HSBC says borrowers will be required to carry out their own local authority searches because those provided in HIPs do not carry sufficient insurance.
As a result, solicitors have been advising homebuyers to pay for a full local authority search, which checks for illegal extensions and enforcement orders, which many may demand back from the seller.
A full local authority search costs between £200 and £300, compared with the personal searches, which cost around £120, that are bundled in with the cost of a HIP.
Peter Ambrose, director of HIPs provider The Partnership, says: "Sellers paying for HIPs containing such searches may well find their buyer's solicitor will not accept them and may want sellers to reimburse them for the additional costs incurred in commissioning new searches."
However, HIP Payment Services, a provider of deferred payment schemes for those commissioning a HIP, claim that the majority of lenders will accept a personal search.
Jeff Smith, chief executive of HIP Payment Services, says: “Personal searches are already used in more than 50% of cases and are accepted by the vast majority of lenders. This misleading story has received publicity in some papers that are unashamedly Tory supporting and it is simply aimed at undermining the introduction of HIPs which so far has been flawless.”
Smith claims that nine out of ten lenders will accept a personal search as part of a mortgage application and the Council of Conveyancers accepts all personal searches that comply with the Search Code. Members of AHIPP are bound by the HIPs code, which requires all members to comply with the Search Code and is designed to protect consumers.
If you would like to comment on this story, contact:
Tel: 020 7034 2682
e-mail: [email protected]
100 new clients
Achievements, charity work and other happy snippets
Square Mile’s series of informal interviews
Partner Insight: The rise in demand for DFM and multi manager solutions has been largely driven by new mandates from the regulator, says James Bampton, head of UK intermediary distribution at Architas