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Trading Standards sends a clear warning about substandard HIPs

by Tom Horrocks

A recent investigation by Trading Standards revealed the quality of five out of six randomly selected Home Information Packs to be unsatisfactory. Tom Horrocks, director of legal services at Simply HIP, investigates.

As The Negotiator reported on October 1, a recent Trading Standards investigation has revealed serious flaws in the quality of a random selection of HIPs.

Trading Standards selected six HIPs from estate agencies in Birmingham and subjected the local searches in the packs to detailed inspection.

The investigation concluded that five out of the six were unsatisfactory, and therefore house buyers were being misled because vital information supposed to be found in the HIPs was inaccurate, incomplete or missing.

Many estate agents have been alarmed by the headlines, with one asking me whether they will be blamed for inaccurate pack contents, since their understanding is that it is not the duty of estate agents to
interpret the contents.

Their view, which I’m sure is shared by many agents, is that unless it is made clear that the accuracy of the pack does not rest with them, it will be another stick with which to beat them.

Issues

The investigation by Trading Standards raises many questions, such as why an investigation was being undertaken in the first place. What exactly was wrong with the local searches? And who is to blame for inaccurate information in HIPs and who could be held responsible? Also, what should a qualitycompliant HIP contain?

Local Trading Standards officers and the Office of Fair Trading have a duty under the Housing Act 2004 to enforce the law on HIPs.

Trading Standards officers can require estate agents to produce copies of HIPs or any document from a pack for any property that should have a HIP. Failure to do so could lead to a fine of £200 for each offence.

Officers in the recent investigation only subjected the local searches to detailed inspection, and not the whole HIP. While they are entitled to do this, you have to wonder why only part of the HIP was targeted.

All examples given of missing or inaccurate information in the local searches, except one, concerned the planning history of the property. The information was allegedly readily available from the local authority, so it seems that Trading Standards officers suspect private search companies are short-circuiting the system to save money.

The party to blame for the inaccurate information would appear to be the private search companies who stated the required information was
“not known”.

Under the Home Information Pack (No.2) Regulations 2007, estate agents are not responsible for the accuracy of the information contained in the local search, although they are clearly responsible for ensuring the local search contained in the HIP is of the right type to comply with the HIP Regulations.

The HIP Regulations require search organisations preparing personal local searches to do so with reasonable care and skill. A personal local search for a property that does not contain all the required information, in circumstances where the local authority keeps records containing the information and allows other persons to inspect those records, does not satisfy the HIP Regulations.

This is the crucial point for estate agents. If an estate agent knows or suspects that the person they are using to compile the personal local searches is not competent to do so, or worse, is deliberately cutting corners and failing to provide information or providing misleading information, then they should find it extremely difficult to say they reasonably believed the personal local search complied with the HIP Regulations.

Estate agents are used to having to demonstrate that they exercised due diligence to avoid liability under the Property Misdescriptions Act 1991. Similarly, estate agents would be wise to exercise due diligence
in their choice of HIP provider to avoid being in breach of the HIP Regulations.

Protection

The only safe way for estate agents to ensure they are not exposed to the risk of a £200 fine for a HIP that does not comply with the Regulations is to source their packs from a reputable provider, which includes only personal searches from respectable search organisations.

Reputable HIP providers subscribe to the HIP Code prepared by the Association of Home Information Pack Providers and search providers subscribe to the Search Code prepared by the Council of Property Search Organisations.

Home Information Packs produced under the HIP Code can only contain personal local searches where the search organisation subscribes to
the Search Code. Subscribers of both of these Codes are regularly inspected and assessed by an independent body, the Property Codes Compliance Board, to ensure that the information included in their HIPs complies with the requirements of the HIP Regulations.

CoPSO-accredited search providers should ensure that their staff are experienced and trained professionals, and that their search results are sufficiently insured.

If it is not a CoPSO personal search in an agent’s HIP, it means it could literally have been prepared by anyone off the street, with no training or experience, and totally incompetent to extract the required information from the local authority registers.

Compliant HIPs

Under the HIP Regulations, the duty on estate agents is to have the following:

• Index: estate agents are responsible for the content, so they should ensure that a reputable HIP provider prepares this for them;
• Energy Performance Certificate: estate agents are not responsible for the accuracy of the content but should ensure their HIP provider uses only accredited domestic energy assessors;
• Sale statement: estate agents are responsible for the content;
• Title documents and plans: estate agents are not responsible for the accuracy of the content, but they should ensure their HIP provider uses official Land Registry documents. If a HIP includes register views and not official documents, it does not comply with the HIP Regulations;
• Local search: estate agents are not responsible for the accuracy of the content, but should ensure their HIP provider uses search CoPSOaccredited personal search providers;
• Water and drainage search: only official CON29 drainage and water searches contain all the required information. A personal search is not compliant with the HIP Regulations.

Legalities

HIP providers should understand the legal requirements of the HIP Regulations, so that they can protect agents from a breach and the risk of a £200 fine.

The market has recently seen HIPs being offered at incredibly low prices, but too low to enable providers to make a profit. It is, therefore, inevitable that unprofessional HIP providers and search organisations will cut corners in order to stay in business.

Purchasing cheap, noncompliant HIPs leaves estate agents at risk of a £200 fine and of having to withdraw the property from the market until a new HIP is prepared. Their vendor will be angry for having wasted money and will thus expect their agent to pay for the cost of a new HIP.

One last point to make on Trading Standards’ investigation is that the sample, when compared to the total number of HIPs prepared nationally in a year, is so small it is less than meaningless.

While it is patent nonsense to claim that 83% of all HIPs prepared are riddled with mistakes, it is undoubtedly true that some unprofessional HIP providers are producing cheap HIPs, which are putting estate agents at risk of breaking the law. It seems that HIPs are like so many things in life: buy cheap and buy twice – cheapest is dearest in the long run.

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