Home Information Packs (HIPS) were slowly phased in over 2007, it was a legal requirement that all properties offered for sale on the open market must have a HIP, but this is no longer the case as HIPs have since been abolished.
Under the original legislation, the seller was required to provide a pre-contract package consisting of a draft contract, property information forms, copy deeds, evidence of legal title, copy Local Authority consents and guarantees or warranties relating to the property. In those days, the buyer would have to undertake local searches on the property (local authority and water and drainage searches, etc. ). The introduction of the HIPs pack has changed the conveyancing process since it became the seller’s responsibility to provide a package complete with the documents mentioned earlier, but they must also provide local searches and an Energy Performance certificate (EPC). An EPC reports on the efficiency of the property in terms of energy in the home, e.g. the quality of insulation in the home or the effectiveness of the boiler.
The HIP has not been without controversy. Conveyancing Solicitors have criticised them saying they will slow down the conveyancing process while sellers wait for a HIPs pack to be prepared. There has also been criticism over the costs of preparation of the HIP and who would be best placed to provide the packs since there are now a number of competitors on the market. Those groups against HIPs claim that sellers are unhappy as the cost of selling a property has now increased.
Under the original system, the buyer was responsible for paying for local searches on the property, which meant that if the transaction did not go ahead the buyer lost out financially having paid for searches which could not be used. This could happen to a buyer any number of times whilst searching for a property since a seller can pull out of a transaction at any time up until exchange of contracts. By introducing searches into the HIPs pack and becoming the responsibility of the seller it is argued that there is more of an incentive on the part of the seller for the transaction to go ahead.
The conveyancing process has changed to some degree post-HIPs with the buyer put in a slightly better position. However, the documents that were required to be provided by the seller pre-exchange remained largely the same with the exception of the EPC certificate.
It is certain that the “HIPs experiment” shifted the burden somewhat from buyers to sellers, but it is not as obvious as some claim that HIPs caused property transactions to be any more expensive.