Article on HIPS

HIPS are kept swinging.....................................

Love them or hate them Home Information Packs are here to stay as is clear from the recently re-issued regulations (Home Information Pack (No.2 ) Regulations 2007 and the Energy Performance of Buildings ( Certificates and Inspections ) ( England and Wales ) ( Amendments ) Regulations 2007 ) which will come into force on the 1^st August.

The new HIP regulations and the amended EPC regulations are very similar to the 1st version published on 29/3/07.

All they do is alter, or rather suspend, the date on which the duty on a seller or estate agent to deliver a HIP arises. As you will see that unlike before the duty only arises once the EPC is obtained. This is a transitional measure and which under the regulations will cease on 31^st December, 2007.

This does not mean however that the HIP can be put to one side when it comes to marketing. On the contrary the seller or estate agent must take steps to commission the pack documents before the property is placed on the market.

The main regulations make no reference to the phasing in of properties. This is dealt with in the commencement orders. The first one has been laid and will come into force on 1/8/07. It will bring into force the relevant provisions of the Housing Act 2004 but will restrict these provisions or rather the duty to deliver a HIP to 4 bedroom plus properties.

Further commencement orders will follow in accordance with the Government's ‘implementation' plan. This provides the Secretary of State with the power to extend the implementation to other properties as and when she is satisfied with market conditions mainly connected with the number of accredited domestic energy assessors.

So how do the new regulations operate........................

When a does the seller/estate agent has a duty to deliver a HIP under the new regulations?

Sections 155 and 156 of the Housing Act 2004 impose the duty to have a HIP and to make this available to a prospective purchaser.

Regulation 34 of the new regulations states that up until the end of the year this duty does not arise until the seller or estate agent has in his possession the EPC providing the following conditions are met:

1) The property is on the market before the 1/1/08; and
2) All of the required documents ( regulation 9 ) were requested before the property was placed on the market; and those requests comply with the requirements of regulation 18 ( see below), and further:
- a. The seller and or agent can on inquiry satisfy the inquirer that he had on requesting the documents a reasonable expectation of receiving the document before the property was placed on the market, or
- b. that he has a reasonable expectation of receiving the document within 28 days of placing the property on the market and is making every reasonable effort to obtain it, or
- c. where a and b do not apply, he cannot obtain the document or documents but will continue to make all reasonable effort.

In conjunction with this, the EPC Regulations (as amended) require up until the end of the Year, the EPC to be delivered to the prospective purchaser before a contract is entered into.

So what does this mean in practice?

On all properties placed on the market before the end of the year you can market the property without a HIP providing before it is placed on the market you have written proof that all required HIP documents have been requested and further that you make every effort to get those documents in as quickly as possible.

You only have to deliver the HIP to the prospective purchaser once the EPC arrives but that as the EPC has to be delivered before contracts are exchanged the HIP will need to be made available to the purchaser before this stage of the conveyancing transaction.

It does mean that pack providers will be anxious to ensure the pack is paid for in full before the pack is requested so as to avoid the situation where the seller backs out of the transaction before exchange of contracts and tries to cancel the HIP. Once commissioned, the HIP will need (from a commercial point of view ) to be delivered regardless of the outcome of the marketeting. Even if the sale was aborted for whatever reason, the seller could still make use of the pack at a later date if the property is put back on the market with 12 months of the first date on which it was marketed. There would be no requirement to update the documents including the EPC and the searches.

How long will each document be valid for and what is the reference point for calculating the validity?

The First Point of Marketing (FPM) is the reference point.

For the moment and whilst consultation takes place the EPC will be valid for 12 months from the FPM.

What is the FDM for the EPC?

In calculating the validity the FDM will be the first day on which the property was placed on the market. So if on the 1^st August the property is placed on the market and the EPC arrives on the 14^th the FDM will be the 1^st of August and the EPC will be valid for 12 months from that date.

What is the position with regard the other required documents?

Index - 3months validity from the date on which the property was first placed on the market
Sale statement - ditto
Proof of registered title - ditto
Index Map - in relation to unregistered title - ditto

What about searches and other required documents not covered in the above list?

As before, if proof can be given that these were requested before marketing and providing all reasonable efforts are made to obtain the same, the HIP can be delivered without their inclusion if there is a reasonable belief they will be obtained within 28 days of the FPM.

The FPM for this purpose will be the date on which the property is placed on the market. So by the time the EPC comes in and the duty therefore arises to deliver the HIP the 28 days period could be much less.

What proof is required to show all required documents have been requested before marketing?

Proof of request for documents must be in HIP

The proof will be in the form of a statement and this must include:

Identity of document to which it refers
Date of request
Name of person to whom the request is addressed.
When is it expected the document will be produced?
Confirmation it complies with requirements of regulation 18 (1)

The Index must note where Regulation 16 (EPCs after 1/1/08 not obtainable within 14 days of request), Regulation 17 (the "28 day" documents) or Regulation 20 (documents completely unobtainable) apply the following:

The missing document
The reason it's missing

In addition, and in relation to Regulation 16 ( EPC after 1/1/08 not obtainable within 14 days of request ) or Regulation 17 ( "28 day" documents ) the statement must also specify:

What steps are being taken to get it?
When is it expected?
Reason for delay and anticipated delay to expected date of arrival (if any).
Reason for any further delay

What is the position with properties which are not physically complete at the FPM?

If property is not physically complete only require a predictive energy assessment (PEA). This needs to be updated to full EPCs if property becomes complete after FPM - within 14 days of it becoming complete - it replaces the PEA in the Pack.

What is the definition of a 4 bedroom property?

This is found in the Commencement Order issued on 10^th June, 2007 (http://www.homeinformationpacks.gov.uk/industry/137_pubregulations.html). In short if it is marketed with 4 bedrooms then it falls within the definition. Are sellers really going to ‘lose' a bedroom for the sake of saving £350? The down side would be that those searching on the internet for 4 bedrooms, for example, will not come across these ‘adapted' sale particulars and this could in turn make the properties less visible to the buying market. Is it also not true that a seller can ask more for a four bedroom than a three bedroom? Quite a lot more than £350!

David Pett Solicitor and Director with Hip2go.com, a Home Information Pack Provider, providing HIPs to solicitors and Estate Agents in association with Norwich Union. David has also provided legal advice to Association of Home Information Pack Providers ) AHIPP in connection with the RICS Judicial Review.