It is obvious that it will be the seller who has to pay the cost. This will add to the costs of selling property. In addition the HIP will have to include a home condition report. Previously most buyers rely on the valuation from their lender as doubling up and serving the purpose of a condition report on the property. Buyers tend not to appreciate that instructions given to a lender’s valuer are really quite different and they would not necessarily refer to all the problems that might be relevant at a property because their job is just to be satisfied that the security is adequate. It is believed that only about 20% buyers at present get their own surveyor’s report. It is believed that obtaining this home condition report could add about £370 to the sellers’ costs. The Law Society, the professional body for Solicitors estimates that it would cost about £500 to get a HIP together.

In some way it is very unfortunate that this cost should fall on homeowners who may have little or no equity in their property. Putting these reports together will take somebody a good deal of time. Time being money, somebody will want to be paid and it is fairly easy to work out that there are only three likely candidates for preparing this information, the seller, the Estate Agent and the Solicitor. Most sellers will want to be guided as to what is needed so it is likely that one or other of the other parties involved will have to do the work.

Another problem that arises is how long the HIP will remain valid. Suppose your buyer does not proceed and your next buyer appears in three months time do you have to spend another £370 or so on a new home condition report? A local authority search is only valid in most instances for about three months and is not cheap. They can cost around £200 and having to renew those will not be pleasant.
In looking at these packs buyers may think it may have everything they need and forget that there will be a lot of information that needs to be found out.

It appears necessary to ensure that anyone producing the HIP has proper indemnity insurance to protect the buyer and indeed the seller against any errors. It is easy to imagine a separate industry developing in the production of these reports. Very often increasing regulations do not achieve their objective but simply make the process more complex and expensive achieving the opposite of what is desired.

Another recent example of this is the new Stamp Duty legislation which now requires somebody (usually the buyer’s lawyer) to complete a seven-page form some of which contains quite detailed and complex questions. The whole conveyancing process appears set for more complexity rather than less and most solicitors are already charging additional sums for completing the new Stamp Duty forms. What is more, a sensibly advised seller is likely to make available answers to standard enquiries, draft contract, local authority search and other material documents immediately a buyer is found (having prepared them in advance).

The Government has become increasingly aware of the criticism of these proposals and have recently announced that there is to be a delay before they are brought into effect. It is unlikely that they will be shelved. The likelihood is that selling your flat is about to become a more costly and involved process.

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