The Department for Communities and Local Government (DCLG) has recently made and laid in Parliament a set of Home Information Pack (HIP) Regulations regarding the ending of the transitional arrangements. The main provisions are:
- The Local and Water and Drainage Searches will, despite a certain amount of negativity, remain a compulsory component of the HIP. However a working group will be set up to examine and advise on how they can be made simpler, easy to use and easy to understand.
- The transitional insurance cover for missing search information will end on 5th April 2009. This, of course, relates to personal (sometimes called private) searches and not full official searches obtained direct from Local Authorities.
- From 6 April the HIP will have to include a new form, the Property Information Questionnaire (PIQ). I comment further on this form later in this article.
- The present “temporary” leasehold information provision will be made permanent from 1st January 2009. The new PIQ will also contain additional leasehold information.
- First day marketing will end on the 5th April 2009. However a 28 period of grace will still be extended for the obtaining of certain information, for example the searches, if they are likely to take longer to obtain than other required documents.
A disappointment, particularly to HIP providers, is that the revised Regulations do not introduce a “drop dead” date. This means that those properties currently on the market, legitimately without a HIP (apparently thousands in number), can remain on the market indefinitely without the need for a HIP to be prepared. HIP providers would have appreciated that additional work, in these very lean times.
In addition, the Office of Fair Trading has been asked to conduct a comprehensive study of the home buying and selling process, looking at competition between service providers and how consumers’ interests are best served. The OFT will look at competition on price and quality between service providers; the prospects for new entry by, in particular, internet property retailers; and the extent to which consumer interests are protected by the existing regulatory framework
The study is also likely to cover the relationship between estate agents, mortgage brokers, surveyors, solicitors and other professional advisors.
I believe that these changes should help put the conveyancer at the forefront of HIP production. Some HIP providers already claim to produce an “Exchange Ready HIP”. In my opinion they don’t do that. A true Exchange Ready HIP can only be produced with the involvement of an experienced conveyancer, preferably one who is well acquainted with the property or the location in which it is based. A local conveyancer will be able to advise on matters such as whether additional searches are required (Mining, Radon, Chancel Repair etc) and if old restrictive covenants are still enforceable. That short list could go on and on.
The Property Information Questionnaire
The inclusion of a PIQ is going to be yet another controversial matter. Traditionally, the buyer’s conveyancer would raise his own set of questions (or to use an older, perhaps more well know phrase, preliminary enquiries). The questions contained in the PIQ will go part of the way to answering some of the questions raised by the buyer’s conveyancer but not all of the way. This will dismay the conveyancer and possibly confuse the seller who may be asked to answer the same, or very similar questions, a second time once a buyer has been found.
The PIQ is likely to state that the information contained in it only relates to the period during which the seller has owned the property and does not replace official documents or legal information.
It is anticipated that there will be two forms, one for older existing properties and one for new homes.
The following, is an example of some of the questions that will probably be included in the PIQ:
- When was the property purchased?
- Is the property a listed building or contained in a listed building?
- What parking arrangements exist
- Has there been any damage to the property caused by storm or fire which has led to an insurance claim?
- Has the property been flooded?
- Are there any guarantees for dry rot, wet rot or damp?
- What type of central heating is there and when was the system last serviced?
- Have any structural alterations, additions or extensions been carried out to the property?
- Does the seller or any other person (ie a neighbour) have a right of access over each others land?
Some of the leasehold questions will be along the lines of:
- To whom does the seller pay the ground rent and service charge?
- How many years does the lease have left to run?
- Does the lease prevent, sub letting, keeping pets?
- Does the lease contain any other restrictions which could impact on a person’s use of the property?
The new home questions may include:
- Has the property received a building regulation completion certificate?
- Is the property sold with a warranty?
- How much is the proposed ground rent and annual service charge?
How will this affect conveyancers?
Two things seem certain. First, a significant number of conveyancers from Penzance to Carlisle will be concerned that the HIP is taking away from them a substantial amount of the work they are used to doing.
Secondly, on a brighter note, the inclusion of the PIQ could bring them into the buying and selling process much earlier, ie when a property is being marketed rather than when a buyer has been found.
I have always believed that local conveyancers should work with innovative HIP suppliers in order to produce a pack of documents that delivers real benefits for the consumer, speed, transparency, certainty and less stress.
Rob Hailstone is CEO of the Independent HIP Group Hipag.
Note from Rob about CPD accredited seminars
Hipag is holding a series of CPD accredited seminars early in the New Year. In addition to providing clear and accurate information on HIP legislation we will be explaining how our unique HIPS2Xchange process is designed to assist the high street conveyancer produce an Exchange Ready HIP. Anyone interested in attending the seminars should email firstname.lastname@example.org.