iHome4Ssale
Home Information Packs
Unfortunately, as many of us know, buying and selling property doesn’t always go to plan. One in four sales collapses before contracts are exchanged and it’s estimated that £1m a day is lost through transactions failing at a late stage. That doesn’t even take into account priceless time and anxiety! More than two-fifths of these failures are the result of a survey or valuation inspection report highlighting faults with the property. The delay in obtaining searches, etc. is usually the main cause of sales falling through as buyers become disillusioned and look for another property.
Why we need a new solution
Until now, 9 out of 10 people have been dissatisfied with the current conveyancing process (the legal process of transferring a property from one owner to another). It`s not surprising when you consider that 28% of sales fall through after the terms of sale have been agreed, costing consumers over £350m a year. Add to this the lengthy time it takes to complete on purchases and the knock-on effect that 60% of us experience being tied up in a chain.
HIPs
HIPs (including Energy Performance Certificates) have been implemented on a phased basis since the start of August 2007. The Government has introduced HIPs to make buying and selling clearer and more straightforward, as well as to encourage homes to be more energy efficient. From 1 August 2007 packs were required for the sale of four bedroom properties and larger; from 10 September 2007 homes for sale with three or more bedrooms also require a HIP.
Sellers of three bedroom properties and larger should have a ready-prepared HIP available to buyers when marketing their home for sale. The pack will provide buyers with important information early on, giving them a transparent picture of any issues they need to be aware of before making an offer. Currently most of the important information only emerges after an offer`s been made, during conveyancing. Issues that crop up at this stage may result in a buyer pulling out of a sale, which means wasted money on searches and legal fees.
Another added benefit is that estate agents marketing homes with Home Information Packs will now be required by law to be registered with the Ombudsman for Estate Agents (OEA). This means that consumers should get a better standard of service, and if not, they can complain to this independent industry body if they`re not satisfied with the service.
As buyers will not have to pay for a copy of a HIP, the scheme should help struggling first time buyers and make it easier and cheaper for them to get their first foot on the property ladder.
What information do Home Information Packs contain?
The Home Information Pack (also known as a `seller`s pack`), will be made up of `required` and `authorised` information about a property. The `required` documents are mandatory, while the `authorised` documents can be included if the seller thinks they may be important to buyers.
The required documents are:
An index (i.e. a list of the documents included in the pack)
A sale statement including: name of seller and address of property being sold, whether the property is freehold or leasehold
Evidence of title - proof that the seller owns the property and, therefore, has the right to sell it, and whether the property is registered or unregistered
The Property Register and the Title Plan - official copies from Land Registry. The Property Register provides a brief description of the property and whether the property is freehold or leasehold (including remaining years on the lease and legal rights and duties of the leaseholder and landlord). There should be details of the ground rent and service charges payable for the property. The Pack will also require local property Searches (i.e. a drainage and water search) and these are usually provided by the relevant local authority. Whilst every effort must be made to get hold of all the relevant information to complete a search, if any questions can`t be answered, an insurance policy should be included to protect the buyer in case of any problems arising with the property or the area that`s been missed
A stand alone Energy Performance Certificate (or an optional Home Condition Report containing a separate Energy Performance Certificate). This tells buyers how energy efficient the home is on a scale of A-G. The most efficient homes, which should have the lowest running costs, are in band A. The certificate also tells you, on a scale of A-G, what impact the property has on the environment. The higher the rating, the less carbon dioxide emissions it should emit. The average UK property falls into bands D-E for both categories. Recommendations are included about how the energy efficiency can be improved to save money and help the environment.
Where appropriate, commonhold information (commonhold is an alternative to the conventional method of owning flats and other interdependent properties under a lease and is a new form of freehold ownership) including a copy of the commonhold community statement
Leasehold information if appropriate (including a copy of the lease, information on service charges and insurance)
Where appropriate, a New Homes Warranty
Where appropriate, a report on a home that is not physically complete
If you live in a leasehold flat you will also need to provide:
A copy of the lease
Any landlord or management company regulations
The most recent service charge accounts and receipts
Details of your building insurance policy and payment receipts
Memorandum and articles of the landlord or management company
The authorised documents that can also be included are:
A Home Condition Report
Guarantees and warranties
Fixtures and fittings list detailing what`s included or excluded from the sale
Other searches
Home Condition Reports
A seller can top up a pack voluntarily to include a full Home Condition Report. This report will contain an Energy Performance Certificate and information about the condition of each part of the home on a scale of 1-3 (where 1 is best) – advising the seller and buyer of any repairs needed and, if so, whether they are serious. This is a reliable report as it`s carried out by Home Inspectors who are qualified, accredited and insured.
Sellers offering full Home Condition Reports are more likely to speed up their sale and reduce the likelihood of buyers pulling out thanks to more information being available up-front and no unwanted surprises coming to light. The Government is working with HIP arrangers to encourage them to take-up the full Home Condition Report.
How are HIPs arranged?
It is the person responsible for marketing the property, eg. the estate agent, or the seller themselves if the property is being sold privately, to arrange the HIP and this must be available on the first day the property is marketed. There is a £200 a day financial penalty if you market a home without a HIP and the local Trading Standards Officer will be checking to see that one is in place.
If estate agents breach their HIP responsibilities, this will be treated as an "undesirable practice" under the Estate Agents Act and they will be reported to the Office of Fair Trading (OFT). An estate agent who deliberately flouts the HIP regulations will risk being banned by the OFT.
Conveyancing provider, MyHomeMove, offers a Home Information Pack. Alternatively, you can get a pack from a recognised pack provider. Consider having your pack ready before signing up with an estate agent or other home selling arrangement, that way you`ll have more flexibility in how to sell your property and get a competitively priced HIP.
Find out more about Home Information Packs
How much does a HIP cost?
A HIP is likely to cost anything up to £600 if it includes a Home Condition Report, or half that amount if it does not.
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