“Green Ratings” benefiting home buyers and sellers

The Home Information Pack (HIP) has been successfully introduced across England and Wales despite negative media hype. As part of a scheme aimed at improving the home buying and selling process, all homes marketed for sale after 14 December 2007 in England and Wales are now required to include a HIP.

Although this final phase in the implementation of HIPs now brings in the entire range of homes coming to the market, the Government is allowing a number of flexible "interim arrangements" to ensure the smooth introduction of HIPs. Currently, any property that was already on the market on the relevant commencement date (i.e. 1 August 2007 for sales of homes with four or more bedrooms; 10 September 2007 for those with three or more bedrooms and 14 December for all properties) does not need to have a Home Information Pack.

At this stage no date has been set when all such properties that are on the market will be required to have a Pack. However, the Government has extended the temporary first day marketing provisions for an additional 5 months to allow for full flexibility - from 1 January to 1 June 2008.

Housing Minister Yvette Cooper said:

"HIPs and EPCs are already helping consumers to save hundreds of pounds off their fuel bills and are cutting search costs too. All home buyers will be able to benefit from energy efficiency advice, with those receiving low green ratings of 'F' and 'G' especially targeted for support and grants to make improvements to cut their costs and carbon emissions."

According to CLG sources early monitoring of the scheme shows the roll out has gone smoothly.

• HIPs are taking on average 7 to 10 days to prepare
• The majority of property, and drainage and water searches, are being delivered promptly within 5 days
• EPCs are being prepared on average within 2 to 4 days

The average cost of a pack is £300 to £350 - costs which apart from the new information included in the EPC are already part of the home buying and selling process.

The Government has also recently published an independent report by Europe Economics on the impact of HIPs on the market. Their report 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. The report concludes that the impact on listings is short lived and the impact on the market is marginal compared to the wider factors.

The Government also asked Europe Economics and Peter Williams of the National Housing and Planning Advice Unit (NHPAU) to consider whether changing housing market conditions meant we should change the approach to completing the roll out. They concluded that there are strong arguments for rolling out as planned, and further delay could cause greater market difficulties and uncertainties.

The implementation of HIPs so far and the work of the Stakeholder Panel have also highlighted further improvements needed to benefit consumers.

Early monitoring of HIPs has highlighted stakeholder concerns that for some consumers leasehold documents are proving hard to obtain quickly and, in some cases, disproportionate charges are being requested. In the majority of cases we would expect leasehold documents to be readily and easily available as part of HIPs. However, given the higher number of leasehold properties amongst one and two bedroom homes, to ensure a continued smooth roll out we will phase the introduction of leasehold information.

A key component of the HIP is the Energy Performance Certificate (EPC), which will rate the home's energy efficiency, using graphs like those on fridges and washing machines. Crucial to the operation of the scheme, only qualified and Accredited Domestic Energy Assessors or Home Inspectors are permitted to produce EPCs.

The extension of HIPs to all properties will particularly benefit first time buyers through a reduction in their upfront costs by not having to pay for a pack, helping them in getting a foot on the housing ladder. The EPC will enable all home buyers will, for the first time, receive A-G "Green Ratings" for their properties which will help cut fuel bills and carbon emissions.

Buyers whose homes score poor energy ratings of F or G (currently around one-fifth of all homes) will receive an offer of a discount or free help with energy efficiency measures from the Green Homes Service which will be established, helping to save hundreds of pounds off fuel bills, as announced by the Prime Minister at the end of November.

Chief Executive of property-careers.com, Stephen Callaghan said:

"The early evidence of how HIPs are operating and statistics published by the Government is very encouraging. Nationally, EPCs are being prepared on average within 2 to 4 days, which compares favourably against the average for our own business exchange, the-energy-portal of 2.5 days. Also, from April 2008 the Government 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 residential lettings will need an EPC. We are now looking forward to 2008 with much greater optimism for our Graduates and students."