HIPs set to hit the housing market - and your pocket

Selling your home is about to get more expensive. In seven weeks' time - on 1 June - new laws will come into force which require homeowners to put together a Home Information Pack (HIP) before they can put their property on the market.

The new packs are expected to set homeowners back around £300 to £400, and while some of this expense is accounted for by costs that will be saved on your next house purchase, HIPs will also introduce some brand new costs into the process of selling and buying property.

As well as including evidence of the property's ownership, details of relevant leases, and a range of standard searches (the costs of which are currently borne by the purchaser), HIPs will also have to include an Energy Performance Certificate (EPC). This will entail having your property inspected by a qualified "Domestic Energy Assessor", who will look at how efficient your home is in terms of insulation and energy usage. Finally, you'll be issued with your EPC, along with an energy efficiency grade from A to G - with A being the most efficient.

Although HIPs were originally conceived with a view to simplifying the process of buying and selling property, the end result is not quite as radical as the initial blueprints.

According to Alan Dring of eHips, who sat on several of the committees which helped devise HIPs, the average first-time buyer wastes in the region of £500 to £700 on searches, legal fees and surveys of properties which they end up not buying - either because the sale falls through or because they have been gazumped. HIPs aimed to cut out this wastage by ensuring that these costs only ever need to be borne once - by the seller.

As a result, HIPs were initially set to include basic structural surveys - or Home Condition Reports (HCRs) - which would have added around another £300 to the cost of the packs. However, last summer, the Government got cold feet over this, and ditched the mandatory requirement to include HCRs in HIPs.

Housing minister Yvette Cooper explained her decision by saying that "further testing was needed to ensure HCRs deliver the assumed benefits for consumers". However, commentators speculated that the Government was in fact concerned that the high cost of HIPs - estimated to be more than £600 if an HCR was included - could have dampened the housing market. Furthermore, it seemed unlikely that enough HCR inspectors would be trained and ready to meet demand in time for the Government's proposed launch date.

HCRs can still be included in HIPs voluntarily. And while this will mean additional cost for the seller, Dring believes HCRs may still catch on. "If people can be shown that having a good HCR speeds up the sale of your property, then I think it's something people will consider," he says.

Given that the average property is worth around £200,000, the £300 cost of an HCR is fairly insignificant, he says.

Once it was revealed that HCRs would not be mandatory, consumer groups questioned whether HIPs really had any value at all. However, for the Government, they still serve one important process. EU law states that an EPC must be made available to all purchasers of property by January 2009 - a goal which HIPs will help achieve.

However, Gillian Charlesworth, the head of regulation and policy at the Royal Institute of Chartered Surveyors, is concerned that there will not be enough trained energy inspectors to meet demand once the new rules come into place, delaying thousands of homeowners from putting their property on the market. "We've been saying to the Government that this isn't ready - why not put the launch back for six months?"

However, the Government claims that 4,000 inspectors will be trained up by 1 June, some 1,500 more than it believes is necessary to meet demand.

Although the vast majority of people will have to supply a HIP when they sell their property, there are a few exceptions to the new rules. For a start, HIPs are only mandatory for properties which are marketed. Hence, if you decide to sell your house to a relative, for example, you can side-step the formality of a HIP. Properties with leases of less than 21 years, holiday properties and flats above shops are also exempt from the new rules.

For most people, there's no escape, however. To find out more information, visit the HIPs website at www.homeinformationpacks.gov.uk.

What is a Home Information Pack?

* A Home Information Pack (HIP) - or sellers' pack - is a file of documents which provide information about a residential property. As of 1 June, it will be mandatory for homeowners to put together a HIP before they put their property up for sale.

* HIPs will have to include evidence of the property's ownership, a copy of the lease (where appropriate), standard searches (such as local authority, drainage and water), copies of the home warranty (for properties less than 10 years old) and an Energy Performance Certificate (EPC).

* EPCs will be issued by qualified inspectors, who will assess your property for its energy efficiency. Homes will then be given a grading from A to G - similar to the energy efficiency gradings awarded to fridges and washing machines.

* It is estimated that a standard HIP will cost in the region of £300 to £400. However, sellers also have the option of adding a Home Condition Report (HCR) to their HIP, which will add around £300 to the total cost. An HCR includes a basic structural survey of the property.

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