Tuesday May 22, 2007
Guardian Unlimited
So what is a Hip?
Hips were scheduled to be introduced across England and Wales from June 1, but now their whole future looks in doubt, despite today's attempt to rescue the scheme.
The original plan was that sellers would provide prospective buyers with a collection of documents to prove what they say about the house is true. The seller would collate the pack before the property went on the market.
The scheme has been watered down and delayed. The government has postponed the Hips launch until August 1, and even then it only applies to houses with four rooms or more. Hips for smaller homes will be rolled out on an as yet unspecified timetable.
What's in a Hip?
There are five main compulsory documents - the Hip index, which explains exactly what's in the pack, the energy performance certificate, which rates your property's energy efficiency and gives it an environmental impact rating, the sale statement, which explains who owns what, a standard searches document, which should cover all the relevant searches carried out by the local authority, including water, drainage and nearby planning proposals, and evidence of title documents, which prove that the seller owns the property.
Copies of the lease and other documents relating to leasehold and commonhold properties should also be included where necessary.
What about a survey?
There is no homebuyer's report or survey in the Hip. Buyers are still advised to get a survey done themselves, and any mortgage company will also carry out its own valuation survey, for which the buyer will also pay.
When Hips were first mooted it was thought that a survey would be the most important part of the pack, but heavy lobbying from organisations such as the National Association of Estate Agents forced the government to take them out. They argued that buyers would not trust a survey commissioned by the seller and would spend additional money getting a separate report done. Consumer group Which?, which had previously though Hips to be a good idea, promptly withdrew their support labelling the scheme "half-baked".
The government had promised to make surveys compulsory in the future, but where they stand on that now is unclear. In the meantime sellers can include a home condition report as an optional item, along with a legal summary, a contents form and other location-specific forms such as a risk-of-flooding or ground stability survey.
How much will a Hip cost?
Estimates say £400, which will be paid for by the seller, although the buyer might have to pay for printing and postage - some Hips will be 200 pages long. However, critics say the cost will be passed on to the buyer by way of higher property prices - one of the reasons Hips have been so heavily criticised.
There will also be a variety of ways of hiding the cost. These include choosing an estate agent that offers a "free" Hip as part of their all-inclusive fee, or by paying for it after the house has been sold. You can also save money by doing it yourself.
The new big bill is expected to be the energy performance certificate (EPC), which will cost around £150.
Tell me about that
The EPC is what the government and the Royal Institute of Chartered Surveyors got in a fight about, and is what has caused the climbdown.
An EPC is an energy audit. Before you sell your house an inspector will rate how efficient it is - they will look at your boiler, light bulbs, windows, and loft and cavity wall insulation.
The government says 2,500 EPC inspectors would be needed by the end of June to carry out the assessments, but so far only 520 have accreditation. Such a shortfall just 10 days before the launch of Hips made the whole scheme look unworkable, so the government postponed and changed the scheme.
The government thinks EPCs will encourage people to insulate their homes and cut carbon emissions. However, the certificates have been labelled pointless because, unlike a survey, the information won't swing a sale or put people off from buying a home.
Why else are people worried about the scheme?
One of the main criticisms was that the packs would go out of date before a sale was made, leaving the seller open to additional costs. The National Association of Estate Agents also said the packs would mean an end to day-one marketing, where a property is sold the same day the owner puts it up for sale.
Changes to the scheme announced by Ruth Kelly today took notice of this. EPCs are now valid for a year, not three months, and sellers will be able to market their home as soon as they have commissioned their Hip.
I am thinking of selling my house. Do I need to get a Hip now?
No you don't, and unless you live in a four-bedroom house or bigger you can forget about Hips for a while. If you do live in a four-bedroom house or bigger you will need to have a Hip from August 1.
This, the government says, is because bigger houses use a lot more energy and should be encouraged to be energy efficient before smaller houses. Around 17% of houses have four bedrooms or more, according to the Council of Mortgage Lenders.
If you live in a smaller house then the government has said you will have to get a Hip ... some day. When that day is hasn't been named. This state of confusion has been labelled "utterly exasperating" by Allied Surveyors, the UK's largest firm of chartered surveyors. They added it was a clear case of "staggering ministerial incompetence."
It's all a bit of a mess isn't it?
You could say that.
Okay, so if I do have to get a Hip, how long is it valid for?
In theory until the property sells. If the property comes off the market and goes back on again within 12 months the Hip will still be valid.
And what about Scotland?
Scotland plans to introduce a similar scheme next year, but it will include the property survey and is known as the single survey scheme or purchasers information pack.
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