Hips stumble on local searches
Hope Information Packs (Hips) are at the centre of more controversy because some mortgage lenders are unwilling to rely on the local authority searches contained in the packs.
Leading lenders, including HSBC and Barclays, are insisting that those buying a property should obtain searches, which include information on drainage and building consents, through their solicitor.
In practical terms this means that large numbers of property vendors will be obliged by law to spend around £500 on a Hip whilst at the same time being required by their mortgage lender to pay a similar amount to carry out searches on the property they are purchasing.
Hips were introduced for properties with four or more bedrooms at the beginning of August and the scheme is being extended to three-bedroom properties from 10th September.
According to the Department for Communities and Local Government, which administers the scheme, the legislation requiring Hips will cover a further 6.4 million smaller homes by the end of this year.
One of the main aims of the pack was to speed up conveyancing processes by providing all the information needed by a purchaser.
Therefore the requirement of some mortgage lenders that searches should be carried out by the purchaser’s solicitor is a serious setback.
Some would argue that mortgage lenders cannot trust information they are being given by vendors because, for example, vendors would have a clear interest in the searches not exposing problems.
Over 1.5 million local authority searches are carried out on homes each year, with around 40% carried out by buyers without commissioning a solicitor.
These are known as personal searches, and under the new system nearly all searches will be personal; that is made by companies providing Hips for sellers.
According to a survey carried out by Splinta, the anti-Hips group, 57% of solicitors questioned were refusing to accept packs containing personal searches.