From June 1st 2007, if you want to sell your house you’ll have to prepare a Home Information Pack (HIP) first. That’s the law.

At that point it will be illegal for you to put your home on the market without one. If you don’t, you’re facing a £200 fine!

The Government claim the HIP’s will reduce gazumping and reduce the number of sales that fall through. But the National Association of Estate Agents disagree. They think the new Packs will simply shift the existing problems from the middle of the selling process to the beginning. Other commentators believe that HIPs will do nothing to reduce gazumping or indeed, the tricks employed by some of the less reputable estate agents.

Our view is that if the packs help to identify a problem before everyone starts instructing solicitors and incurring cost, then surely that’s for the better? Better to have problems out in the open at the start than stumble upon them half way through the selling process.

Within the Packs the Government proposes that sellers will have to include the following information:
· A draft sale contract
· Search results from the Land Registry
· Replies to the normal initial enquiries made on behalf of buyers
· Copies of any planning, listed building and building regulations consents and approvals
· And for new properties, copies of warranties and guarantees
The Pack will also contain two items provided by buyers now:
· Replies to searches made of the Local Authority
· A Home Condition Report based on a professional survey of the property including an energy efficiency assessment
In addition, for leasehold properties:
· A copy of the lease
· Most recent service charge accounts and receipts
· Building insurance policy details and payment receipts
· And regulations made by the management company or landlord
Later this year the Government will publish the exact details of what will have to be included within the HIP. They believe that the Pack is likely to cost sellers around £825 including VAT to prepare, but they claim that these are not additional costs.

The points raised by the Government are:
· The HIP will transfer responsibility for obtaining local searches and a home condition report from the buyer to the seller. But since most sellers are also buyers, these costs would usually be balanced by corresponding savings and benefits. We agree.

· The Government also say that they expect that most sellers won’t have to pay up front for the pack. We doubt this. Someone is going to have to pay and we doubt whether solicitors or estate agents will fund the up-front cost. But nevertheless the Government argue that HIP’s shouldn’t act as a brake on properties coming to the market. We say it will certainly dissuade all but the committed seller – those simply wanting to test the market will surely back off. In practice this will be a good thing, but it will reduce the amount of property up for sale.

· The Government believes that market forces will keep prices low for consumers and those who are pricing Home Condition Reports and Home Information Packs at a premium will lose out to those who don’t. We are not so confident about this. It very much depends on how estate agents and solicitors adapt the pricing of their fees. We think we’re likely to see some very creative pricing especially from estate agents! It’s certainly going to pay to shop around for a good deal.

· Another factor is that at least £350 million is wasted each year on the 30% of sales that fall through. The Government hope that the Home Information Packs will greatly reduce number of failed transactions and avoid these wasted costs. We don’t think you can argue against that!
We just hope that all these changes to the process of buying and selling houses doesn’t result in a bureaucratic nightmare. Over 7,000 inspectors will be needed to carry out the new Home Condition Reports and getting them all trained, qualified and registered may yet prove to be that fly in the ointment!

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