The introduction of Home Information Packs (HIPs) is potentially the biggest change to the house buying process since MIRAS back in the late 1980's.
Rachel McKay, mortgage analyst at Moneyfacts.co.uk will be closely following the planned implementation of this high profile legislation over the course of the next 18 months, and in this article, looks at some of the basic questions that consumers will be asking.
Why are HIPs being introduced? HIPs were first mentioned as part of the Labour party manifesto back in 1997 and were originally deemed to be the solution to the then common problem of gazumping. In the eight years that have followed, the reason now given is that they will speed up and simplify the current housebuying process.
One of the main aims of this new legislation is to reduce the current high percentage of agreed sales (reportedly more than one in four) that do not make it as far as an exchange of contracts.
By providing key information at the beginning of the house buying process, HIPs are expected to cut down the levels of wasted time and money and ultimately, to reduce the number of sales that fall through.
When will they be introduced? 1st June 2007
What will a HIP contain? A HIP will comprise a set of documents, which will provide homebuyers with key information about the property that they intend to purchase, this will be paid for by the seller and will include:
How much will it cost? The cost of the HIP will be the responsibility of the vendor (seller). Initial estimates are quoting a figure of around £600 + VAT for the average home. The Home condition report is expected to account for half of the total HIP cost, at approximately £300 + VAT.
How long is a HIP valid for? There is currently no planned expiry date planned for an individual HIP.
What is the Home Condition Report (HCR) A Home Condition Report will provide information, in layman's terms, on the physical condition of a property, including its energy efficiency. It is important to note that the HCR will not quote a valuation of the property.
Who can provide HCRs and who will regulate? Only qualified inspectors (certified in line with government requirements) will be able to prepare these reports.
Will the Home Condition Report (HCR) include a mortgage valuation acceptable to the lender? Lenders will still be required to make their own valuations, but it is hoped that they will make use of the new HCR to improve their existing valuations and provide cost savings to borrowers.
Moneyfacts will be providing further updates on this hot topic during the next eighteen months.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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