Subsidies offered for HIPs

Home Information Packs (HIPs) have come in for a lot of discussion and criticism in recent months, and the Government has been forced to delay their introduction from the original date of 1 June to 1 August 2007.

Now the government has said that it will subsidise 5,000 HIPs ahead of the new compulsory deadline. The Communities and Local Government (CLG) department said that it will contribute £100 plus VAT towards any energy performance certificates (EPCs), which are part of each HIP, if commissioned before 1 August 2007.

On the implementation date HIPs will become compulsory for homes with four or more bedrooms, and after that properties will require packs “once sufficient energy inspectors are in place nationally and regionally to meet demand, taking into account market conditions and evidence from implementation".

The CLG expected that they would need 2,000 accredited assessors and inspectors to implement EPCs and HIPs for three bedroom homes, and a total of 3,000 would be need to cover the whole property market. With only 1,000 accredited energy assessors in place there is a long way to go, although 4,700 have passed training exams.

Housing minister Yvette Cooper said that EPCs would help to save nearly a million tonnes of carbon a year by 2020, and will help families to reduce their fuel bills by hundreds of pounds. EPCs will give homes an energy rating using green-amber-red coding, similar to those already used for white goods ratings. Cost effective measures will help to reduce carbon emission that come from homes.

Good news for supporters of HIPs came recently when major providers agreed to guarantee that the packs will come to consumers within seven days of commission or a refund of £100 would be offered if not completed in that time.

There are still critics of HIPs in all areas of the property market. Peter Bolton King, the National Association of Estate Agents (NAEA) chief executive, believed that the already chaotic situation would be made worse by the now three-phased introduction of the packs and cause complete confusion.

RICS identified a legal loophole in that the CLG will not require sellers to produce a HIP at exchange of contracts – so some might wonder what the point of them is. If the buyer can’t use the information in a HIP before exchange what use is it to him/her? But that is the case: sellers need to only prove that they have ordered a HIP at exchange, which will save them costs of the scheme. An EPC is required by exchange, but a HIP only needs to be on order. If a buyer is found but then the property is taken off the market and the HIP hasn’t yet been produced, then the seller would not need to pay for it.

RICS feel that HIPs are a rushed policy, which fails to meet consumer needs and industry needs. Members of RICS have been requesting clarification of the new regulations, so they can avoid breaking the law. At the moment RICS believer that selling a house without a HUP would not be illegal in the interim period. The Government is under pressure to provide regulations that clearly state the position if a home is sold without a HIP, otherwise there will be those who pay for a HIP, and those who legally don’t by getting round the rules.

RICS is committed to the introduction of EPCs, and has asked the Government to separate EPCs from HIPs.

The CLG has published revised regulations for HIP implementation and amendments to the regulations governing provision of EPCs. The Royal Institution of Chartered Surveyors (RICS) is analysing these regulations and taking legal advice on their impact. They say that there are a number of clear points of which RICS members should be aware:

• From 1 August 2007 a HIP must be ordered for all properties with four or more bedrooms
• The property may be marketed before a HIP is obtained, as long as there is proof that the documents have been ordered and there is a belief that they will arrive within 28 days
• As soon as an EPC is available a HIP must be provided to prospective purchasers, and other documents must be added when they become available
• An energy asset rating is only needed once a HIP has been received
• Irrespective of whether the HIP arrives before the property is taken off the market (agreement to sale having been reached), an EPC must be provided at exchange

As dates are entirely dependent on the number of energy assessors who come forward for accreditation, there are as yet no dates for roll out of HIPs to three bedrooms, and then to all other properties. It is said that it will be before 1 January 2008.

The roll out of HIPs to three bedroom properties, and the rest, will be achieved through Commencement Orders giving three weeks’ notice of the additional phase.