Go round the houses no more: here come fast sales

As Labour moves closer to introducing sellers' packs, Melanie Bien asks if property deals will really be painless
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The Independent Online

The Government's determination to speed up the tortuously slow home- selling process in England and Wales was confirmed in last week's Queen's Speech. Home information packs (HIPs) are set to be introduced in the forthcoming Housing Bill and will become mandatory by 2006.

Otherwise known as sellers' packs, HIPs should make home buying and vending less stressful, more transparent, more certain and faster. Currently, a property transaction in England or Wales takes an average of 12 weeks from an offer being accepted to exchange of contracts, leaving plenty of scope for something to go wrong.

The buyer may pull out if the survey reveals major problems, for example, or the seller may decide to accept a second, higher offer from another buyer - known as gazumping. This can be devastating for the initial buyer, who may already have forked out hundreds of pounds for surveys and instructed a solicitor.

"The Government estimates that around 30 per cent of all property sales fall through each year at a cost of £350m to consumers," says Jane Pridgeon, managing director of Halifax Estate Agents. "Without the HIP, the house-buying process will continue to be dragged down by the slowest link in the chain, and money will continue to be wasted on sales that collapse."

Currently, prospective buyers make an offer before a survey is carried out. They can then commission a basic homebuyer's report, or a more detailed structural survey, though this is not compulsory. If the survey reveals serious problems, the buyer may make a lower offer or pull out altogether - leaving the seller to find someone else.

Under the Government's proposals, all vendors will have to provide an HIP, giving buyers all the information they need to make their decision (see below). Each pack must include a Home Condition Report (HCR) - one of the most controversial aspects of the proposed scheme - which will reveal structural problems such as subsidence.

Critics of the HIP initiative have three main concerns. The first is related to the HCR, since they feel that buyers and mortgage lenders are unlikely to trust a survey that has been provided by the seller. The Government aims to avoid this by providing fully trained inspectors, with appropriate professional indemnity insurance, to carry out the surveys.

The second criticism is that surveys can become dated. Not all properties sell immediately; some hang around for months or even years. If your home is on the market for a long time, you may need to have more inspections done. The Government's proposals don't specify how often surveys should be repeated, stating only that the seller should "consider whether it would be worthwhile paying the home inspector to 'refresh' the report".

Third, critics are concerned that HIPs could bump up the asking price for a property. Some estimates for the cost of the packs are as high as £1,000, but the Government estimates that the real cost is likely to be nearer £600 - a figure that Halifax Estate Agents agrees is more accurate.

And, of course, most sellers are also buyers and they won't have to pay for a survey on their new home.

The people who really stand to benefit, though, are those taking their first step on the property ladder. "The HIP will be great news for first-time buyers," says Ms Pridgeon at Halifax Estate Agents. "The seller will cover a number of costs that they would previously have paid."

What vendors must provide

* Terms of sale - details of what is being offered, such as fixtures and fittings.

* Evidence of title - proof that you own the property you are trying to sell, which is obtained from HM Land Registry.

* Replies to standard searches - including drainage and water enquiries and environment agency searches. These should reveal potential problems such as flood risk.

* Planning consents, agreements and directions, and building control certificates - essential in proving to the buyer that any extensions, alterations or demolitions are lawful.

* Seller's property information form. It is standard practice for the solicitor representing the buyer to ask the seller a range of questions regarding the property's boundaries, any disputes with neighbours and any restrictions. Sellers don't have to reply to these, and may not know the answers, but omissions may raise questions in the buyer's mind.

* Warranties and guarantees. Warranties from the National House Building Council or Zurich Municipal, where appropriate, should be included if the buyer will benefit from them.

* Home condition report, including an energy efficiency assessment. This should be prepared by a home inspector qualifying under a certification scheme approved by the Secretary of State.

Leasehold properties also need a copy of:

* The lease - provides the buyer with vital information such as the length of the term and obligations such as paying ground rent and service charges.

* Recent service charge accounts and receipts. The buyer will be looking for evidence that these are up to date.

* Current and planned future works - necessary where the landlord has posted formal notice that such works will be funded by service charges paid by leaseholders.

* Insurance for the building and receipts for premiums. Prospective buyers need to know who is responsible for insuring the building and, if it is the landlord, how much it is likely to cost them.

* Regulations set by the landlord or management company. Some leases enable landlords to create regulations covering a range of matters relating to the management of the block. These could include restrictions on the activities of leaseholders and the provision of services.

* Memorandum and articles of the landlord or management company (where the company is controlled by the leaseholders). This ensures that the company is properly constituted.

Source: Office for the Deputy Prime Minister