Search light
Jacinta Walmsley of Hatchers Solicitors’ residential property team in Shrewsbury shines a light on recent headlines suggesting searches supplied in home information packs will not be acceptable to lenders…
From 10 September homes with three or more bedrooms will need a home information pack (HIP) before they are marketed for sale. In the lead up to this second phase of HIPs, newspaper headlines suggesting problems with lenders accepting the searches contained within home information packs caused unnecessary anxiety to potential buyers and sellers. The reports claimed that people would be hammered financially because they would have to pay twice over for searches.
What the reports did not make clear was that lenders were referring to searches provided by private search companies, rather than provided directly by local authorities or water companies. The fact is that some lenders have always been unwilling to rely on searches provided by private search companies because there is a greater risk of errors in the information. This stance is not new and is not linked with HIPs.
Searches are a main constituent of a HIP and are usually requested by a solicitor on behalf of their client. For a ‘local authority’ search, the solicitor contacts the council and asks for all information it holds on the property. Council officials then search their records and supply all relevant details including whether the property has planning consents, building regulations approvals or if it is listed. For a water search, the solicitor will ask the water company to verify that the property is connected to mains water and drainage, and provide maps of the routes (to ensure the house is not built over a main sewer).
These documents are an assurance to the mortgage lender that the property is a good risk. All mortgage lenders continue to be happy to accept search results contained within HIPs if they have been supplied by the authorities directly.
If a property owner or HIP-providing company asks a private search company to carry out these searches a search company employee will visit the council/water company offices and check the documentation in person. Private companies will do these so-called ‘personal’ searches more cheaply (roughly one third cheaper) and historically personal searches have been quicker – although councils are improving their turnaround times.
Since the recent headlines, mortgage lenders Barclays and HSBC have said that they will accept personal searches, with certain conditions. The HSBC spokesman 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.” While the spokesperson for Barclays said: “We will accept a personal search, at the conveyancer's risk.”
However, many conveyancing solicitors will not want to take on this risk. With improved technology most councils are able to provide the search information quickly. Shrewsbury & Atcham Borough Council currently turn their searches around in three to four working days and Telford & Wrekin take five days. North Shropshire District Council and South Shropshire District Council at the time of writing still take a leisurely 10 working days. However, because there is less likelihood of inaccurate information searches conducted by local authorities are the preferred option.
So, as long as the searches within your HIP are conducted by local authority and water company officials, there will be no problem at all.
For full information on the house buying and selling process, and an explanation of searches, see our residential property pages.
j.walmsley@hatchers.co.uk
