Home Information Pack (HIP) Regulations 05-07-2006

Earlier this month the Government published its regulations on the contents of the packs, the exceptions from the HIP pack duties and the provisions for approval of the Certification Schemes for Home Inspectors (HIs) carrying out the mandatory Home Condition Reports (HCRs).  The regulations also specify the level of penalty charge that may be levied for a breach of the HIP duties, and make transitional provisions for homes already on the market when HIPs come into force.  The Government also published a Regulatory Impact Assessment document with the regulations.
 
Some of the main parts of the regulations are highlighted below:

Principal duty

The regulations say that the principal duty for the HIP lies with the ‘responsible person’ – they must have under their possession or their control a HIP which complies with the regulation.  These duties relate to the marketing of a residential property for sale and provide that either a seller of the property or his/her estate agent will be a responsible person.

 
Pack contents

 
The regulations make a distinction between ‘required’ and ‘authorised’ documents in the pack.  For example, a HCR is required as is an Energy Performance Certificate (EPC).  ‘Authorised’ documents may be included in the pack but are not mandatory.  These include: summaries or explanations of any pack document; maps, plans or drawings; and information on source of documents.  Advertising/marketing information can not appear in the packs.  If this information is handed across ‘in close proximity’ to the pack, it must be ‘separated and clearly distinguished from the pack or pack document’.

  
Exclusions

A list of exclusions is also included.  For instance, a HIP is not required where: the property is non-residential; the property is not being offered for sale with vacant possession; the property is not physically complete; or the property is a ‘mixed sale’.

 
Transitional period

Properties placed on the market prior to 1 June 2007 (the date HIPs are due to be implemented) do not need a HIP until 1 November 2007.    After this period, all marketed properties will need a HIP.  This is to stop properties being marketed without a HIP indefinitely just because they’ve been put on the market pre-1 June 2007.
 

Penalty charges

Essentially, trading standards officers will enforce the HIP regulations.  Where a property is marketed without a HIP or there’s been a breach of the HIP duties, a penalty charge can be issued.  The regulations say this can be up to £500 but have settled, at least initially, on £200.  Those who have to pay the charge must also stop marketing their property without a HIP.  For each subsequent breach of the regulations, a further £200 charge can be levied.  Estate agents who continue to market properties without HIPs are liable for action by the Office of Fair Trading (OFT) and could be issued with a banning order which would prevent them from continuing to trade.

 
Certification Schemes

The Certification Schemes are to be established to ensure the HI is fit and proper and appropriately qualified to prepare HCRs.  The schemes must have suitable indemnity insurance; a suitable system of redress for solving complaints; they must ensure HCRs are entered onto a register; they must keep a register of all its members; they must require all members to use the standard form of HCR including prescribed terms; and they must have a code of conduct for members.
 
Complaints about HIs and HCRs must first go to the Certification Scheme.  If they are not satisfactorily resolved they then have recourse to an Independent Complaints Resolution procedure.

Dry-run

A three-phase dry-run pilot of the packs is underway.  The Government has stated that the regulations can be amended if the results of the dry-run throw up any specific changes which should be made.  By October 2006 the Government expects packs with a full HCR to be produced and by January 2007 it expects lenders to ‘increasingly’ use the packs as a basis for assessing the type of mortgage valuation required.
 
Full details of the HIPs regulations are available from the Department of Communities and Local Government website at: http://www.odpm.gov.uk