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Building Society Surveys
Benefits of the Home Information Pack
The Packs will directly address:
Consumer dissatisfaction - nearly nine out of 10 consumers are dissatisfied with the present process;
Lack of transparency - at present key information about the property only becomes available after terms of the sale have been agreed;
High transaction failure rate - 28 per cent of property sales fail after terms have been agreed;
High costs of failed transactions for consumers - over £350m lost a year;
Slow transaction process - twice the European average;
Uncertainty – 60 per cent of property sales are in chains. Delay or failure in one has a knock-on effect through the chain.
Other direct benefits for home buyers and sellers:
Consumer confidence – estate agents marketing homes with Home Information Packs will be required, for the first time, to belong to an approved redress scheme. This means more peace of mind and a better standard of service for consumers who will be able to complain to an independent industry body if they’re not happy with how they have been treated.
First time buyers – will receive Home Information Packs for ‘free’, making it easier and less expensive for them to get their first foot onto the property ladder.
Why
Currently, much of the essential information needed by home buyers and sellers 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. Providing all the information up front, at the time of marketing a property, will make the home buying and selling process more efficient and transparent.
The Government is introducing Home Information Packs in England and Wales on 1 June 2007. They aim to take the stress out of buying and selling a home by providing key information upfront. Every Pack will include Energy Performance Certificates which, like fridges will provide A - G ratings on the energy efficiency of a home, plus advice on how to make further energy savings. The Packs will also include information such as searches and other legal documents. A Home Condition Report giving details on the condition of a property can also be included in the Packs on a voluntary basis.
When
From 1 June 2007, anyone selling a property must provide potential buyers with a Home Information Pack. This is a set of documents providing important information about a property including energy efficiency, searches and evidence of title. The government will also be encouraging sellers to provide a new document called the Home Condition Report.What will be included in the Home Information Pack?
The Home Information Pack Regulations 2006 were laid before Parliament on 14 June 2006.
Home Information Pack Regulations 2006
The Regulations set out provisions on the “required” and “authorised” content of the Pack. Required documents must be included in the pack where appropriate and authorised documents may be included at the seller’s discretion.
The required documents are:
- An index (I.e. A list of the contents of the pack)
- A sale statement (summarising terms of sale)
- Evidence of title
- Standard searches (I.e. Local authority enquiries and a drainage and water search)
- An Energy Performance Certificate
- Where appropriate, commonhold information (including a copy of the commonhold community statement)
- Where appropriate, leasehold information (including a copy of the lease, information on service charges and insurance)
- Where appropriate, a New Homes Warranty
- Where appropriate, a report on a home that is not physically complete
The authorised documents include:
A Home Condition Report*
Guarantees and warranties
Other searches
* The regulations will be amended so that from 1 June 2007 the Home Condition Report will be an authorised part of the Pack.
Sellers can top up their Packs voluntarily to include full Home Condition Reports; these reports are based on a professional survey of the property and will be authorised documents. Sellers offering full Home Condition Reports will be more likely to benefit from swifter sales and suffer fewer transaction failures, as accepted offers are much less likely to be re-opened as a result of new information coming to light. The Government is working with stakeholders to facilitate the take-up of the full Home Condition Report.
Do you have to wait for all Home Information Pack components to be assembled before the property is marketed?
A home must be marketed with a Pack at the time the property is put up for sale. Providing reasonable attempts have been taken, in certain circumstances the property can be marketed with an incomplete Pack – this is defined in regulations. As part of the Dry-run, however, we will be testing various options, including allowing marketing to begin if sellers have already commissioned their Pack, rather than having to wait up to 14 days.
How long will the complete Pack be valid for?
The Home Information Pack is valid whilst the home is continuously marketed for sale, and the Regulations allow for a period where the property might be taken off the market whilst, for example it is under offer or to allow a seller to change agents.
The main time-sensitive items in the Home Information Pack are the local searches. These are generally acknowledged to be valid for six months.
The majority of sales complete within six months under the current process and we expect the Home Information Pack to shorten the time between offer acceptance and exchange of contracts.
Are Home Information Packs needed at auctions?
Yes. People buying at auction need reliable information just as much as anyone else.
Is there an impact for Right to Buy (RTB) properties? Who would have responsibility for it?
RTB properties are excluded from Home Information Pack legislation as the property is not being openly marketed. However, the Department for Communities and Local Government is examining the scope for adopting Home Information Pack principles for such sales and thereby providing reassurance to people exercising their Right to Buy.
Are there shared ownership implications?
A shared ownership property marketed for sale would require a Home Information Pack.
Liability? Is it the provider who is liable?
The competent provider is liable for any misinformation within the pack. For example, search provider for searches, Home Inspectors for Home Condition Reports, seller for property information form, etc.
There’s no legal opinion within the Home Information Pack?
There is no requirement or authorisation to include in the pack a legal assessment of the pack contents, so this isn’t something that could be included in the Pack, but there’s nothing to prevent such assessments being provided alongside it.
Once a Home Information Pack is produced, who has the responsibility for ‘policing’ the expiry dates, and re-producing the expired components? Also, at what point after sale agreed would any of the components have to be re-produced, e.g. if expired 1 week before sale completes?
None of the Home Information Pack components will have an expiry date. The main required item in the Home Information Pack that is time-sensitive is local searches.
We need to know the Home Information Pack delivery will not default to hard paper copies as with 1.8 million Home Information Packs per annum, and only a single copy on paper some 225 million pages will be used, c. 2000 trees.
It is up to Home Information Pack providers to determine the best way of providing their product to the customer. The legislation provides for Home Information Packs to be entirely electronic, except when a buyer requests a paper copy.
What are the Home Information Pack requirements for new conversions i.e. barns or a house that was converted into flats?
If individual properties are being marketed then they do require a Home Information Pack - the converted barn therefore does, and so do individual flats. There is an exception for portfolios of properties, so if all the flats were being sold as a package, then no Pack would be required. Exceptions to the duties are set out in the Regulations.
A NEW BOILER CAN COST A LOT OF MONEY. GET IT RIGHT BEFORE YOU BUY. GET IT CHECKED OUT BY US OR A CORGI REGISTERED PERSON
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