Make your own HIP (Home Information Pack)
Our HIPs
We can of course prepare your HIP for you. We treat the HIP making process as an integral part of the sale process, which means we can ensure your sale proceeds to exchange as quickly as possible.
Once instructed on your HIP, we will also begin collecting all of the necessary information your buyer will normally expect to see prior to exchange, looking at each document and search to ensure we pre-empt as many of the buyer’s enquiries as possible. If you do not find a buyer you do not pay for this work. If you do find a buyer, it means that a lot of the pre-exchange work will have already been carried out. Depending on whether your buyer is using a mortgage, you may then find that you are ready to exchange almost immediately after you accept an offer. You will almost certainly find the sale process simpler and less effort.
What is a HIP?
A HIP or home information pack is a collection of documents about a property that the seller must prepare before placing the property on the market.
Since their introduction, the need to provide a HIP at the beginning of the transaction has attracted heated comment from both critics and advocates. People seem to love them or hate them.
Aside from the Energy Performance Certificate, all of the documents contained in the packs were necessary before their introduction. The argument is simply whether making the seller pay for them, even before they have a buyer, adds anything to the sale process.
The main arguments against Home Information Packs have been:
- the cost of the packs stop speculative marketing, where people put a property on the market to see what they can get, accepting if they get a high bid. This is reckoned by some to have helped dampened house prices – either a plus or a minus, depending on whether you’re a house owner or not
- they can increase the overall cost. Previously, once an offer was made, the buyer then put in place their own searches. The advantage of this is that the search was then almost inevitably going to be ‘valid’ up to the date for completion (it is a general rule for mortgage lenders that the searches should be dated no more than three months prior to the completion date). As HIPs have to be commissioned (and from April 2009, completed) prior to the first day of marketing, it is unusual that a Local Authority Search contained in a HIP can be relied on by a buyer. The buyer then has three options – accept the search (which is unlikely to be acceptable to a mortgage lender); obtain an indemnity policy to insure against the risk of relying on an old search; or commission a new search. The latter two options can cost the buyer significant amounts of money – essentially making both the seller and buyer pay for the same thing.
- In November 2007, then Housing Minister Yvette Cooper said “Information such as searches for which [the buyer] would previously have had to pay will now be included in the HIP paid for by the seller, reducing the costs of the first step onto the property ladder”. However, even if the searches contained in a HIP are recent enough to satisfy lenders, the poor quality of many searches makes them essentially pointless. We would estimate that at least half of the searches contained in the HIPs we see are worthless to us for the purposes of revealing what they are supposed to and the buyers then have to carry out their own. This is because there are two types of local authority search – an ‘official’ search and a ‘personal’ search. An official search is one produced and guaranteed by the council. A personal search is one which is produced by a private company and can be of widely varying standards. An investigation by Birmingham Trading Standards in September 2008 found that five out of six of the HIP searrches inspected were inaccurate or unsatisfactory (the final report is now suspiciously pro-HIP, the council website saying the department ‘believes that the public interest is best served by local authorities working with the industry to iron out teething problems’).
- they are pointless. The directgov HIP website says “Always ask to see the pack - you have a right to see it and doing so can save time and money.” But how many buyers know what they are looking for?
We have yet to have a client who has made a decision on buying a house based on the EPC. A lot of clients are not aware whether a HIP is available.
- the cost of the HIP may also restrict access to the market for those in financial difficulty and are looking for a quick sale. There are agents out there offering free HIPs but they invariably bind you to the agent and can even bind you to a particular conveyancing firm. We maintain that the independence of a buyer’s conveyancer is very important. When a house purchase may be the most expensive transaction you ever enter into, do you really want to be advised by someone whose livelihood depends on the seller’s agent?
Some of the arguments for HIPs include:
- Speed. In a bouyant housing market it will often be the case that sales are agreed soon after marketing. In this situation, provided the searches are of good quality, a Home Information Pack could speed the market up considerably.
- cost. In some situations, the fact the seller has to provide the searches could avoid duplicate ones being made by different buyers – especially in a contract race. However, contract races are relatively rare and, where a previous buyer has pulled out, they are usually prepared to sell the search to the new buyers (it would be pointless for them not to).
It is not only estate agents willing to help you create your HIP, there are many private companies scrambling over each other to help you too.
Despite projected costs of £600 upwards by some critics before the launch of HIPs, the cost of some packs can even be under £100. Providers can charge such low amounts by including personal searches, producing their own EPCs and utilising unqualified staff to do what is essentially just an administrative task. When you consider that an official search is anywhere from £100 to £250ish (mainly in London), using a specialist HIP provider will often be the cheapest option.
If you actually want a HIP which will do what it is supposed to – speed up the transaction and lower overall costs – then you should consider your provider carefully. As explained above, some HIPs aren’t worth the paper they’re printed on.
Aside from the usual investigations about reputation (a Google search will often reveal what other customers think of a company), you should ask whether the HIP will contain a personal or official search, if extra documents will be included or only the most basic and (especially if introduced by an agent) whether using that provider binds you to using that agent or a particular conveyancer.
If you do want to provide a HIP that is useful for your potential buyer, you could consider making your own.
Why make your own HIP?
Making your own HIP is relatively straight forward and may save you money on administration costs, you are also able to get the best quotes for certain required sections.
Handling it yourself will also free you from an estate agent. To make a HIP with an agent will tie you to that agent and you will lose the element of freedom to move around.
What does a HIP need to contain?
The HIP is comprised of documents and certificates most of which must be provided, but some of which are voluntary and would only be included if you believed that their inclusion would make the house more sellable. Here is a list of what the HIP will contain:
• Index
• Energy Performance Certificate
• Sale Statement
• Title information
• Local Authority and drainage searches
If your property is Leasehold or Commonhold then the pack must also contain the following:
• Copy of the lease
You may also include if you believe that it may help with the sale of your house, the following:
• Building insurance policy
• Contact details for the landlord or management and any legal details
• Regulations that apply
• Recent service charges receipts and accounts• Home condition report
• Two sellers questionnaire forms called Home Use Form and Home Contents Form
• legal summary
• Other searches such as a mining search
Getting started
The Home Information Pack Index
First of all go to: http://www.homeinformationpacks.gov.uk/consumer/42_publications.html
Scroll half way down the page and under the title Pack forms, you will find the download. At this stage it is also advisable to download the Sale Statement just underneath it for use later.
The Home Information Pack index is the first item on the list but is best left until last to fill out. It is basically a contents page to the rest of the pack. In this index you must list everything that is included in your pack, whether the items are required or optional (authorised). Any documents that are missing must also be listed with an explanation as to why that document is missing. This index must be amended as soon as any change is made to the contents of the pack.
For now just fill in the Address and Postcode or Plot Number section on the front page.
Energy Performance Certificate
For this you will need a registered Home Inspector. You can find these people on the internet or in the yellow pages. It is well worth asking for quotes because there is not a set price for these so shop around a bit. If you are choosing to have a Home Condition Report done then get it done at the same time as it takes a registered Home Inspector to do this as well.
The Sale Statement
This is the basic information about the house it includes:
• The address of the property
• Whether the property is freehold, leasehold or commonhold (due to the rarity of commonhold properties they will not be covered in this guide)
• Whether the property is registerd or unregistered
• Whether the property is being sold with vacant possesion
With the form you have already downloaded this is a case of just ticking the boxes.
Title information
These are the documents that prove that you own the property and consequently that you have the right to sell it. You will not have to fill out all sections on the Index for this section only the ones that are relevant to your property. Some houses are registered with the land registry and some are not and there are slightly different proceedures for each situation. First of all go to the land registry website:
http://www.landregisteronline.gov.uk/
Fill in your house name and postcode. If the details of your property appear then you are registered. You will then need to buy your Title Register and Title Plan. These will go in the pack.
If your details do not come up then press the Property Enquiry Button in the top left hand corner and select: search of the index map. When you have filled in the required fields it will perform a search of the index map for you and will send you the resulting form, which should be included in the pack.
If your property is unregistered, which will be confirmed by the last check then it is advised that you consult a solictor as the process of retrieving title information will be complicated.
Tenancies, Licenses or Leases
You must include any documentaion concerning any of the above if applicable.
Local Authority and Drainage Searches
These are two searches that must be included in the pack. You will need two forms for this: an LLC1 (land charges search) and a CON29 (local enquiries). Both of these can be found on the web using a search engine and downloaded, print off two copies of each. They can also be downloaded at:
http://www.oyezforms.co.uk/
Fill out all the information above the line on the first page of the LLC1 forms and all the required boxes on the CON29 form. When you have done this locate your local council’s Land Charges Page, on this page you will find the charges for the enquires and the address to send them to.
Now you must post both the LLC1 forms and the CON29 forms (they are required in duplicate) along with two plans of the property, which can be the ones you got from the land registry earlier on. Outline your properties in the colour you have indicated on the form.
Next is the drainage search. For this you will need to fill in a CON29DW form and send it your local water authority. Your local water authority will be the ones who send you your bill. Again this must be sent off with two plans of your property.
For freehold properties that is all that is required, so congratulations.
Leasehold
If your property is leasehold you will need to produce a copy of the lease.
The Lease
A copy of your lease needs to be included. If you or do not have it then you may be able to get it from the Land Registry as another available document to download otherwise make an OC2 application to them.
The following items are currently optional for inclusion but may become compulsory in the future.
Names and addresses of Landlord and managing agents
The lease might have these details but they may be out of date so check them with the management company, or whoever you received your last letter from concerning the property.
Restrictions and covenants
These are any rules and regulations on how you are to live in the property.
Statements of service charges over las 36 months
If you do not have these then the management company should be able to provide them on request.
Summary of work affecting the property
Notification of any work that may be planned on your property or on the building as a whole if your property forms part of that building.
Payments of service charges, ground rents and insurance in the last year
Basically a breakdown of anything you have payed the management company or landlord in the last year.
Proposed Lease
If you are planning to sell the property as a leasehold for the first time then a copy of the proposed leasehold will need to be included. If this applies you should seek legal advice.
Estimate of service charge, ground rent, and insurance in the next year
This again only counts for new leasehold properties and it is the estimated amount which all the above will amount to over a twelve month period.
If you are a leaseholder then these are all the essentials that must be included in your pack. Congratulations!
