Birmingham Law Society Legal Column - June
Monday, 1st June 2009
Birmingham Law Society Legal Column – June
By John Hughes, chairman of Birmingham Law Society’s Non-contentious Business Committee
Whether you view them as a help or a hindrance, Home Information Packs or ‘HIPs’ are now compulsory for every residential property that is put up for sale.
The packs provide a summary of the terms of sale, evidence of the seller’s title and in the case of leasehold, a copy of the lease, together with local authority, drainage and water searches. They must also include an Energy Performance Certificate.
The seller may choose to include other documents, in particular a Home Condition Report prepared by a certified Home Inspector. But this document, which may well be the most useful information for a prospective buyer to have, is not mandatory. Nor does it necessarily avoid the need for a full survey report, which a lender may require.
The local authority and other searches, which are mandatory, often have to be repeated by the buyer's solicitor, sometimes because they do not provide adequate information and again to fulfill the requirements of the lender. In any case, a solicitor is still the best-qualified person to interpret and advise his client on the results of the searches.
The expense of preparing a Home Information Pack runs into several hundred pounds, so it can have a beneficial effect in deterring the relatively few owners who have no real intention of selling. But on the downside, it is a considerable burden for homeowners who genuinely want to sell.
At a time when the residential property market has slumped, members of the Birmingham Law Society believe the mandatory requirement for a HIP should be put on ice, at least until the market improves.
The previous president, Caroline Coates, made representations to local MPs to that effect and the national Law Society has expressed similar concerns.
Ms Coates’ letter to one local Labour MP elicited the following succinct email: "I have to observe though that I have had representations from people who have qualified as HIP inspectors and now don’t have much – if any – work on their hands."
But the reason for that is the government's decision not to make Home Condition Reports mandatory.
The reply from the MP for Sutton Coldfield was rather more informative. Andrew Mitchell referred to the Carsberg review, which confirmed that HIPs add to the administration and costs of moving house but do not provide reliable enough information.
He said the report also echoed Conservative party concerns that the additional bureaucracy was damaging the housing market at a time when prices were falling as a result of the credit crunch. A Conservative government would abolish HIPs but maintain the requirement for an Energy Performance Certificate.
Birmingham Law Society supports this view, and we believe the Government should swallow its pride and acknowledge that HIPs are not helping the housing market or potential buyers.
