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Home Information Packs - less than a year to go

On 1 June 2007 Home Information Packs ("HIPs") become mandatory. Later this month, the Law Society HIP dry run will begin in order to test the changes to the home buying process.

The Department for Communities and Local Government ("DCLG") - John Prescott's old department - announced on 24 May 2006 that estate agents and other professionals are in danger of being left behind ". . .as innovative organisations take the lead in transforming home buying and selling to provide a better service to customers".

The DCLG's own dry run is set to involve up to 150 organisations.

Competition is increasing. Asda has announced that they are entering the estate agency market and will include a free HIP as part of their offer to customers.

From a Professional Indemnity perspective, the provision of HIPs and Home Condition Reports ("HCRs") raise many issues. Solicitors are better placed to provide HIPs and recent ICM research for the Law Society indicated that 57% of respondents said they would most trust a solicitor to prepare a HIP for the sale of their property.

The proposed content of the HIP includes searches and other information currently paid for by the buyer. Under the new arrangements all prospective buyers will be able to access the information supplied by the seller which raises a number of issues in circumstances where the eventual buyer will be able to rely on the HIP.

HCRs will be an objective report on the condition of the property that buyers, sellers and lenders will have a legal right to rely upon. Home Inspectors (HIs) will have to have suitable insurance that will be backed up by insurance of last resort provided by a certification scheme. There are certain to be minimum terms and conditions although details have yet to be provided.

It is estimated that between 5,000 - 7,000 inspectors will be needed when the HIPs are introduced on 1 June 2007 to produce an estimated 1.6-1.8 million HCRs a year.

Although many HIs will be surveyors, it is not a requirement. For many people it is a new career and they may well be unfamiliar with PI insurance.

We will provide further updates when more detail emerges about the insurance arrangements.

Professional Indemnity Bulletin

Home Information Packs - less than a year to go

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