28th August 2007 - Barclays and HSBC happy with HIPsTwo big mortgage lenders, HSBC and Barclays, have denied that they are unhappy with the recently introduced Home Information Packs (HIPs).The packs require sellers to provide information such as planning permission and copies of title deeds to buyers. The Daily Mail had claimed that the banks would ask buyers to carry out extra searches as they did not trust the information in the HIPs. However, the lenders said they just wanted them vetted by a solicitor. No worries?
The government denied there was any problem with the reliability of personal searches of local authority information, as opposed to information supplied directly by the council in response to a solicitor's request."The HIPs legislation brought in a stringent code of practice for personal search companies," said a spokesman for the Communities and Local Government department (DCLG). "They now have to have insurance cover for the searches they provide." A spokesman for HIP providers said the lenders had nothing to worry about. "They have no need to be concerned at all," said Paul Broadhead of the Association of Home Information Pack Providers (AHIPP). "50% of all local authority searches are already done by personal search organisations." He added: "They get exactly the same information as a solicitor would and mortgage lenders accept them already." A spokesman for the Council of Mortgage Lenders (CML) added: "Lenders have agreed that as long as the property search organisation is a member of the Council of Property Search Organisations then the lenders will accept that search." Supportive
A spokesman for HSBC said there was nothing new about his bank's policy and stressed that the bank was supportive of the introduction of HIPs."But we have never accepted private searches rather than those from a solicitor," he said."We just need to be sure that the customer's solicitor will sign off the search so that it is covered by their personal indemnity insurance," he added. A spokeswoman for Barclays agreed. "We will accept a personal search, at the conveyancer's risk. "We are not demanding that house buyers spend more money on more searches," she said. Barclays currently has 5% of the new mortgage market while HSBC has 4%. Law societyDespite these assurances, the Law Society renewed its warnings about HIPs that contain personal searches of council information.It said solicitors, when acting for home buyers, should always point out to their clients that official searches provided a higher level of protection than personal searches, if any of the information in them turned out to be wrong. "If you are buying a house for half-a-million pounds and you are mortgaging yourself to the hilt for the next 25 years, you can either have a search carried out by the council staff, on which you can rely, or one provided by someone you don't know - the search company," said Paul Marsh, vice-president of the Law Society. "There is a degree of risk between the two but the buyer's solicitor has a search thrust on them now," he added. The Law Society said it would like lenders to specify exactly which personal search companies they would be happy with, to remove a lawyer's current responsibility to vouch for a search company's work. ConveyancingThe local authority search has been a compulsory feature of the conveyancing process since 1925.It involves a buyer, or their solicitor or other representative, asking a set of standard questions about a property, covering local authority plans for the street or area, and any planning permission granted for the building. This should also show up any restrictions on the way the property can be used, for instance the existence of smoke control orders, conservation areas, tree preservation orders, and any financial charges where the council could recover money owed to it. Additional information can also be gleaned at the same time about neighbouring properties. The aim is to make sure that the buyer does not get a nasty surprise once they have bought the house or flat. |
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