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EPCs and HIPs for all marketed homes from 14th December 2007

It's official, from 14th December the final phase of the Home Information Pack (HIP) is being implemented.

Housing Minister Yvette Cooper and the CLG Department for Communities and Local Government) has this morning (22nd November 2007) issued an official press statement to confirm the timetable for commencement of the final phase of HIPs.

Commenting on the news, Chief executive of property-careers.com, Stephen Callaghan said: "We are delighted that the CLG has listened and has responded to our regular lobbying. The Minister's press statement will come as welcome and timely news to all the Domestic Energy Assessors (DEAs) and Home Inspectors (HIs)who have made personal investment in their new careers. At last, all the negative speculation is over and our new industry can now move forward positively into 2008."

Here is a copy of the official release, just published by CLG:

Full roll out of HIPs
• All homes marketed for sale from 14 December 2007 in England and Wales will need a Home Information Pack (HIP).

Ministerial Statement by Yvette Cooper on 22 November 2007

The Government set out its approach and criteria for phasing the implementation of Home Information Packs (HIPs) including Energy Performance Certificates on 11 June. Sixty per cent of the market is now covered by HIPs. And the criteria for roll out to the rest of the market have now been met. We will therefore complete the phased roll out by extending coverage to the rest of the market from 14th December.

First time buyers of one and two bedroom homes will be the main beneficiaries as they will now get important information about their new home for free. Information such as searches for which they would previously have had to pay will now be included in the HIP paid for by the seller, reducing the costs of the first step onto the property ladder. But all householders will benefit from having detailed information about the energy efficiency of their home, and measures to save on their fuel bills and cut carbon emissions.

200,000 Energy Performance Certificates have been generated since the summer. The analysis of the early phase of rollout of HIPs found that the average rating for homes was an E, and we know that approximately one-fifth of all homes are likely to get an F or G rating. This means that basic measures could significantly cut both fuel bills and carbon emissions. The Energy Savings Trust have also estimated that homeowners could also save around £300 a year on fuel bills from implementing the recommendations in the Energy Performance Certificate.

We will establish a new Green Homes Service to offer those buying or selling a home with an F or G rating free or discounted help with energy efficiency measures, by linking them up with grants and loans provided by energy companies and others. Home buyers could potentially be eligible for hundreds of pounds to get help with insulation or other improvements.

As set out in the criteria of 11 June there are now sufficient energy assessors and home inspectors fully qualified and accredited to provide Energy Performance Certificates for all homes bought and sold. 5794 people are now accredited.

In addition, the government has also conducted monitoring and analysis of the implementation programme to ensure continued smooth roll out.

Early monitoring shows:

• HIPs are taking on average 7 to 10 days to prepare.
• The majority of property, and drainage and water searches, are being delivered within 5 days
• Energy Performance Certificates (EPCs) are being prepared on average within 2 to 4 days
• On average, a HIP costs between £300 and £350. Most of these are not new costs, as they cover the cost of searches and other documents which have simply been transferred from buyer to seller at the beginning of the process. The Energy Performance Certificate (EPC) is of course new but provides consumers with valuable information of the costs of running their home.
• Competition from HIPs is reducing the costs of average property searches. 85 local authorities have already reduced their charges by £30 on average.

The government has also commissioned and considered extensive analysis by Europe Economics on the impact of HIPs on the market. We are today publishing their independent report which includes modelling on the impact as well as analysis of the first few months of implementation. It finds no evidence of any impact on transactions or prices, although there is a predicted short term impact on new listings as sellers change the timings of their listings. It concludes that the impact on listings is short lived, and the impact on the market is marginal compared to the wider factors.

We also asked Europe Economics and Dr Peter Williams who is a member of the National Housing and Planning Advice Unit to consider whether changing housing market conditions meant we should change the approach to completing the roll out. Their conclusion was that there are strong arguments for rolling out as planned, and that further delay could cause greater difficulties and uncertainties in the market.

In the light of this evidence therefore we will tomorrow lay the commencement order to extend HIPs and EPCs to one and two bedroom properties from 14 December. In order to ensure continued smooth implementation, we are also extending the temporary provisions on first day marketing for all properties from 1 January to 1 June, providing flexibility for sellers as part of the roll out to one and two bedroom properties.

The implementation of Home Information Packs so far, and the work of the Stakeholder Panel, has also highlighted further improvements that are needed to benefit consumers.

HIPs have already led to improvements in the delivery and cost of searches, with significant reductions in the cost of searches, and in some areas, substantial reductions in the delays in producing searches. However, there are still wide variations in costs and services and we want to see further improvements for consumers. We will therefore publish guidance on access and charging in December for local authorities and personal searchers with the aim of speeding up searches and delivering a fairer deal for consumers.

We have asked Ted Beardsall, Deputy Chief Executive of the Land Registry - and member of our Home Buying and Selling Stakeholder Panel - to advise on what else could be done to improve the search process, ensuring better quality and timeliness of information, and improving value for money for consumers.

Stakeholders have also raised concerns about the costs and timeliness of leasehold information, and the impact that this will have on Home Information Packs when one and two bedroom properties are included given the higher number of leasehold properties. In the majority of cases we would expect leasehold documents to be readily available and easily provided as part of Home Information Packs. However we are aware that some leaseholders, whether in the pre-existing system or creating a HIP, can find the relevant documents difficult to obtain quickly. We know that some also face disproportionate charges to access their documents.

As leasehold information is an important part of the home buying and selling process, and is already generally paid for and provided by the seller, we continue to believe there are considerable advantages to consumers from having leasehold information early on in the Home Information Pack. However, to ensure continued smooth roll out we will phase the introduction of leasehold information in response to stakeholder concerns. We will temporarily amend the HIP regulations so that the lease document itself must be included, but other leasehold information will be introduced as a requirement in six months time. This will allow HIPs for one and two bedroom properties to bed down in advance of leasehold information being required. In the interim, we have also asked Ted Beardsall to advise us and the Home Buying Stakeholder panel on what more can be done to improve the timeliness and cost of leasehold information, alongside the work on searches.

From April 2008, we will begin to roll out EPCs for newly built homes, as well as across commercial property for sale, rent or construction. By October 2008 all public buildings will have a display certificate.

All these measures are designed to promote the interests of the consumer. We will continue to actively monitor the rollout of HIPs and energy performance certificates and the home buying and selling process to ensure we can respond where further improvements are needed. The introduction of HIPs is part of a wider programme of reforms to home buying and selling including e-conveyancing and better redress, which aims to provide consumers with a clearer, more transparent and effective service, with better value for money, benefiting all potential homebuyers and helping in tackling climate change.

Here an overview of the FAQ's released by the CLG:

HIPs - what do I need to know?

22 November 2007

What is being announced today?

• The final phase of the roll-out to all existing properties (2- bedroom and smaller) from 14 December 2007
• A consultation on proposals for a complementary searches charging regime.
• An extension of the temporary First Day Marketing provisions for an additional 5 months to allow for full flexibility (from 1st January to 1st June 2008).
• The laying of an order to temporarily amend the HIP Regulations until 1 June 2008. During this time HIPs will only need to include the Lease, while the HIP will authorise other leasehold documents.
• We have commissioned Ted Beardsall, Deputy Chief Executive of the Land Registry - and member of our Home Buying and Selling Stakeholder Panel - to advise on what else can be done to improve the search process and the provision of leasehold information.

Will this now mean more work for our DEAs?

Rolling out HIPs to the rest of the market will bring immediate benefits for DEAs, as from 14 December DEAs will be able to carry out EPCs for all properties (1&2 bedrooms homes will now require them) In addition, from April 2008 EPCs on newly built homes will be rolled out. From then we will also start to introduce commercial EPCs on the sale, rent or construction of a huge range of premises.

Why did you extend the exemption on first day marketing?

We have extended to ensure smooth implementation as well as because of a later than expected commencement of Home Information Packs and in response to delays in the production of guidance to local authorities dealing with access to and charging for search information.

What will happen to packs already completed?

If these packs contain leasehold information which will not be mandatory under the updated regulations, those sellers will benefit from having more information about the property available for potential buyers thus making their homes easier to sell.

Why have you decided to roll out now?

As we made clear, we planned to roll out to other sized properties having taken into account the number of assessors and how HIPs are operating in the market ensuring a smooth implementation in the housing market. However we also had a duty to consumers to ensure the carefully managed, smooth implementation of the packs, which is why we looked carefully at how they are operating in the housing market. The final stage of the roll out follows careful analysis of how HIPs and EPCs have been working in order to maintain their smooth introduction into the housing market. Now, as from 14 December DEAs will be able to carry out EPCs for all properties.

When will you announce a Drop Dead Date (DDD)?

We will assess the need for a drop dead date in the light of experience in the market.

What documents are actually required to be included in the HIP?

HIPs will include the EPC, searches and a range of legal documents which are necessary parts of the home buying and selling process.

These documents bring information up front in the home buying and selling process reducing the risk of problems emerging later on that cause wasted money, time and energy This will allow less time for additional problems to emerge and will reduce the number of sales which fall through and in turn reduce the number of chains which collapse.

What's happening with authorised leasehold documents?

It is standard conveyancing practice for the seller to provide leasehold information once a sale has been agreed but before completion.

The temporary provision will allow this practice to continue and is intended to protect owners of leasehold properties from facing additional and unreasonable costs at the beginning of the sale process, while additional evidence is collected into the extent of this problem.

Transactions involving leasehold properties are often held up by delays in obtaining leasehold information. Providing this information upfront in a HIP is intended to eliminate these delays and also help reduce the number of transactions that fall through because of problems associated with leasehold information coming to light at a late stage.

We are not removing the leasehold documents from the pack; instead, the government has decided to allow the provision of leasehold documents to be determined by the market. This provides consumers with choice, encourages competition and helps to drive down prices. The government is also engaging with stakeholders in an ongoing process, and taking account of the views of these stakeholders in making its decisions.

The CLG hotline number for enquiries from DEAs and HIs is: 0845 6430810

Here is a link to the full Government article: Full roll out of HIPs

Stephen Callaghan
Chief Executive

November 2007