People have been grumbling about Home Information Packs. These are surveys which a seller must buy and then have available to potential buyers when a home is marketed. “HIPS” are supposed to contain lots of useful information but enquiries show that less than 7% of potential buyers actually bother to read the Home Information Pack, so they would seem at first sight to be simply an unnecessary additional cost on selling your home.
A “HIP” has to contain the following information, all at the cost of the seller. It must have an index, an energy performance certificate, a sale statement, standard searches and evidence of title. Your conveyancing solicitor can provide the evidence of title quite cheaply, searches are obtained from the local authority or a land search, which cost up to several hundred pounds but the energy performance certificate has to be obtained from a qualified assessor and can cost upwards of £250.HIPs have changed the way we do things.
Traditionally in England and Wales (Scotland has different rules) the law of buying and selling a home has operated on the principle that the buyer must beware. That put the onus on the buyer to make all necessary searches and enquiries while the seller was only liable to disclose latent defects without being asked a specific question.
HIPs reverse the traditional principle and takes the expense of making enquiries largely from the buyer and places the expense on the seller. That is fair to the buyer in a rising market, when gazumping prevails, but unfair to the seller in a falling market where gazundering is rampant.
In a rising market an owner is tempted to increase the house price, so the expense of a HIP falling on the seller means that the buyer is less prejudiced by a change of mind. In a falling market (as is likely to prevail now) the buyer would be more tempted to try to negotiate a price reduction before exchange of contracts because the buyer has not incurred the expense of a HIP, so as far as I can see HIPs neither quicken the house purchase process nor do they make it more equitable.
The reason for introducing HIPs was to provide in particular energy efficiency information in relation to a home, so that the buyer understands what measures need to be carried out in order to make the home more efficient pursuant to a directive of the European Union.
The energy information given is on a rather crude scale of A to G efficiency and I am unsure that the methodology used is actually robust enough to provide accurate information. I am unsure that assessors have enough experience to provide consistently accurate results.
I am sure that all sorts of anomalies will be thrown up until the assessors develop more accurate methods of providing information. If you run a biomass boiler using wood that would otherwise degrade or go to landfill, and use it infrequently wear your woollies at home and keeping the heating turned down a HIP might well show your home to be inefficient with a high carbon footprint, whereas your use of energy is highly efficient with a low carbon footprint.
It is important for buyers to have information about energy efficiency especially as energy prices will undoubtedly rise horrendously in the coming years. Many people seem unaware of this and on the whole relatively disinterested, as is shown by the limited numbers of people who bother to read the HIP about the property that they propose to buy, which will usually be the largest single asset purchase in their lifetimes.
If you are buying a house, please read the Home Information Pack. Even though you haven’t paid for it, its cost is inevitably built in to the overall house price and it generally provides useful information about what you can do to save energy.
If you follow the recommendations it will make your mortgage more affordable as energy prices continue their inexorable rise. If you let your house you can certainly command a better rent if the energy running costs are low. House buyers and tenants are not yet savvy, but as the prices hit their pockets they will become more savvy realising that not only should they read the energy information in the HIP but demand more accurate and better information and then act on the advice given when they buy the home.
I think that ultimately people act in their own financial interests. The purpose of the HIP should be to show house buyers what is in their best financial interest by avoiding wasting energy. I am not sure that it does this yet, but I hope, as it develops, it will do so.
Filed under: biomass, carbon emissions, climate change, energy, law | Tagged: home information packs, HIPs, conveyancing, contents of HIPs, energy performance certificates, cost of HIPs, future cost of energy
