Home Information Packs (HIPs) provide details relating to the condition and environmental impact of a property, with certain inspections required to establish the ratings given to a particular house.

They are expected become a legal requirement for all homes put up for sale after June 1st 2007, with the onus of responsibility on the seller or estate agent to ensure the pack contains all the statutory documents.

But the packs have met with some resistance among practitioners in the housing industry and accusations from the House of Lords that they will raise the cost of selling a home.

Meanwhile, those wishing to carry out the inspections necessary for the completion of key documents - such as an Energy Performance Certificate - will need to be accredited and obtain Professional Indemnity Insurance (PII) before being permitted to do so.


Background and political debate

HIPs have been designed to relieve some of the burden on the purchaser when a property transaction takes place.

They require the seller to provide certain information relating to the condition of the house, offering the buyer a free source of details akin to a mid-range survey, but falling short of a full structural survey.

But recent research from online portal propertyfinder.com revealed that two in five Britons expect a structural survey to be included in the report, while about three in four do not know what HIP stands for.

Given the level of publicity the packs have received in the press recently, chief executive Warren Bright stated that the ignorance among the general public is "astonishing".

HIPs have been the subject of much debate in the House of Lords and the property industry as a whole - a Lords committee given the task of looking into the packs reported that they have been met with "at best scepticism and at worst hostility" by leading companies in the sector.

Lord Armstrong of Ilminster told representatives from the Department of Communities and Local Government (DCLG): "You have unanimity among the stakeholders saying that it will not lead to something better afterwards; if anything, it will lead to something more expensive with no better transparency."

However, despite the department being accused by Lord Jopling of behaving like "somebody lost on a very foggy night", HIPs are to be introduced as planned on Friday, June 1st and those involved in creating the component parts will need to prepare for the red-letter day.


Component parts of a HIP

There are five fundamental documents which must be contained in all HIPs. The first of these is a simple index detailing the contents of the pack, which should be updated to reflect the progress made in obtaining the remaining statutory requirements.

A sale statement must also be included, advising the buyer of whether the property is leasehold or freehold, whether it is registered and the full address.

Search information, covering the local land charges register for the property, as well as the provision of water services and drainage, is the third compulsory component.

The fourth is evidence of title - proof that the owner has the right to sell the house - as well as any related documents from the Land Registry if the property is registered.

But perhaps the key statutory requirement is the provision of an Energy Performance Certificate, estimating the property's energy usage and impact on the environment.

This may be provided within a Home Condition Report and demands an assessment to be carried out by a qualified inspector accredited by an approved scheme, with certain protections, such as PII, forming part of the requirements for accreditation.


Home Condition Reports

Home Condition Reports are an optional feature of HIPs, according to guidance from the DCLG. They represent a mid-range survey of a property, less in-depth than a full structural survey but designed to describe in plain English the general condition of a property.

According to certification scheme provider Surveyors and Valuers Accreditation, 30 per cent of transactions fail before exchange of contracts, with two in five of these due to survey-related problems. Home Condition Reports aim to eliminate these issues by detailing any defects in need of urgent attention.

They do not cover the value of the home or issues relating to its location, minor defects which would not normally impact on a sale, or health and safety risks not related to work which needs carrying out.

While an Energy Performance Certificate may form part of the packs, it is not optional and must be included in the HIP regardless of whether a full Home Condition Report is conducted.


Energy Performance Certificates

These are a compulsory aspect of HIPs and give an indication of how energy-efficient a home is, with properties rated from the most environmentally friendly (awarded an A grade) to those with the largest carbon footprint (graded G).

According to the DCLG, the average home in the UK currently falls into bands D and E both in terms of fuel efficiency and impact on the environment.

New-build homes are not exempt from the requirement for an Energy Performance Certificate to be completed, although it is accepted that an estimate may be used until the property is finished, at which point a full survey should be carried out.

Only accredited inspectors may conduct an energy assessment - individuals wishing to do so should acquire the status of Domestic Energy Assessor (DEA), with the DCLG listing a number of approved schemes through which this may be achieved.

The government guidance adds that existing Home Inspectors already hold the necessary level of accreditation to act as a DEA, meaning they may also perform energy assessments.


Individuals/companies offering HIPs

From June 1st, 2007, estate agents must ensure that all properties included in their portfolio have a completed HIP available from the time they first go on the market. Houses already up for sale on that date remain exempt from the requirement, but will need a HIP to be created if they remain unsold on January 1st, 2008.

The DCLG advises that firms may wish to provide HIPs themselves, but stresses that those wishing to do so must ensure they are adequately prepared and are aware of the "requirements of integrity", such as the protection afforded by Professional Indemnity Insurance (PII), that apply to key documents such as Energy Performance Certificates.

Housing developers are also advised that they will be required to produce a HIP for all new properties, although some allowances are made, such as the permission for an interim report to be used in place of a full Energy Performance Certificate. Developers are told that they should still obtain a full certificate at the first opportunity by employing an accredited DEA or Home Inspector.


Requirements for PII

Individuals wishing to carry out duties as a DEA are required to be accredited under the HIPs legislation. A list of accreditation schemes approved by the secretary of state has been prepared by the government, which advises that "Energy Performance Certificates will be a legal obligation and consumers need to be protected".

Accreditation schemes will include the need to determine whether a DEA holds sufficient PII, according to the government, as well as providing codes of conduct for DEAs to adhere to and a process by which any complaints may be resolved.

Angus Ogg, special projects director at PYV, believes that all Home Inspectors and DEAs will owe a professional duty of care to home buyers and sellers when producing Home Condition Reports and Energy Performance Certificates. PII provides protection against claims by third parties for breach of professional duty.


Buying PII

PYV, a Lloyd's broker which specialises in placing Professional Indemnity Insurance for IFAs, Mortgage Intermediaries, Solicitors and other professions, has announced that they have found an insurer who is prepared to cover this new exposure at highly competitive rates.

Mr Ogg said: "PYV is ideally placed to put in place appropriate PII on behalf of both HIs and DEAs. With over 20 years experience of placing PII for a whole variety of professions and truly independent access to London-based PII insurers and Lloyd's syndicates, PYV is rightly considered an expert in the placement of PII. Our experienced staff are fully prepared to meet demand for PII in the lead up to HIPs becoming compulsory from June 1st, 2007."

For more information on PYV and the services they provide visit their website www.pyv.co.uk.