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Law Society says Agents are Ignoring HIPs

publication date: Aug 18, 2008
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author/source: Rebecca Swain
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HIPs nooseMany estate agents are advertising properties which do not provide a Home Information Pack (HIP) for several weeks after they first go on show, it has been claimed. 


The Law Society believes that some agents in England and Wales, have begun marketing the homes without having even ordered the HIP - which is mandatory for all property sales. The BBC reported that resistance required to purchase the pack is thought to be one of the reasons for this trend.


Love them or loathe them, Home Information Packs have now been with us for over a year. Government proposals requiring HIPs to be completed before marketing have been delayed until 1 January 2009. At present, a property can be marketed without a HIP - but only where the contents of the HIP are expected to be available within 28 days. 


Reports at the beginning of August suggested that some sellers and estate agents are failing to order and produce HIPs. Whether or not this is true, HIPs are now compulsory for the vast majority of residential properties being marketed for the first time. The responsibility for the Pack lies with the person who is marketing the property - more often than not that is you, the estate agent. 


Penalties and fines 

The penalty for failing to provide a HIP and any other breach of the HIP fines are enforceable by the Local Authority Trading Standards Officers. Simple maths may suggest to sellers and estate agents that, with the average cost of a HIP lying between £300-£350, taking the risk of a fine is a more attractive option. However, if Trading Standards do issue a penalty charge, they are also under an obligation to notify the Office of Fair Trading (OFT). The OFT's powers are far greater and can lead to a Warning Order being issued against the agent and, ultimately, banning the agent from practising as an estate agent in the future. 


Mistakes can happen and confusion can arise, particularly in the current market where a property may already have had a sale agreed and the transaction has fallen through, or where the seller has changed estate agents. Consulting with an expert fully aware of the regulations can mean that these mistakes can be avoided. The expert can also make you aware of matters the buyer's solicitor will want to investigate, if these are then dealt with, it can also add value to the HIP. 


Are they really necessary? 

At the moment, buyers are cautious and mortgage funds are less readily available. The searches in the HIP can get out of date and this results in additional abortive costs if the seller decides to withdraw from the market. It is this that has surely led people to question whether the HIP is really necessary, especially when searches are generally now produced quickly. 


With the negative press that HIPs are receiving, it is inevitable that some sellers are going to question the need for one and try and avoid the associated costs. After all, if they have employed an estate agent to market the property, there is no risk to them. Whilst a HIP does assist the Government in meeting certain energy efficiency obligations relating to the Country's housing stock, research shows they have little impact on the prospective buyer. Estate agents, sellers and, indeed, the public as a whole may feel that HIPs are an inconvenient administrative burden that delays the initial sale process.


The coinciding of the implementation of the Packs with the so called 'credit crunch' has meant that any added value that a HIP could have had has been wiped out. 


The Law Society and the NAEA will continue to lobby the Government for changes but, for the time being, we are left with HIPs. Rather than resist this, perhaps we should take the time to sell the HIP, as well as the property. 


Packs 

A Pack itself is, clearly, not going to convince a buyer to buy the property. They may not even be interested in receiving a copy at all. A HIP, however, that has been properly prepared and contains searches and other compulsory and authorised documents can be used by the buyer's conveyancers and it can make the transaction progress faster once a sale has been agreed. 


Sending a Pack to the buyer's conveyancer with the Notification of Sale (or as soon as it is available) will enable them to start work without having to wait for the contract Package from the seller's conveyancers. 


Enquiries can be raised at the outset, rather than weeks in to the process. They are an inevitable part of the transaction and, the sooner they can be dealt with, the better all round! 


It will be a tough job for HIPs to win over the hearts and minds of the sellers, estate agents and the conveyancers. For all any of us know, they may be gone before we are ever given the chance to see what they could do. 


However, with the penalties available for any breach of the regulations, the message to estate agents should be clear: ignore HIPs at your peril - your business could be at risk! 


Rebecca Swain 

Thomson Snell & Passmore 

rebecca.swain@ts-p.co.uk