It’s time that Home Information Packs went for an MOT
Dominic Cullis, MD of Easy Convey, takes us through some of the
fundamental flaws in Home Information Packs (HIP), and the legislation that he
describes as a 'necessary evil'
It is important to point out from
the outset that I can put my hand up and say that I am actually a ‘supporter’
of the Home Information Pack (HIP). When
I say a ‘supporter’, however, I mean a supporter of the concept of HIP's as
originally outlined by the government. At the moment I am struggling to come to
terms with some of the legislation that has been enforced, and I am currently
campaigning for some changes to be made before this beast is let out of the bag
and slumps slowly to its knees.
There are clearly, in my opinion,
changes that need to be made to the legislation surrounding HIP's and it is my
intention to be constructive in my criticism and to ensure that everybody with
a registered interest in HIP’s – from all walks of industry – joins together in
order to make HIP’s the success that they can be.
I must first register my great
surprise and amazement that the government apparently has neither acknowledged
the Council of Licensed Conveyancers nor the Law
Society’s opinions, to ensure that their professions are the ones to provide
the HIP’s.
HIP’s, as proposed, have been
opened out to non-qualified suppliers.
To our astonishment at Easy Convey,
we have already been approached directly by numerous so-called providers, with
some under the rather alarming impression that HIP’s can be provided offshore
and as far away as
Specialised property lawyers have
been undertaking all of the work required to piece together a HIP for many
years, and most of the documents required to be included are currently carried
out on every home purchase anyway, with the only additions being the Home
Condition Report and Energy Efficiency Report. Therefore, in my opinion, HIP’s
should be undertaken solely by licensed conveyers or solicitors. A spokesperson
from the Office of the Deputy Prime Minister, as quoted at a recent forum that
I attended, stated that any legal comment on a HIP must not be included in the
pack, but should appear on a separate document. The Government's reason behind
this is that it is not possible to guarantee the quality of legal comment. But
surely this wouldn’t be the case if the pack were conducted by an experienced,
qualified lawyer?
Among the many reasons for
introducing HIP’s was to save money, since at least £1 million a day is wasted
on aborted transactions. If an experienced
professional lawyer produced a quality pack then a buyer would be able
to rely on the information provided, and it would be highly unlikely that the
buyer’s lawyer would subsequently need to repeat any searches.
With the conveyancing
process that we have now, searches are conducted after an offer has been made
on a property. Since these are valid up to 90 days, it is rare that these
expire prior to exchange of contracts. However, with the introduction of HIP’s
– and with a slow market – a property may remain unsold for in excess of 90
days, and therefore the likelihood of searches falling outside the validity
period is high. These searches would need repeating, therefore adding to the
cost and contradicting the reason given for introducing HIP’s in the first
place. Since much of the information contained within the search result never
changes, there would surely be significant benefit if there were a 'refresh'
service available at a reduced cost, which could extend the lifespan of the search?
The way I see it, an HIP is
similar to an MOT. If a potential buyer has bought a car more than three years
old from a reputable dealership – and it was sold with a valid MOT certificate
– the buyer would not question the validity of the MOT. On the other hand, if a
car was offered, reported to be with a valid MOT, and was clearly covered in
rust, with bald tyres and broken headlights, it might seem that the MOT was
fraudulent?
My point is that Home Condition
Reports won’t carry a certificate indicating a ‘pass’; it will be a lengthy
detailed document containing measurements and readings and the home inspectors'
considered analysis of the condition of certain aspects of the property. This
would be like a car buyer looking at the MOT checklist and trying to make sense
of emissions test results, tyre tread depth, and break wear. This highlights a
need for a legal synopsis to be provided in the pack, written in lay person’s
terms describing the property.
This synopsis would be pivotal in
the example of a buyer considering three apparently similar properties, and
would be critical in their decision process. I can not emphasise strongly
enough the need for this type of synopsis in HIP’s, as I feel it would be
essential in ensuring a smooth sales transaction, which was the main motive
behind the creation of the HIP.
Furthermore, and in a similar way
to an MOT, the proposed Home Condition Report will carry recommendations for
remedial work to be carried out on the house. A good legal synopsis for the pack
as a whole would extrapolate from the Home Condition Report any advice or
recommendations included in it. If the report doesn’t contain any such
recommendations, then an experienced
professional would be able to interpret the information and provide necessary
recommendations or advice to the potential buyers.
The office copy entries are also
often written in legal terminology, and a lawyer would be able to advise
clients of any restrictions in the use of the property (restoration,
conveyance, rights of way etc).
Had there been a regulation for a
legal synopsis in the HIP, then a vendor bringing a property to market would
benefit significantly in the event that any problems were found with the
property. For example, at the moment, if a property is to be put on the market
with a garage that didn’t have the necessary planning consents,
this sort of issue will be resolved through the conveyancing
process, adding to the duration of the transaction. Had the HIP’s been
implemented (with the requirement that proper professionals were to prepare the
pack), then the vendor would be advised to resolve the planning issue by either
obtaining retrospective consent, or, in the absence of this, by demolishing the
garage.
Another example may be where the
lawyer identifies that there is a problem with the right of way or another
defect in the title. Again, were the pack to be produced by a licensed conveyer
or solicitor, then they could advise the client to ensure that these issues are
resolved prior to marketing the property.
Fundamentally, HIP's represent a strong concept, and could become a revolutionary
tool within the property market. As
such, we are issuing a call to all lawyers to further lobby the Government to
ensure their involvement in the production of HIP’s. I am certain that lawyers
will remain a vital part of the process and that estate agents will need their
help to compile HIP’s. I would even go as far to say that estate agents should
be on the look out now, for like minded licensed conveyancers
and solicitors to help them in this process and this is something Easy Convey promote
through a series of road shows across the