Sales Information Packs – What Are They?

A Sales Information Pack (SIP) is a collection of documents that contain important information that may affect a buyer’s decision to proceed with a house purchase.

This post explains more about the SIP and why it is causing concerns for residents of Oak Tree Gardens.

Background

SIPs have recently caused problems for residents on Oak Tree Gardens who are trying to sell their properties. This is due to the sky-high cost charged by our Managing Agent for providing an SIP to prospective buyers. This cost needs to be picked up by the seller! I.e. the resident of Oak Tree Gardens.

A SIP is produced by the seller’s representatives and distributed to the purchaser’s conveyancer so that they can make the purchaser aware of any important factors. For example, future maintenance and ongoing liabilities.

SIPs have traditionally be associated with the sale of leasehold properties. A SIP details fees payable to the Landlord or Management Company in order to allow the transaction to proceed. This includes (for example), a fee for a change of ownership, or a fee for a certificate to comply with a restriction against selling the property without the relevant consent of the Management Company.

A SIP may also be required when purchasing freehold properties, which is why it’s relevant for residents of Oak Tree Gardens. This is often the case with new build properties, where there are shared public open spaces. For example, the residents of the development may be required to contribute to their upkeep and maintenance. This aptly describes the situation for residents of Oak Tree Gardens.

Cost of a SIP to Residents

The most recent example is where one resident of Oak Tree Gardens has been advised that they would be charged £550 + VAT for the provision of a SIP. This charge is being levied by our Managing Agent for Oak Tree Gardens.

We consider this a very high price, for what must be a standard off-the shelf document. It is another example of how Managing Agents are ripping residents off.

This adds weight to the argument that residents should take full control of the Management Company after handover. In that situation, it would be up to residents to set a fair price for the production of a SIP.

What’s in a SIP?

Generally speaking, a SIP will consist of some or all of the following:

• An LPE1/FPE1 Questionnaire form – the FPE1 is the document that is relevant for residents of Oak Tree Gardens.
• A current service charge/ground rent statement. I.e. how much will residents be charged each year for upkeep of the public open space.
• The most recent three years’ Income and Expenditure Accounts for any service charges. This gives an idea of whether service charges are increasing over time.
• A building/public liability insurance certificate and policy document for any shared areas.
• An estimate of service charges for the current/upcoming service charge period.
• An estimate of any service charge costs for the most recent service charge year (if relevant accounts are yet to be produced).
• Copies of any due or expected invoices for major works. Unlikely for Oak Tree Gardens in the short term
• Copies of any legal notices related to the Management Company. This could be an indication of a future liability that could be significant.

What is the Freehold Property Enquiry Questionnaire (FPE1)?

This is the key document in any SIP, as almost all of the other documents supplied as part of the SIP will relate to questions listed within the FPE1 Questionnaire.

Consisting of multiple pages, the FPE1 is essentially a list of questions relating to different issues regarding the property – the service charge costs, any legal issues that exist, any unpaid debts at the property that could be passed to the buyer, and serious repairs that are anticipated, and so on.

It should be a comprehensive list of answers to just about any question that a prospective buyer may want to ask.

Here’s a link to the latest standard FPE1.

Do I Need To Buy a SIP?

A SIP is not a legal requirement for a property sale – you could theoretically sell your property without one.

Realistically however, as SIPs provide a detailed collection of information about a property, the seller of a property will nearly always need to buy a SIP in order to sell their property.

Understandably, any prospective buyer wants to have a clear picture of the property’s condition, and any obligations that they would be taking on if they bought it – as the MIP is the simplest and most efficient way to do this, it is common practice for the seller to request one from the relevant party, whether that be the Freeholder, the Management Company or the Managing Agent.