Eddie answers: Don’t panic. It’s good news that you’ve recognised the merits of adding HIPs to the range of services you offer.
If your client is selling a home they may as well buy a HIP from you, rather than from their local estate agent. Not only will you generate valuable additional income, but you’ll also be providing your clients with a comprehensive ‘one-stop shop’ service.
Good news for them and good news for you.
Any requests?
A HIP is required whenever anyone puts their property on the market for sale. However, the government recognises that searches and other documents may take time to come through and it’s not its intention to delay the house selling process unnecessarily. It is therefore allowing sellers to market their properties without a HIP for the time being, providing one has been requested.
Don’t think, however, that your client can make a bogus request for a HIP and pretend one is being produced, when in fact it isn’t.
A HIP must be requested and be in the process of being produced for a home to be marketed and the rules stipulate that, under normal circumstances, a HIP should be available within 28 days. If there is a genuine delay, there should be evidence that efforts are being made to arrange a HIP as soon as possible.
Rules and exceptions
If your client is buying a new home, they should expect to see a HIP. However, if the home is under construction the Energy Performance Certificate (EPC) will be based on a SAP rating, which demonstrates that the house will meet government targets for energy performance.
If the home is being sold off-plan, then a Predicted Energy Assessment (PEA) will be included in the HIP and once the house is finally complete, the PEA will be replaced by an EPC and a Recommendation Report.
If all of this sounds confusing, the key point to bear in mind is that new homes do require a HIP. If your client is part-exchanging their house with a builder for a new property, then the builder may want to put their home on the market for sale before the new home is ready for occupation.
Again, a HIP is required and, if the builder takes over a HIP from the existing owner, then the builder will need to include a new index and sale statement. However, items such as Land Registry documents can be recycled.
Homes being sold on shared ownership terms also require a HIP, unless the home is being sold to a sitting tenant, and it is even worth bearing in mind that, with effect from 1 October 2008, EPCs have to be produced by landlords for prospective tenants. Landlords won’t have to provide an EPC for existing tenants and, once obtained, an EPC will be valid for 10 years.
General principles
The general principle is that all properties – with very few exceptions – now require a HIP if they are being put on the market for sale. The only significant exception is properties that were already for sale before the HIP regulations came into force.
They do not currently require a HIP and the government has not yet set a ‘drop dead date’ for them to be included within the regulations.
However, remember that HIP regulations were introduced on a phased basis and the key date for your client is the date when the regulations which apply to their type of property came into force.
Four-bed properties were the first to be regulated with effect from 10 August 2007, with three-bed properties being included from 10 September and all other properties with effect from 14 December. Make sure your client gets the right date if they think they are exempt.
On the market?
On a final note, some people have asked what constitutes a property being ‘put on the market for sale’? If a home owner is simply facilitating an informal viewing, does that fall within the definition of being for sale and is a HIP required?
The answer is no, it doesn’t need a HIP. One to one sales that don’t involve any other person – an estate agent, for example, and don’t involve marketing to a section of the general public, do not need a HIP. However, if an estate agent is involved, or if the home is being advertised to the public, then a HIP is needed.
Don’t be daunted by the HIP regulations. If you’re in doubt, ask your HIP provider for clarification, or visit the government’s HIP website www.homeinformationpacks.gov.uk which contains a wealth of reasonably understandable information.
