Lenders Show Support for Home Information Pack

Buying and selling a property doesn’t always go according to plan. One in four transactions collapse before contracts are exchanged, wasting time and money.

The government is concerned that many house purchases fall through because of the time it takes to get to completion. Where there is a chain of buyers and sellers, just one person pulling out can ruin a whole series of purchases, costing all those involved money, time and patience. Government research suggests that £350 million is wasted by consumers every year as a result of aborted housing transactions. The government’s solution to this problem is the introduction of Home Information Packs (HIPs).

From 1st Juke 2007 all home owners in England and Wales will need to arrange for a Home Information Pack to be prepared before putting their homes up for sale. The idea is that property sellers will produce a Home Information Pack (HIP) for potential buyers to see before they make an offer.
HIP will not be required for:

• properties in Scotland and Northern Ireland
• private sales where the property is not offered on the open market
• non-residential property
• homes held on a lease of less than 21 years
• portfolios of residential property, etc.

Home Information Packs will provide important information to prospective purchasers at the very start of their interest in a new home, giving increased transparency on key issues and meaning any offer to purchase is based on an informed decision. Currently, much of this essential information only comes to light when an offer has been made and accepted. In the meantime, buyers are negotiating in the dark and are often wasting money on legal fees, searches and surveys.

The pack includes:

• evidence of title
• Replies to standard enquiries (whether you are aware of any problems with the property)
• Copies of any planning, listed building and building regulations, consents and approvals
• Copies of warranties and guarantees for new properties
• Any guarantees for work that has been carried out on the property
• A draft contract
• A house condition report based on a professional structural survey of the property

Some estate agents are sceptical of the plans. President of the National Association of Estate Agents, Julie Westby says: “It imposes extra costs and red tape in an already complex market. It could have serious repercussions on housing transactions and consequently on house prices.” Also, introduction of the HIP could slow the housing market as each seller will have to find at least £600 to compile a pack.

All lenders recognise the need to improve the conveyance process, and there is widespread support for the e-conveyance initiative by the Land Registry. However, lenders have had mixed views about HIPs since the proposals were first developed. Members are not persuaded at this stage that the perceived consumer benefits will be achieved.

The Council of Mortgage Lender’s head of policy Jackie Bennett said: “Lenders are generally not anti-Hip in principle. It is the practicalities, the government’s expectations, and the possible unintended consequences that cause them concern.”
In a clear sign of the change in attitudes towards HIPs, the Council of Mortgage Lenders (CML) has published a new report showing that lenders are happy to support the use of Home Information Packs. According to a CML survey, two thirds of lenders intend to provide packs.

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