Home Information Packs (HIPs) – Press release from SPLINTA
From what I am hearing there is some confusion over the current state of play with HIPs and so I thought it would be useful for everyone if I summarise the position.
What is the law?
As the law currently stands, in June 2007 the mandatory HIP will come into force. It will contain the Energy Performance Certificate (EPC), with an energy rating designation (graded A-G) plus legal documentation including basic Searches, replies to preliminary enquiries, copy of the lease, service charge accounts, etc. The Home Condition Report will be a voluntary document, included if the client asks for it – and is presumably willing to accept liability for the cost.
Anyone can produce the legal documentation part of the pack but the EPC will have to be done by a qualified, accredited and insured person. Currently that will mean someone who is a Home Inspector (also qualified to produce the HCR) but in the coming months there will be a means of qualifying as a standalone Energy Performance Inspector (or similar title). This may well appeal to estate agents who wish to offer the EPC as part of their service.
Marketing, or any intimation to a potential buyer that a property is about to come up for sale, is not allowed unless the HIP is in place but if any required document for the HIP cannot be obtained within 14 days the marketing may commence, provided that a note of the missing document is in the pack and that efforts to get it continue. Clearly leasehold properties will be at a disadvantage as we wait for managing agents to respond with service charge information.
How should your firm proceed?
Firms have three main options. Do the work ‘in-house’; form alliances with local solicitor/conveyancers and surveyors/home inspectors; contract out all the work to a pack provider. It seems likely that the second and third options will be most widespread.
There are at least 140 firms acting as pack providers but there are already signs that this number will reduce over time via consolidation and merger. Some will provide ‘white label’ packs which can be branded with your own corporate identity. It remains our advice that no firm should sign up with any pack provider until much nearer June, when we shall have seen what other amendments are made to HIPs by government.
In the meantime there is no contradiction to your anti-HIPs stance in assessing a variety of pack providers, nor in sending staff on HIP handling courses (run by the NAEA).
What you should be thinking about is how the pack will be funded. Will you absorb the cost (likely to be in the order of £500 – £750 on average, without an HCR)? Will you have a pack provider contract directly with your client? Will you bear the cost and charge the client at completion? Be aware that there are implications regarding FSA rules if you start getting involved in credit agreements. Do you want to ‘own’ the pack to preserve a sole agency? There’s no right or wrong answer to these questions and in most cases the answer lies in commercial common-sense and what your competitors do.
What may change before June 2007?
A number of leading stakeholder groups are now openly saying that the ‘Half-HIP’ is not worth having and that government should go back to the drawing board. Whatever government may say publicly there is no doubt that they are under pressure over HIPs. It is now all about ‘green issues’ and very little to do with real improvement to the home buying process. A large question mark hangs over just how many Home Inspectors are really in the process of qualifying. The latest figure says 470 are qualified (but not yet accredited) but no-one seems to know how many of the alleged 4,000 registered to train are actually pursuing the courses. If there is a shortfall next June the launch will be delayed.
The AHIPP trials (which the government are supporting with £4 million pounds of our money) are really a gradual roll-out of HIPs to avoid a Big Bang in June 2007. When I asked AHIPP last week for the criteria that are being measured in the trials, they were unable to give any information. The media are alert to this and are generally highly sceptical of them. Few believe that a commercial organisation representing pack providers can deliver an objective study of the pack. The assurances that the results (what results, if they don’t know what they are measuring?!) will be ‘independently assessed’ gives no comfort.
SPLINTA is pressing government to make the EPC a voluntary document during marketing, becoming mandatory at exchange of contracts. There must be no impediment to First Day Marketing, which may mean that an agent could comply with the law by receiving an electronic certificate from a solicitor/conveyancer or pack provider to prove that a HIP has been commissioned.
These changes will happen if we apply the right pressure in the right places – and you can be certain that we are be doing just that.
I hope these notes are of help but please contact me if you need further information.
Nick Salmon FNAEA