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HIPs update - July 2008
On this page Michael Garson gives his assessment of where things stand this month.
Michael Garson is the author of "Home Information Packs - A Guide to the New Law" published by the Law Society.
Click here for the Government's Home Information Pack website which has a great deal of information and many useful links.
Home information packs
There is a pause with little happening directly on the HIPs’ front but recent reports and consultations will, eventually, impact on the future of the Pack and conveyancing generally.
The Home Information Pack (Amendment) (No2) Regulations 2008 No 1266
As mentioned last month these regulations amend the leasehold information required until 31 December 2008 to remove any requirement additional to the lease itself and also extends the provisions relating to first day marketing in regulation 34 of the Home Information Pack (No2) Regulations 2007 until 31 December 2008.
Beardsall report
Local Property Searchers and Leasehold Information
The report by Ted Beardsall, deputy chief executive of the Land Registry, ‘Local Property Searchers and Leasehold Information’ has resulted in the government convening a working group made up of industry specialists and interested parties to implement the recommendations made in the report. This working group is to report at the end of September 2008. A consultation is also to take place so that final proposals can be agreed in autumn 2008 allowing any new regulations to be in place by 1 January 2009, when the current relaxations expire.
Practitioners will not be surprised to learn that the report ‘discovered’ that there was almost ‘universal agreement’ that ‘requiring all leasehold information prior to marketing would cause serious difficulties.’
The relaxation allowing the lease to be the only additional leasehold information ‘required’ in the HIP has been extended until 31 December 2008.
Without pre-empting the end result of the consultation, it is likely that the working group will adopt Mr Beardsall’s recommendations to: Make the ‘lease only’ relaxation permanent;
Require a summary of the lease provisions; and
Require details of landlord’s and managing agents to be provided. The report also acknowledges that landlords and managing agents need guidance on ‘good practice’ with regard to providing leasehold information.
Carsberg review
Carsburge Review of Residential Property
Sir Bryan Carsberg’s review came to the conclusion that, while improvements may be necessary to the process, the introduction of HIPs has not provided these. Like the Beardsall Report, the consumers' interests need to be ‘at the heart of policy making’ – Beardsall commented that information was more important to buyers than speed.
Sir Bryan Carsberg made a total of 30 recommendations, including:Proper regulation albeit ‘light touch’;
Protection of client money held by letting and managing agents;
The requirement of a knowledge of the law relating to property for those giving advice on property transactions;
Transparency with regard to conflicts of interest;
Transparency with regard to lenders’ fees;
A single structure for consumer redress to include those who do not use an agent;
Information about the process of residential property transactions;
A standard form draft contract;
Additional information to be held by the Land Registry;
Legislation to speed up searches;
Legislation to make HIPs voluntary. He concludes his recommendations by setting out three basic principles to apply to all proposals for the residential property market:Simple transparent information for clients and customers as a primary objective;
Proportionate control over the service provider rather than the service to encourage and allow innovation;
Consistent enforcement and redress to underpin all schemes.
Complaint and redress schemes
Under the HIP legislation brought in by the Housing Act 2004, estate agents must belong to a complaint and redress scheme – the remit of these schemes at that time was limited to matters relating to the HIP.
The Consumers Estate Agents and Redress Act 2007 has extended the remit of redress schemes, and the scheme run by the Ombudsman for Estate Agents (OEA) has received approval under the Act. An order will next be made requiring all estate agents dealing with residential property in the UK to join an approved scheme. It is expected that such an order will become effective on 1 October 2008. The OEA scheme will consider complaints by buyers and sellers and has power to make awards including the payment of compensation.
Two other schemes are under consideration by the Office of Fair Trading namely Surveyors Ombudsman Service Ltd (SOS) and Register of Estate Agents (RoEA). Details of their applications can be found on the ‘Estate Agents Redress Schemes’ area of www.oft.gov.uk.
Energy Performance Certificates
EPCs are now required for categories of property including commercial buildings with floor area of over 10,000 square metres where they are sold or let after 6 April 2008.
Commercial buildings with floor area of over 2,500 square metres require an EPC on construction, sale or letting from 1 July 2008.
All other commercial buildings will require an EPC on construction, sale or letting from 1 October 2008. (But note there are exclusions)
From 1 October 2008 an EPC will be necessary in respect of all residential property which is let. Where buildings are to be sold or let then the responsible person must ensure that an EPC with recommendation report is available free of charge to prospective buyers and tenants at the earliest opportunity and no later than when any written information about the building is provided in response to a request for information or when a viewing is conducted or in any event before entering into a contract.
An EPC does not have to be made available if the seller or landlord has reasonable grounds to believe that the prospective buyer or tenant is unlikely to have sufficient funds or is not genuinely interested or the seller or landlord is unlikely to be prepared to sell or rent the property to the person.
The Energy Performance of Buildings (Certificates & Inspections) (England and Wales) (Amendment) Regulations 2008 No. 647 provide interim arrangements for buildings which potentially require an EPC from 6 April 2008 or 1 July 2008. In these cases no EPC needs to be made available at the initial stages mentioned above if the property is on the market before 6 April or 1 July as the case may be. In those cases the building must be continuously marketed. If it is taken off the market and put back on the market within twenty-eight days following withdrawal or rejection of an offer then the exemption will continue to apply.
From 1 October 2008 when the transitional arrangements are scheduled to end an EPC will have to be made available. Where the seller or landlord has benefited from the transitional arrangements and enters into a contract before 1 October 2008 and inspection has not already taken place, a request for an EPC must be made and all reasonable efforts made to obtain an EPC as soon as practically available and must then be given free of charge to the person who has bought or rented the property.
Under Regulation 11 of the 2007 Regulations (SI No. 991) the certificate must be issued no more than ten years before the date on which it is being made available. This applies to rented and commercial property but does not course apply to residential property under the Hip legislation. See consultation ‘EPC for private marketed sales of dwellings: Validity of Period of Certificates’– closed 6 March 2008.
© Michael Garson
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