What will Home Information Packs mean for you?

The spectre of Home Information Packs (HIPS) looming over the UK property market, but what will it really mean to buyers and sellers? Perhaps more importantly for readers, how will it affect the farmland market?

The current rules stipulate that all residential properties newly offered for sale from 1 June 2007 need a HIP (albeit in a simplified form to start with, including proof of legal ownership and an Energy Performance Certificate).

There are however certain properties which fall outside the jurisdiction of these regulations, including mixed-use properties such as a house with land in non-residential use.

According to the government’s procedural guidance notes, land may be considered “non-residential premises” if both the following apply:

1) That the land covers 5ha (12 acres) or more and
2) The most recent use of the land is or was primarily for one or more of the following purposes:

• Horticulture or cultivation
• The breeding or keeping of animals or livestock
• Grazing land or woodland

In theory therefore this regulatory initiative should not have a great impact on commercial farmland transactions.

The full implications and practical interpretation will be fascinating to observe, but we don’t expect/anticipate that these new regulations will have anything like the same impact on the farmland market as they will in the purely residential sector.

However careful judgement with regard to the interpretation of the primary use of the land will be required. For example, it is a widely held view that having a couple of chicken coops on the 5ha would not enable an exemption, likewise using that amount of land for grazing a pony is unlikely to be a suitable qualification for not having a HIP.

Clearly the practice of offering farms and estates for sale in lots will need to be considered.

Houses and cottages being offered for sale in separate lots, with fewer five ha (12 acres), will need their own HIP, unless the property is sold with a sitting tenant who will continue to be in occupation following completion.

Also a property portfolio, which is classified as more than one property, is exempt. So in theory a pair of cottages marketed as one lot would not require HIPs.

It is unlikely that the cost and hassle factor savings made by not having HIPs would outweigh the values achieved by marketing the cottages separately.

One side effect of the introduction of HIPs is the fact that a record of every Energy Performance Certificate will be held on a central database.

It could well be that at some time in the future the Energy Rating of a property could form part of the basis upon which properties are valued for Council Tax purposes. Also a poor Energy Rating may be used by a potential purchaser as a reason for renegotiating on a sale price.

As with any new initiative there will inevitably be some teething problems however I am confident that we will be able to advise buyers and sellers on the best way forward.

Contact Alex Lawson on 020 7409 8882 or alawson@savills.com