Member Article

Home Information Pack U-turn ? is this the beginning of the end?

With Watson Burton LLP Law FirmOn the 18th July 2006 the Government announced that it no longer intends to make Home Condition Reports (HCRs) compulsory in the Home Information Packs (HIPs) due to be introduced in June 2007. HCRs are designed to outline the condition of the property and form an essential part of the HIPs. The fact that a survey was to be included in HIPs was intended to cut the time from offer to exchange as buyers would know what they were buying before they made a formal offer, helping to reduce the number of deals falling through and money therefore being wasted on searches and surveys. However, solicitors have been concerned that compulsory HCRs would disrupt the house buying process because buyers could not sensibly rely on a survey commissioned and paid for by the seller. The Council of Mortgage Lenders were also concerned that HCRs as proposed would not fully satisfy their needs for offering mortgages. Following pressure from lenders, solicitors and estate agents the Government has announced that HIPs will no longer contain a compulsory HCR. HIPs will now comprise of title deeds, searches and the Energy Performance Certificate (EPC). The Government says its decision has been based upon the analysis of 14,000 HIPs produced so far and concerns that there will not be enough home inspectors (i.e. the surveyors approved to carry out the HCRs) in place by June 2007. Furthermore, evidence from the Council of Mortgage Lenders has shown that many lenders will not be in a position to make use of Automated Valuation Models (designed to speed up the mortgage offer process) which will support the use of the HCRs. The Government will instead begin by promoting the take up of HCRs on a market-led basis. Housing Minister Yvette Cooper said, “We believe there will be a significant incentive for consumers to top up their HIPs voluntarily to include full home condition reports and that this is a product that the market can and should deliver. Further testing is needed to ensure that home condition reports deliver the assumed benefits for consumers and that the operating systems that support them work smoothly.” However, the Government has stressed that if HCRs are not taken up on a voluntary basis, mandatory inclusion of HCRs remains “on the table”. It is now make or break for HIPs. If the market rejects voluntary HCRs the Government may have to rethink the whole HIPs regime. If you have any queries relating to this article please contact Nicholas Gemmell at Watson Burton LLP (

This was posted in Bdaily's Members' News section by Ruth Mitchell .

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