Shoot from the Hip

If black was the chosen colour for home information pack (HIP) providers in 2008, in mourning for the market, then 2009's colour of choice is undoubtedly grey. On 8 December 2008 and 21 January 2009, there were further amendments to the HIP Regulations, which will take effect from 6 April. However, despite this deadline fast approaching, there are still several grey areas, the majority of which fall around local authority and personal searches. The only certainty appears to be that the changes will come in on 6 April as planned.

Minding your PIQs

Mortgage advisers should be aware of the changes as it is likely that consumers will come to them for advice, particularly concerning the completion of the new Property Information Questionnaire (PIQ), which will now form part of the HIP. The CLG has prescribed the questions that will be asked and the order in which they will be asked, but each HIP provider is likely to have a different format.

The PIQ includes 17 questions for freehold properties and 27 for leasehold properties and therefore customers are expected to need some help in completing the form. The broad subject matters include utilities information, changes to the property, access and other relevant information while for leasehold properties questions will focus on information regarding the lease.

Examples of questions that need to be asked are:

When was the property purchased?

What council tax band does the property fall in?

Have you carried out any structural alterations?

How long has your lease left to run?

Most of these questions have a "don't know" option, but they must be answered truthfully, accurately and to the best of the seller's knowledge. It will not be acceptable to answer with a series of "don't knows".Interestingly, the PIQ does not require a signature.

The HIP Code specifically advises estate agents about their responsibilities in relation to completing the PIQ under the Property Misdescriptions Act 1991 (PMA). Estate agents should therefore not complete the form themselves, nor help the vendor to complete the form, or they may be liable to fines under the PMA. Estate agents should instead choose a HIP provider who takes responsibility for arranging for the form to be completed and have a range of options to do so.

First Day Marketing

The biggest change is that from 6 April, a completed HIP will be required before a property can be marketed for sale, known as First Day Marketing. At present, marketing can begin once an order has been placed and commitment to pay for the HIP made.

Prior to marketing a property, the HIP must contain:

An index (existing)

A sale statement (existing)

An energy performance certificate (existing)

Land registry title documents and plan (existing)

A copy of the lease where the property is leasehold (existing)

A Property Information Questionnaire (new)

Searches need to have been ordered, but do not need to have been received, to release the HIP.

Searches

There are big changes within the search industry from April. Firstly, the way local authorities charge for searches, and charge personal search providers for accessing information will change. Secondly, the transitional insurance cover provisions are expected to be removed, which means that the search enquiries will need to be answered, rather than insured over.

Lastly, the HIP must include evidence that searches have been ordered but the results do not need to have been received prior to First Day Marketing.

What impact will this have?

The following outcomes are possible as a result of the changes:

There will be a delay in marketing the property until a HIP for the property is compiled.

Overall, the cost of a search, whether carried out by a personal search company or a local authority, will increase and therefore the cost of a HIP will increase.

There will be a wide disparity of prices dependent on which local authority the property falls into and the cost of a HIP is likely to be a variable cost of a HIP plus search as opposed to a nationwide standard fee.

There will be an increase in Trading Standards activity to ensure that HIPs, and the searches within those HIPs, are compliant.

What does this mean for brokers?

A customer may need help from you to complete the PIQ. Their estate agent is unlikely to help them as aiding a client to complete the form falls within the Property Misdescriptions Act 1991.

For mortgage advisers wishing to form partnerships with local estate agents, this is a prime time to approach them, as because of the grey nature of the regulations, there has been a distinct lack of communication about the new requirements.

Estate agents are also nervous about completing the PIQ for the reasons explained previously. They are therefore thirsty for any information they can get, so helpful local mortgage advisers who can provide them with this information and assist the customer in aspects of completing the PIQ (where required) may be worth their weight in gold.

Karen Babington is sales and marketing director for Easier2move, a provider of conveyancing and HIP services and member of the Association of Home Information Pack Providers (AHIPP). n