Home information packe - a gift or a burden?
We all know how stressful buying a house can be. It is a major step that most only take once, or maybe twice, in their lives. For first-time buyers, the situation can be exacerbated by not knowing to which estate agent to turn or worries over whether one can afford a mortgage.
Through the introduction of Home Information Packs, the UK government hopes to alleviate some of the above concerns. The pack must contain ownership, planning and environmental searches, a list of fixtures and fittings included in the price, and the terms of sale. Everything, in fact, that the buyer currently sets about getting after an offer is accepted. The pack must also include the property’s Energy Performance Certificate (EPC). What has been dropped, at least for now, is a compulsory Home Condition Report, although this can be added voluntarily. Buyers will still need a mortgage valuation.
Coming into effect from 1 June 2007, ’HIPs’ are designed to provide benefits not only to buyers, but also to estate agents. From the buyer’s perspective, HIPs will help them to better understand the product they are buying and better protect them - rather like the American model where home condition reports (known there as "material disclosure") have been law since the 1990s. Similarly, a HIP will help estate agents to more fully comprehend the product that they are selling. From a purely financial perspective, estate agents hope that HIPs will cut down on the number of sales that fall through at the eleventh hour when either a conveyancer or surveyor identifies a previously unnoticed problem.
As it is the seller who pays for the pack (which will cost them in the region of £700, depending on the size of the property), the introduction of HIPs is good news for first time buyers, and also a way of meeting the EU’s energy directive. Yet the scheme has drawn fierce criticism. The Chief Executive of the National Association of Estate Agents believes that the cost of providing an HIP would deter people from selling their property in the first place, thereby causing a slump in the housing market. Meanwhile, trading standards officers have claimed that the £200 fine that the government threatens to levy on any vendor who fails to provide an HIP could prove too expensive to pursue. But the main problem is whether or not there will be enough inspectors trained to carry out the reports by next June – fears that caused the government U-turn over mandatory home condition reports, previously regarded as an integral part of the HIP.
For now, Jersey has no plans to introduce such a scheme over here. With opinion so fiercely divided, it would be prudent to wait a couple of years to see how the UK deals with the inevitable teething problems. If the scheme is a success, and HIPs do indeed succeed in speeding up the time between offer and exchange of contracts, thereby significantly reducing the chance of someone coming along and offering more once an individual has already forked out a small fortune on searches and surveys, then the States would do well to consider introducing a similar pack over here. On the other hand, if HIPs end up causing a slump in the housing market or reducing the value of Britain’s housing stock, then we will have lost nothing. Let’s just wait and see.