Wednesday, 22 August 2007

UK Homeowners take a double hit on ‘searches’ costs because of HIPs

It seems that major mortgage lenders do not trust searches contained within HIPs (Home Information Packs) because they are commissioned and purchased by the sellers.

Some mortgage lenders are now insisting that they will only offer mortgages if searches are carried out by the buyer's solicitor, others will accept the HIPs but only if the buyer’s solicitor guarantees them, against anything that might threaten the marketability of the property the searches fail to turn up.

This is effectively resulting, in lenders legal representatives commissioning their own searches and passing the cost on to the purchaser.

So the searches are being paid for twice. Once by the seller, because the government is forcing them to and then again by the purchaser.

The party formerly known as the Conservative’s housing spokesman, Grant Shapps, noted that: "This is yet more proof that HIPs are almost completely and utterly worthless.” “Gordon Brown cannot claim to be on the side of homeowners unless he scraps this disastrous scheme."

The Fib Dems’ housing spokesman, Paul Holmes, lambasted HIPs as: "a shambles", saying "It is unbelievable that the Government did not foresee these problems," "The packs are clearly not worth the paper they are written on."

Unbelievable indeed, considering that concerns about possible partiality and reliability of information and searches contained within HIPs are by no means new.

In fact the government were perfectly aware of the potential problem, as exactly that concern was expressed in a report for the office of the (then) Deputy Prime Minister old ‘Two Jags’ himself, in March this year.

Concerns were raised in it as to how independent the report would be if it was commissioned by the seller - and tellingly, concern over whether or not the report would be acceptable to mortgage providers.

So Nu-Lab did have an idea the problem might well surface but chose to chance it anyway…