Home Information Packs (HIPs) are changing and, with them, so could the housing market. From April 6, it will be compulsory to provide a HIP to buyers from the very first day of marketing a property. Although this sounds like a minor amendment to the current legislation at present, sellers must have commissioned a HIP, but can make it available up to 28 days after putting a property up for sale some estate agents worry that it may have a huge impact on housing supply.
The Government announced the new measure in December last year, because ‘it is essential that all buyers are able to see the HIP as early as possible to ensure they are benefiting from this important information,’ according to Housing Minister Margaret Beckett. Bringing forward the HIP requirement would not hinder transactions because estate agents would ‘still be able to advise potential clients about properties they expect to be coming onto the market’. But advising doesn’t include showing, so some agents believe the ‘first day of marketing’ rule could prove devastating.
The end of private sales?
‘In a recessive market, 25% to 30% of all transactions take place off-market,’ says David Adams of Chesterton Humberts. ‘The introduction of compulsory HIPs will essentially kill the off-market deals.’ At the moment, there are many vendors looking to sell quickly but quietly. With the new HIP requirement, neither is possible. ‘Normally, people looking for a discreet sale would call an agent in for a valuation,’ he explains. ‘The agent would then remember these properties and call prospective purchasers. But the HIP legislation will make these one-off viewings illegal.’
To comply with the law, sellers will have to have a HIP done before an agent can bring in a buyer. Even giving out details that may help identify a property can land agents in trouble, says Richard Gayner of Savills. ‘I can only say to a buyer that I have a house coming in Surrey with seven bedrooms, but I can’t give you information allowing you to identify what it is, because I need a HIP before I do so.’
Buying agent Jonathan Bramwell of Prime Purchase thinks the change to the HIP legislation ‘will encourage more properties coming to the open market’. At the very least, he says, it won’t obstruct discreet sales: ‘In this market, there’ll always be vendors who don’t want to be seen as selling, and they’ll continue to do so. They’ll get a HIP for their property, but then instruct their agents to market it quietly.’
Mr Gaynor disagrees: ‘I’m sure there will continue to be a number of people who want to sell privately, but now they’ll have to have HIPs done. Some will say “Fine, we’ve just got to do it”. But others will say “It’s too much of a bother”. This is going to reduce the number of properties available privately, reduce choice available to buyers, and affect estate agents adversely.’
Another negative side effect is that the new rule could slow down sales because a HIP takes up to a month to be produced. And ‘properties coming to market with a brochure will be further delayed, because we need to have the Energy Performance Certificate (EPC) printed on the particulars,’ says Mr Gayner. Mr Bramwell believes the legislation might get challenged: ‘You can’t stop someone from buying something just because the HIP is not in place.
In some streets of London, a property is there one day and gone the next. People will question whether we really need this.’ Many say we don’t. ‘The majority of our buyers never even look at the EPC. As for the rest of the information, I’d challenge that there are many buyers who ever request the HIP in the first place.’
Do you need a HIP?
Properties with more than five hectares (12.35 acres) may not require a HIP if the land is or was most recently used for horticulture or cultivation, the breeding or keeping of animals and livestock, grazing or woodland. Other exemptions include:
* Mixed sales (properties containing a residential and non residential element) with less than five hectares, if the accommodation is ancillary to the commercial use of the property (for example, an equestrian training yard)
* Non-residential properties
* Property portfolios (more than one unit sold together at the same time)
* Properties that are not sold with completely vacant possession
* Holiday accommodation that can only be used for less than 11 months a year
* Homes bought under the Right to Buy, Right to Acquire and HomeBuy home-ownership schemes
* Unsafe properties or those due to be demolished
Note: In nearly all of these cases, vendors still have to produce an Energy Performance Certificate
Costs vary depending on the type and size of house, the provider used and the cost of searches, which differ from one local authority to the next. Mr Gayner estimates that a country-house HIP costs in the region of £350 to £700