing and such like, and copies of any planning and building regulations.

Packs for leasehold properties will also include a copy of the lease and the building property insurance details.

The packs will be required by law, and a property won’t be able to go on to the market until the owners can prove they have compiled all the necessary facts and figures.

Much of the information involved in the sale of a house must currently be compiled at the prospective buyer’s expense – and only after having an offer accepted. HIPs will see the costs foisted upon the seller.

The Government estimates that the pack will cost around £600 to complete (though in London it will be a little more), with just under half of the amount going towards home condition reports, about £200 paying for local authority searches and the rest being spent on legal fees.

HIPs will be trialled from mid-2006 (when packs will be optional) in preparation for a full launch in 2007, by which time 7,000 to 10,000 new ‘home inspectors’ will have been trained to carry out the necessary property condition surveys.

However, even consumers’ groups, which have broadly welcomed the introduction of HIPs, have expressed their reservations over whether enough inspectors will be prepared in time.

There is also concern over the possible avalanche of work that the inspectors will be forced to carry out. About 80% of homebuyers currently don’t bother with their own home surveys and prefer to rely on their mortgage lender’s valuation. Making such surveys compulsory will mean around an extra 1.5 million will need to be carried out each year.

Inspectors (men and women recruited from the chartered surveying sector) may also be refused professional indemnity cover by insurance companies, it is feared, meaning it will be difficult to sue negligent inspectors.

Solicitors and lawyers have also been sceptical about HIPs, claiming that the packs add to, not reduce, the red tape and costs involved in a property sale – which may lead to negative effects on house prices.

Finally, some critics of HIPs believe the packs could cost as much as £1,000, and have pointed out that prospective buyers will be forced to rely on information paid for and compiled on behalf of sellers, who will of course have their own interests at heart.