Mortgage Articles

Summary:

Ready, steady, go! With just three months to sell your home using the forthcoming and compulsory information pack, you need to get your act together. Here we face the facts.

 

HIP's – the full story

Author: Dot Piper 14/07/06

Home owners will soon have just three months to sell their homes or be forced to re-issue the seller's information pack at an estimated cost of £1000 for the average semi-detached home. This would be in addition to the original £1000 paid out for the original sales pack.

Much has been written about the Home Information Packs (HIP's). Here we aim to examine the final details, just released.

From June 2007 it will be compulsory for all sellers to produce a dossier containing certain basic facts regarding the sale of the property. Ministers estimation of the costs of this survey are £776, a figure that the experts dispute. They say the figure is much more likely to be £1000. These figures are based on an average semi.

The information given in the dossier includes searches, deeds, description of the property and an energy efficiency rating. However, it appears that there are some rather worrying exclusions in the list. For example, there is no reference to rights of access, ground stability, natural subsidence or effects of mining. Risks of flooding are not included; neither is contamination from radon gas or other substances. Telecommunication links seem to have been overlooked too.

Despite this cost to the seller, it appears that if a buyer is borrowing in excess of 80% of the property value, they'll still be expected to commission and pay for valuations.

With regard to the three month time limit on sales, it appears that mortgage lenders will refuse to advance cash to buyers where the HIP is over three months old. Also, if house is taken off the market for over 28 days within those three months, a new HIP will have to be obtained. Where the reason for the property being off the market for 28 days was connected with a sale, the rule would not apply.

Where a property is marketed for sale on a private website or even by a for sale sign in the garden, the failure to supply a HIP will result in a fine of £200 per day.

In reaction to the announcement of these regulations, a Tory spokesman was quoted as saying the packs were “expensive, deficient and dangerous. The refusal to tell families whether the back garden will be safe for their children or of potential flood risks, delivers a serious blow to the credibility of these packs.”

.The Law Society are concerned that there may be significant defects in the scheme in the there is no provision in the regulations for information within the HIP to be authenticated or confirmed by the seller. They are of the opinion that there should be a warning that reinforces to the buyer the risk of taking on substantial liabilities and commitments.

When you take into consideration the fact that the VAT alone from these packs will bring in £111m per year into the treasury you realize why the Government has been accused of yet another stealth tax implementation.

So there you have it. It appears to be that, for better or worse, HIP's are here to stay.

Readers please note : You should undertake your own background checks before taking any action on any aspect mentioned in this article. Where the author has mentioned specific product details or given examples of how companies have reacted to specific situations, these should be correct as far as the author is aware when this article was written. In some cases additional background information not mentioned in the article has been used in obtaining the examples. Some examples or quotes may have been taken from information available in the public domain where all the background details may not be available. Insurers do change policy conditions and underwriting approach. They will view each situation on its own merits.

You should be aware that details of the topics written about within the articles can change. Therefore, always check out the current position before taking any action. You should also check that any action you are considering, or any proposed purchase, is suitable for your personal circumstances.

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