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What is a HIP - The Home Condition Report
Why did the Government decide to change the Home Information Pack implementation plan and make Home Condition Reports an authorised rather than mandatory element?
The decision not to introduce mandatory Home Condition Reports on 1st August 2007 was driven by the overriding priority of ensuring a smooth implementation that maximises benefits for consumers. Rather than having a “big bang” implementation, with all the risks that that would have entailed for home buyers and sellers, we have concluded that the mandatory elements from next August will be the Energy Performance Certificates, searches and other legal documents. The Home Condition Report will remain part of the Pack, but as an authorised document rather than mandatory item, and we will promote voluntary take-up of Home Condition Reports as well as testing them further in the Dry-run.
The Government says that mandatory Home Condition Reports “remain on the table”. Does this mean that if Home Condition Reports don’t work on a voluntary basis you will make them mandatory?
The Government is working with stakeholders to facilitate the voluntary take-up of the full Home Condition Report. The Government hopes to set out the steps that it will be taking to facilitate the voluntary take-up of Home Condition Reports. Mandatory Home Condition Reports will remain an option if the industry fails to make a success of the voluntary take-up.
What kind of support will be given to encourage voluntary take up of Home Condition Reports?
The Department is already working with stakeholders to look at ways to support a voluntary take-up of full Home Condition Reports. As part of this approach we will explore with the sector a wide range of options. We are prepared to invest resources in promoting and developing voluntary take up.
If the Home Condition Report is being commissioned by the seller, how can you ensure it is impartial - How can they trust the contents?
Only Inspectors qualifying under a Certification Scheme approved by the Secretary of State will be able to prepare Home Condition Reports. The schemes will be responsible for monitoring and auditing Inspectors’ work. This will be robust to ensure that standards are maintained.
The Home Condition Report can be legally relied on by buyer, seller and lender. To ensure that consumers are protected, Inspectors will need to have suitable insurance. Certification Schemes will be required to check that the Home Inspector is insured for each Home Condition Report undertaken.
If Inspectors fail to maintain the correct standard or act in a way that is partial to one party, their certification will be removed, and along with that their ability to produce Home Condition Reports.
What assurance does the seller/buyer have that a Home Condition Report has been produced by an accredited Home Inspector and has not been "tampered with"?
The person marketing the property has a duty to ensure that the contents of the Home Information Pack, including the Home Condition Reports, are genuine. The seller and prospective buyers will be able to check whether the Home Inspector who produced the Home Condition Report is included on a Certification Scheme’s public register through a single point of access. Completed Home Condition Reports will be held on a register and those involved in the purchase will have access to Reports and so will be able to compare it to their copy of the report.
If the Home Condition Report is a survey - why not call it a survey?
The Home Condition Report is indeed a type of survey but is different to other surveys currently on the market. It will be an objective report on the condition of a home written in plain English. It has been called a Home Condition Report to distinguish it from other surveys and because this is a more accurate description of what it is.
What will the Home Condition Report cover?
The Home Condition Report will be an objective report on the condition of the property that can be relied upon by buyer, seller and lender. The report will be in a standard format prepared in accordance with standards set by the Department for Communities and Local Government. It will cover matters of importance to a buyer - the general condition of the property taking account of its age, how energy efficient the home is and any defects or other matters requiring attention.
What are the advantages of including a Home Condition Report in the Home Information Pack?
Late availability of home condition information frequently causes problems. Our research suggests that 43% of failed transactions do so as a result of problems revealed by a valuation inspection or condition survey after terms have been agreed. The cost to consumers can be around £1,000 per transaction. Moreover, even where transactions do not fail they are often delayed whilst renegotiations take place. In a chain situation the effects go well beyond those directly involved. That is why we want to ensure that condition problems are identified up front and would advise that sellers ‘top up' their Home Information Pack to include a Home Condition Report.
There are advantages for both sellers and buyers. These include:
- helping sellers make decisions about how much to ask for their home, and giving them the option of having any necessary work done or else getting quotes before they market the property.
- helping buyers make an offer, which reflects the true condition of the property, and avoid unexpected bills when they move in.
- for both seller and buyer there is much less risk that the transaction will be delayed or fail due to problems with the condition being revealed later.
How long is a Home Condition Report valid for?
The Home Condition Report must be no more than three months old when marketing starts, but there will be no duty to update it once marketing is underway. The Report provides a ‘snapshot’ of the condition of a home at the time it was written. The condition of a home does not normally change quickly unless there is an intervening event such as fire or flood, so the Home Condition Report should be reliable for around six months.
The majority of sales complete within six months under the current process, and we expect the Home Information Packs to shorten the time between offer acceptance and exchange of contracts.
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