With just 8 weeks until Home Information Packs are mandatory, should you sell your property now to escape them?
One thing I've noticed the older I've become is this country's general obsession with property. What's more, the housing market is something that we all seem to have an opinion on. Honestly, should you need to start some small talk with anyone over the age of 25 just bring up either (i) The struggles faced by first time buyers, (ii) Buy to Let, and whether there's still money to be made, and my favourite (iii) The possibility of there being a housing crash; and you'll be chatting like old friends in no time!
Home Information Pack
The latest property topic, however, is a relatively new contender, the Home Information Pack (HIP). Although first mentioned all the way back in 1997, a whole decade later they're about to become a reality. Yes, in just eight weeks time (1 June 2007) anyone putting their property on the market will need to have prepared a HIP, containing, amongst other items the property's local authority searches and guarantees for any work done.
However, while the aim of the HIP was to make the home buying and selling process a quicker and simpler one (by providing potential buyers with all of the property's details up front), this may not work in practice as the HIP no longer requires a structural survey known as a home condition report.
Home Condition Reports
Home condition reports (HCR) were presented as one of the main benefits of the HIP, as potential buyers could view the report before making a serious, informed offer. As one in four transactions currently collapses before contracts are exchanged it was hoped this would help speed things up -- plus it would save buyers from potentially having to pay for multiple surveys. However, the government has now said that the HCR is optional and sellers choosing not to include one must supply an energy performance certificate instead.
Whatever your view on the HIP, one thing seems to be certain, and that is that they're definitely on their way. Sellers have just eight weeks to get their house on the market to avoid having to have one, and at around £450 without the optional HCR they're not cheap. Add that to the other costs of home buying and selling, such as stamp duty and you'll see how it all adds up.
Should you sell after the 1 June and need a pack, you may find that your estate agent will do the donkey work for you. However, as no agents have yet held their hands up to quote how much they will charge for this service, we have no idea what it will cost. Indeed, I discovered quite recently from chatting to an estate agent that he'd heard that his chain were planning to charge around £700 for their HIP, which seems shockingly expensive considering they had no plans to include the HCR.
Clearly the only way to avoid the expense altogether is to get that property on the market, quick smart. And many people clearly feel the same as a number of estate agents have reported a surge in the number of properties coming onto the market as public awareness grows, which is expected to increase still further around the Easter break. What's more, although many estate agents sceptically adopted a "wait and see" strategy regarding the packs, local agents in my area at least appear to have now become believers, judging by the amount of information on HIPs they have dropped through my letterbox in the last week.
What's more, the final regulations governing HIPs were laid before parliament last week, and the government is planning an advertising campaign to inform home owners of the packs this month.
So if you're considering selling and wish to avoid forking out for a HIP, remember:
- Any property put onto the market before 1 June 2007 is exempt. However, if you were planning on putting your home on the market at a silly price with the aim of selling next year, beware, if your property is still on the market come 31 December 2007 you'll need a HIP.
- The loopholes allowing you to get out of having a HIP if selling after this date are few and far between. Essentially, the only way to do so is via a very private sale as any amount of marketing (putting up a board, advertising) will mean you'll require one.
- If you live in one of the trial areas for HIPs you may be entitled to a free or reduced cost pack. Areas include Bath, Cambridge, Huddersfield, Newcastle, Northampton, NW Wales, Southampton and Southwark.
Is it worth selling now to avoid having to pay for a HIP? Who knows? But if you are in the position to sell, it certainly can't hurt to get that property on the market before June.
More: Are you ready for HIPs? | Tips to sell a property | Home Information Packs website