Home Information Packs – Preparing for the New Legislation – What does this Mean for Estate Agents?

In December last year the Government announced that from April 6 it will re-instigate the first day marketing provisions in the Home Information Pack (HIP) legislation. This effectively means that from April 2009 estate agents cannot market properties without being in receipt of a HIP, and offenders who do may be liable to a fine of up to £200 per property.

The suspension of first day marketing up until now has allowed estate agents to market the property whilst the HIP was being drawn up. Invariably it was prepared at the same time as the sales particulars, including the energy performance certificate. The main concern for estate agents was that the energy performance certificate was undertaken promptly as the remaining searches and documentation could be produced within a reasonable amount of time.

So what does the new legislation mean for the industry? The first and most obvious change will be that properties cannot be marketed for sale without a HIP. The Government has warned that the threat of the £200 fine will not be an empty one, and it will assign more resources to the policing of HIPs.

Another significant amendment estate agents need to be aware of is the Property Information Questionnaire (PIQ). Completing the PIQ should not be particularly complicated, but some detailed information is required – especially information in relation to leasehold transactions, which may not be readily available from the client. In practice this will mean the client will need to complete this information twice as they will still need to complete the usual enquiries about the property that they receive from their conveyancer as the PIQs aren’t detailed enough!

Estate agents may wish to complete the PIQs with their clients if they want to get properties on the market quickly, essentially resulting in more work. There may also be an additional cost involved if HIP providers add the Property Information Questionnaire procedure to their process.

On the upside it may prove easier to tailor a sale-ready HIP if the conveyancer is instructed early in the selling process. It will then become the role of the conveyancer to produce the Property Information Questionnaire with the client, which they are well versed to do. This will not only mean the estate agents’ workload is reduced, but that the legal instruction is started early so that all documentation will be ready for swift completion once the sale is agreed.

One of the key issues that must be considered with the PIQ is its interaction with the Property Misdescriptions Act. Be warned that if as an estate agent you provide input or even comment for the PIQ you may be liable under the PMA. If the questionnaire is completed solely by the seller you won’t be liable.

Whether the changes will actually come into force on April 6 remains to be seen, the legislation has already been postponed several times as the Government realised the fragile housing market could not take the burden of these changes would mean. The idea behind HIPs was to make all the information about a property available to buyers before an offer was made but what the legislation seems to have done is make the whole process of selling houses more difficult, not easier.

It would appear that very few clients read the HIP as they feel it is full of legal jargon for their conveyancer to disseminate, and many conveyancers would tell you that the HIP is a fairly useless concept as much of the documentation contained in them will need to be reconstituted. Local government searches for example have a maximum shelf life of six months, so requesting them before they are needed simply doubles up on work. The PIQ also seems to have been developed without consultation to the conveyancing industry. They will inevitably lead to additional work for the client as they will have to answer more in-depth questions about the property at a later date.

It is without doubt that the home information pack legislation requires complete review.  It may be that we will not need to wait too long for a new government and for that review to take place. The Office of Fair Trading is undertaking a massive review of the whole process of buying and selling homes, so I hold out hope for a turnaround on the legislation.