Handling HIPs with confidence

Agenda

• Why HIPs? • When will HIPs be required?• Which properties require a HIP?• Required contents of a HIP• Enforcement/penalties• How this effects your business• Keeping it simple!• Using the HIP • Storing the HIP

Objectives

• Ensure you understand what a HIP is!

• Give you confidence to answer questions about HIPs

• Help you understand the contents

• Understanding the legislation

• Help you start thinking of ways to make HIPs work within your office

Why HIPs?

Why HIPs?

The Government introduced HIPs because:

• Millions of £s are lost through aborted sales each year

• There has been an increase in the number of vendors “testing” the market at an agent’s expense

• Because of global warming sellers must have their homes energy rated (EPC element of pack)

• The pack will increase transparency in the market

• The Home Condition Report (HCR) will allow buyers to see the general condition of a property before making an offer.

When are HIPs required?

When are HIPs required?

• From 14th December 2007 every residential property brought to market will require a HIP

• The “drop dead date” has not yet been confirmed. This is the date when all properties on the market, regardless of when they were put on the market, will require a HIP.

• Temporary provisions regarding first day marketing have been extended to 31st December 2008 meaning you can continue to market property as soon as the HIP has been ordered and paid for.

Which properties require a HIP?

Which properties require a HIP?

• All residential properties designed for domestic use, including new build homes, require a HIP. The exemptions are:

– Properties to be demolished– Unsafe properties– Commercial properties– Mixed residential/commercial properties– Seasonal/holiday accommodation– Right to buy and similar sales– Sales of property portfolios– Properties being sold without vacant possession (i.e. with a

tenant in place)

The contents of a HIP

The contents of a HIP

“Required” contents are compulsory. They are:• Index (list of documents in pack)• EPC (or predicted Energy Assessment for incomplete

properties) – EPC can now be up to 12 months old

• Sale Statement • Land Registry official entry and title plan*• Leasehold/Commonhold information (if applicable)• Local Authority search• Water & Drainage search

Until 31st December 2008 marketing may commence once HIP has been commissioned and paid for.* Copies of the title deeds if unregistered and a certificate of search result of the index map

The contents of a HIP

“Authorised” contents are optional. They include:• Home Condition Report (HCR)• Environmental searches• Mining, Radon searches etc• Documents relating to repairs/improvements etc• Warranties/guarantees• Translations

Leasehold HIPs

• The regulations regarding leasehold documents have been temporarily amended. Until 31st December 2008 only the lease document will be a “required” document, other leasehold documents will simply be “authorised”.

Energy Performance Certificate (EPC)

• The EPC was introduced by European legislation• The EPC grades property energy efficiency• Checks include heat retention, loft insulation, boiler

efficiency, lighting, cavity wall insulation • Inspection takes 35-45 mins• EPCs have to be registered by Landmark Solutions

before they are put in the pack• Agents sales particulars must contain/attach:

– A copy of the EPC or a copy of the 2 EPC graphs

Our free EPC Graph Generator software can bedownloaded from www.lms.com to make this quick and easy for you

Enforcement/ Penalties

• Enforcement will be through the local Trading Standards Office

• Any agent who markets a property without a HIP post implementation date will face a fine of £200 per incident

• The fine can be cumulative (i.e. if you don’t get a HIP on a property you can be fined again)

• Repeated offences may render the agent liable to a prohibition/suspension under the Estate Agents Act

• Agents are responsible for any part of the HIP that would contravene the PMA

Glossary of Terms

• HIP – Home Information Pack

• EPC – Energy Performance Certificate

• HCR – Home Condition Report

• CLG – Communities and Local Government

• DEA – Domestic Energy Assessor

• HI – Home Inspector

How HIPs affect your business

Booking an Appraisal

• A seller should be made aware if they will require a HIP at booking stage

• Ideally the valuer should cover off costs and available options at the appointment

• Be prepared to answer questions

• Not everyone knows about HIPs!

Carrying out the Appraisal

• HIPs should not change the way you value a property

• Be prepared for some negativity surrounding the subject

• Remember it is legislation so take a neutral stance if possible

• Offer your HIPs solution confidently - remember “solution” is a positive word!

• Other useful words to use: flexible, funded, your pack!

• Look to identify who the seller will use for conveyancing at the earliest opportunity

The Order Process

• Instruct LMS

• LMS commence HIP compilation

• When all documents are complete we send you access to the electronic copy of the HIP

• The conveyancer will have access to an electronic copy

Things to consider!

• How do you manage the vendor’s expectations at booking stage?

• Giving property access to DEAs may be a challenge

• Who will be responsible for managing HIPs within the office?

• Where will you store the HIP?

Keeping it simple

Keeping it simple

• The documents within a HIP (apart from the EPC) are used in all your transactions today

• It is still the responsibility of the conveyancer to discuss the legal documents contained in the pack with the buyer….not yours

• Because the HCR is not mandatory most buyers will not scrutinise the HIP too much

• Remember you are still selling the property on its features and benefits not the pack

• A good EPC is a good selling point

Using the HIP

Using the HIP

• Use the fact your new listings have a HIP as a positive message

• When you have an interested buyer offer the HIP as a matter of course to aid the decision process

• If you are uncertain about anything or have a question you cannot answer contact your LMS account manager

• If you are selling a 200 year old property you should not expect a high energy rating. Should the buyer?? Manage expectations realistically.

Storing the HIP

• HIPs come in many different formats:– Paper (bound book)– CD– Online– USB StickAs a standard LMS HIPs will be provided online.Different formats can be ordered at £10 + VAT each.