Home Information Pack

The home information pack (HIP) is a provision under the Housing Act of 2004. Some financial experts call it seller’s pack. The law states that an HIP should be provided first before any house and lot in Wales and England may be allowed for sale in the market. This pack consists several of the asset’s documents such as the searches of the local officers, titles guarantees, and Energy Performance Certificate.

Before its introduction, the HIP has become a subject of discussion and debates. Nevertheless, the law was fully implemented on the first day of August 2007 after several postponements and requirements reductions. As of now, houses with four bedrooms or more are subject to HIP, but beginning September 10, 2007, even houses with three bedrooms will have to abide by the HIP policies, too.

Rationale for an HIP

It is reported that because of the insufficient home details while selling and lending transactions are taking place, millions of pounds are lost during the actual purchases. Likewise, as the process of house buying pushes through, the lack of information may result to more serious problems and may even lead to transaction failure. To respond to these problems, government officials have decided to exercise the HIP and its policies. They expect that with the HIP, lesser number of potential buyers will change and retract their decision to buy the house and lot under negotiations. Hopefully, the HIP will also save the seller’s and buyer’s time and energy when accomplishing the documents and other legal papers pertinent to the property purchase.

The Effects of HIP to the Lending Industry

Finance analysts have expressed varying views about the effect of HIP to the lending industry. They said that although HIP mainly aims to cover the transactions between buyers and sellers, both lenders and debtors will also be affected by the HIP.

Notwithstanding the threat the HIP may bring, players of lending institutions are still hoping that the transitions will smoothly take place and will not distract the financial market. This hope of not having any market distortion, however, seems to be contradicted by those who expect it. The opposition said that that the expenses of HIP will certainly be imposed on the customers without considering their financial status. Such situation will, therefore, greatly affect the loan homeowners UK programs available for consumers.

Economic experts also expressed that the lending institutions are indeed aware that they cannot avoid the HIP for such is definitely a necessity. But the insufficient technical specifications have resulted to the absence of effective strategies to combine the HIP into the lending system. These technical details that firms need to provide are the ones concerned with the credits risks and IT sections.