HIP Searches - Don't Take It Personally

In this article, Jacinta Walmsley – a partner with Hatchers Solicitors, discusses the growing problem of mortgage lenders rejecting information contained in many of the compulsory Home Information Packs (HIPs).

It’s a turbulent time for house buyers and sellers. With the waves of the credit crunch still washing over the UK mortgage lenders, along with general uncertainty in the housing market, anything that can unsettle the completion process needs to be taken notice of.

An essential part of the HIP is the local authority and water/drainage searches. They are important as they can highlight key information, such as planning consents, building regulations certificates and responsibility for the nearest road.

Solicitors have traditionally used ‘Official’ Searches from local authorities and water companies whose trained staff ensure that the most accurate and comprehensive information obtained from their databases.  This gives both the buyers and mortgage lenders confidence that there shouldn’t be any nasty surprises lurking in the months and years that follow a sale.

However, as a consequence of HIPs being introduced, a recent trend of using lower-cost ‘Personal’ Searches has increased dramatically. Part of the reason is that these are sometimes faster, but a major contributory factor is that the personal search companies pay a referral fee to their customer. They may not be as thorough and could miss something that would pose a problem to the buyer in later years that could seriously affect the value of their home.

Some lenders insist that an insurance policy is taken out to cover against the risk of a future problem being uncovered that was found to have been missed from a Personal Search.  Other lenders take a stronger view that such searches should be avoided at all costs and only Official Searches will put their mind at rest.

So, a seller using Personal Searches in their HIP runs the risk of delaying the sale if their buyer is using a mortgage lender that doesn’t accept them. What’s more, the seller’s investment of around £200 paid for searches in the HIP could effectively be worthless if the searches can’t be used by the buyer.

By choosing to employ the services of a solicitor who will use Official Searches, sellers can avoid adding additional expense and make sure that the process is as trouble-free as possible.