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 1st August 2007 every residential property brought to market will require a HIP, subject to the phasing below:

– 4 bedrooms or more: 1st August– 3 bedrooms: 10th September – 2 bedrooms: tbc – 1 bedroom: tbc

• There are a number of exemptions (described later)• Properties listed prior to this date will require a HIP

from 1st January 2008 if still on the market

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

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

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.