Getting back to the basics of HIPs

When I was asked to write a weekly column for Mortgage Strategy on Home Information Packs, the brief for the first couple of articles was clear - explain what HIPs are and why they are being introduced.

HIPs are part of the government’s reforms of how houses are bought and sold in England and Wales. They are not being introduced in Scotland where a single survey initiative is being developed, nor in Northern Ireland.

It will be compulsory for sellers to make packs available to prospective purchasers before houses go on the market. There are a few exceptions: non-residential property, mixed commercial and residential property, tenanted properties and houses where the lease has less than 21 years to run.

HIPs will provide home buyers with a summary of the terms of sale, evidence of title, replies to standard preliminary enquiries made on behalf of buyers, copies of planning, listed building and building regulations consents and approvals. For new properties, copies of warranties and guarantees, any guarantees for work carried out on the property, replies to local searches and a Home Condition Report based on a professional survey including an energy efficiency assessment.

Also, for leasehold properties there will be a copy of the lease, most recent service charge accounts and receipts, building insurance policy details and payment receipts, regulations made by the landlord or management company and memoranda and articles of the landlord or management company.

One of the core documents is the Home Condition Report, which will not contain everything lenders currently get from mortgage valuation reports such as the actual value of the property. Neither will it provide buyers with the depth of information of a full structural survey.

HCRs will be produced by approved home condition inspectors drawn from the ranks of surveyors, planning inspectors and others who train for the role. The Office of the Deputy Prime Minister has estimated that 7,500 inspectors will be required.

In summary, a HIP is simply a bundle of information about a property which must be made available to prospective buyers before a property is put up for sale. At the concept level, HIPS are not at all complicated.

n What do you think about HIPs? Email your views to mortgage.strategy@centaur.co.uk