Home information pack, HIP, EPC, DEA, Pack Providers

Home Information Packs

EcoHomes DES will provide you with your HIP, Prices start at £299.00 + VAT for freehold properties. Contact our HIP co-coordinator call 01723512867 or e-mail ecohomes@talktalk.net

Home Information Packs (HIPs) have gone live and will apply from today to homes marketed with 4 or more bedrooms in England & Wales.

A key component of the HIP is the Energy Performance Certificate (EPC). The EPC will rate the home’s energy efficiency, using graphs like those on fridges and washing machines. It includes recommendations on how to cut fuel bills and reduce carbon emissions, encouraging people to make improvements to the energy efficiency of their homes.

Today, Communities and Local Government issued a press release on the Introduction of HIPs and the benefits of the Energy Performance Certificate:

What is a Home information pack?

The government has ignored the deafening calls to postpone the introduction of Home information Packs (HIPs), and is pushing ahead with a public awareness campaign in anticipation of the June 1st HIPs launch date.

So, what's involved, how is it likely to affect home-movers over the next few months, and what are the long-term implications for the housing market?

Rush to beat the deadline?

Despite government hopes that HIPs will improve our buying and selling experience, estate agents are expecting a rush of instructions in advance of August the 1st from homeowners wanting to avoid the cost and hassle.

The estate agent has predicted a 20 per cent increase in properties entering the market in the run-up to the compulsory roll out of HIPs, with property prices increasing by three per cent by the summer months.

The government is not the only one trying to raise awareness. Estate agents are paying for advertisements to entice us to go on the market now to avoid paying for the "complex" and "expensive" packs.

As they are keen to point out, anyone putting their property on the market between now and June will benefit from a HIP amnesty that lasts until the 31st December.

HIP Lite

But surely both the industry and the public should be welcoming an innovation that promised to speed up the process and prevent sales falling through?

Sadly, no. The HIP has now been so slimmed down that it is positively anorexic, and, apart from those with vested interests, it can name few friends.

Even Which?, the consumer group that had long championed the HIP, withdrew its support when the Home Condition Report segment was dropped last year, calling the resulting pack a ‘half-baked compromise’.

So, what remains in the new HIP?

What’s in?

• An index of contents
• A sale statement
• Evidence of title (for registered properties)
• An Energy Performance Certificate (EPC)
• Searches and leasehold/commonhold documents (or proof that these have been commissioned).

What’s Out (or, to be more accurate, now optional)?

• The Home Condition Report (HCR)
• Information on flood risk and ground stability
• Guarantees and warranties

Why the fuss?

By now some 8,000 people have signed a Downing Street petition voicing concerns over the HIP.

The main bone of contention has been the abandonment of the Home Condition Report (HCR). This happened largely because the government was unable to train enough Home Inspectors in time.

The very delays and failures that the government wants to save us from are, in the main, caused by nasty surprises within the fabric of the property, problems that the HCR would have pre-empted.

So, making the HCR optional has been seen by many as leaving the HIP not worth the paper it's printed on.

Although there are many within the industry who were disappointed at the disappearing HCR, there can be none more dismayed than the estimated 4,000 men and women who paid £10,000 to train as Home Condition Inspectors.

Of course, the HCR has not been dropped entirely, it is now officially optional. But there can’t be many sellers who will pay £300 to £500 for a report cataloguing the defects in the home they are trying to sell.

As Nigel Ewart Evans, Chief Executive of the Society for Licensed Conveyancers, puts it: "Turkeys and Christmas come to mind."

Estate agents up in arms

But there are many other aspects of the slimmed down HIP that are causing upset. The National Association of Estate Agents (NAEA) is concerned that the HIP is fundamentally flawed for several reasons.

1. Paying up to £500 upfront will prevent sellers ‘testing the water’, and will reduce the supply of houses on the market. This will make the market slow down and cause even more house price inflation.

2. Sellers will not be allowed to put their property on the market until certain elements of the HIP are completed, or until 14 days have passed, which will delay the process of finding a buyer and disadvantage the consumer.

3. The HIP is not required to contain a legal summary to explain the legal documents to the buyer.

4. There is little evidence that sales fall through because of legal, title or search problems, so there is no need to have this information before a sale is agreed.

5. The government’s area trials will still be underway when HIPs are launched.

6. Aside from the energy certificate, HIPs are unlikely to benefit buyers.

Another concern is that HIPs could disadvantage the less well off. Unlike many other moving expenses, the price of the HIP could remain constant regardless of the value of the house, so for those selling cheaper properties it might represent a bigger chunk of their costs.

And, for those selling leasehold properties, the extra paperwork required, and the difficulty in getting information from management companies, could push the cost of the HIP up to an estimated £1,000.

How green is your house?

Much as our white goods are labeled in terms of energy efficiency, the new EPC will rate our homes with an energy performance rate of A to G. The idea, according to the government, is to make us all more energy aware and show us how we can reduce our carbon footprint.

Research carried out by the Association for Home Information Pack Providers (AHIPP) suggests that if just ten per cent of consumers followed the advice contained in their packs it would reduce carbon emissions by more than 26,000 tonnes a month.

But, in order to rate our homes, we must undergo a detailed survey before we begin marketing the property.

And, despite government claims that they expect to have up to 3,000 Domestic Energy Assessors ready to start work by June, the industry is nervous of a shortfall, and the repercussions for consumers.

Will the EPC impact on prices?

So, if your home has leaky windows, a wheezing boiler and no loft insulation, can you expect potential buyers to be put off, or ask for a discount? Eighty-two per cent of home movers polled by Primemove.com said that they would disregard the findings of the EPC.

But Hugh Dunsmore-Hardy, a non-executive director at Winkworth, one of the chains who have been trialling HIPs in advance of the launch, believes that people will slowly become more aware of the advantages of a greener house.

"People aren’t going to change their buying habits overnight - the heart rules the head. But if you have two similar properties and one has a higher rating than the other, it may have an effect in terms of a decision.

"It will help first-time buyers enormously, especially if interest rates go up." As for becoming a negotiating point, Dunsmore-Hardy says that it depends on the market within which buyers are operating, but it could make a difference. "Buyers like to use anything they can."

Others are not so convinced, pointing out that buyers can already ask to see past heating bills. Trevor Kent , a former head of the NAEA, and vocal opponent of the HIPs simply calls the EPC a greenwash.

D-Day: Disaster or delight?

So, what should we expect to happen in June? Well, it depends on who you ask. Trevor Kent says: "The public is going to be enormously inconvenienced and shocked.

"You’re walking through a high street and you see a house you fancy, so you try to put your house on the market to see if you can buy it, but now it’s illegal for up to 14 days, and the estate agent is fined if you do.

"But, more importantly, if during the 14 days someone else has grabbed the one you’ve fallen in love with you’ve lost the £500 you’ve paid for your HIP too."

And Kent believes that business will become too tough for independent estate agents: "Estate agencies will be taken over by a dozen firms; it will become a closed shop. And we’ll see fees of six per cent, like in the US."

But Hugh Dunsmore-Hardy is not so pessimistic: "I think it’s being overblown. Most of the HIPs package is already there, but the information will be commissioned at a far earlier stage.

"I believe that the information that will be there will assist in taking some of the delays out. Plus the consumer will save money on heating and fuel costs. If you go back to the 80s there were reports by the industry recommending these changes themselves. June 1st is only a catalyst in an evolutionary process."

Mike Ockenden, Director General, Association of Home Information Pack Providers (AHIPP), also thinks the market will adjust quite quickly and insists that the cost of HIPs will not deter buyers:

"Any market impact due to the introduction of HIPs is likely to be minimal and short lived. There is general agreement across the industry that there may be a slight increase in listings in May this year as estate agents encourage homeowners to list their properties before they are required to have a HIP from the 1st June.

"This may generate a small overhang of property listings, although this is unlikely to be substantial due to the fall in properties coming on to market at the present time.

"The suggestion that HIPs will deter sellers from entering the market because of cost was deemed as 'frankly absurd' by consumers in research by the government in January.

"The overall cost of a single transaction today runs to over £5,500, and a HIP with an EPC will increase this by less than £200. In fact, overall there is likely to be no cost increase to the homeowner as HIPs will help to drive out the cost of failed transactions from the market."

Who's right? We shall have to wait and see - but if you have a view on this, please use the feedback box below.

HIPs: The Facts

• From Aug 1st all properties for sale must have a HIP, or have been in the process of gathering the information for at least 14 days.

• The responsibility for acquiring the HIP rests with the person marketing the property, normally the estate agent, who can be fined if they market without one.

• If you are selling your own home without a HIP you can be fined £200 a day by Trading Standards. It is not, however, a criminal offence.

• HIPs are likely to cost between £300 and £500, for a freehold property, and up to £1000 for a leasehold. It may be worth shopping around for a good deal.

• You can save money and compile your own HIP, even if you are using an estate agent.

• Properties already on the market before June 1st will not need a HIP unless still being marketed on 31st December.

• If a property is marketed continuously, there’s no legal requirement for the HIP to be updated within a specific time. It’s up to the buyer to decide if it is still valid. It is expected that HIP providers will update at a reduced cost.

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