News
HIPs update
The impact of HIPs with their phased introduction for 4 or more bedroomed houses in August, then 3 or more bedroomed houses in September and finally all residential properties from the middle of December has been difficult to gauge. Initial feedback would indicate that they have done little or nothing to speed up the conveyancing process and indeed have perhaps slowed things down, adding as they undoubtedly do to further bureaucracy and cost to the system.
A major issue from the solicitors’ point of view is that “personal” local searches are allowed in the packs. Whilst this is beneficial to sellers as the cost of these is generally less (often significantly) than the cost of “official” searches through the Local Authority, doubts exist as to the reliability of the information provided in personal searches. The local search is a very important search in the conveyancing process and whilst most lenders will accept them, this is usually at the risk of the (buyers’) conveyancer who relies upon it. The result is that many buyers’ solicitors are unwilling to accept the personal search that is provided in the majority of packs and are still undertaking the official search through the Local Authority, thus duplicating the cost. It is unfortunate that personal searches were allowed to be included in the packs without unconditional acceptance from mortgage lenders, and the duplication of cost is likely to continue until this issue has been resolved.
The concept of HIPs was originally to avoid gazumping, which was a particular feature of the property market in the mid to late 1990s following the recovery from the recession of the late 1980s-early 1990s. Anecdotal evidence from Estate Agents suggests that few buyers are currently asking to look at HIPs that have been prepared in relation to properties they are interested in buying, even where they have made an offer to purchase. This may partly be because it will take a while for buyers to adjust to the idea of information being available up front, but it is perhaps arguable whether the packs actually contain information that buyers are really interested in from the point of view of making an informed decision whether or not to purchase. Indeed most of the documents require legal interpretation and the packs became far less beneficial to the layman when the requirement for a “Home Condition Report” was dropped in 2006. The Home Condition Report was meant to provide an assessment of the condition of the property to avoid problems arising on the buyer’s own survey, which often results in renegotiation of the price and even sales falling through several weeks or even months after an offer has been accepted. Without the inclusion of the Home Condition Report gazumping, price renegotiations and fall throughs are likely to continue to be a common problem in the marketplace.
With “Green” issues currently holding sway the “Energy Performance Certificate” has become the focal point of HIPs. Many would argue that HIPs have simply become the vehicle on which the Energy Performance Certificate rides, ensuring that an energy assessment is undertaken every time a residential property changes hands. The Certificates are centrally filed and could be used to offer grants to make homes more energy efficient, or perhaps to levy “green” taxes.
There will inevitably be changes to the HIP regulations as their impact is assessed and the arguments will continue to rage on as to whether they are a good thing or a bad thing. Regardless of the arguments either way we at Morrisons are committed to keeping our clients updated on developments and to offer HIP solutions tailored to your needs.”