Tim Worstall

In Which Jim Tells Me Off.

Re this post, Jim tells me I’m a naughty boy.

Hey, whaddayaknow, that story was bollocks:

http://news.bbc.co.uk/1/hi/business/6958111.stm

"Barclays and HSBC happy with HIPs

Two big mortgage lenders, HSBC and Barclays, have denied that they are unhappy with the recently introduced Home Information Packs (HIPs).

The packs require sellers to provide information such as planning permission and copies of title deeds to buyers.

The Daily Mail had claimed that the banks would ask buyers to carry out extra searches as they did not trust the information in the HIPs.

However, the lenders said they just wanted them vetted by a solicitor."

Knowing your passion for fairness and accuracy, Tim, I’m sure you’ll give this story as much prominence as the first.

Hmmm. Original story was based upon this. The Guardian, so at least we’ve been spared Jim’s digs at the Murdoch or right wing press. Looking at the right wing press (The Telegraph) we get:

A spokesman for HSBC said: “If someone wants to buy a
house from someone who has a HIP containing a personal local search, we
would tell their solicitor we would not lend to them unless they
commissioned their own search.”

Peter Ambrose, director of the Partnership, a
HIPs provider, added: “Most HIP providers are using personal local
authority searches to try to ensure a consistent low price, but several
major mortgage lenders do not accept these without guarantees from
solicitors.

“This means solicitors representing those
lenders are rejecting the local authority search contents of the HIP
and will charge their buyers for recommissioning new searches.

Slightly more detail, it’s about the insurance on the search, the lenders want to be covered by the solicitor’s insurance. The piece that Jim points us to refuting my original:


A spokesman for HSBC said there was nothing new about
his bank’s policy and stressed that the bank was supportive of the
introduction of HIPs.


"But we have never accepted private searches rather than those from a solicitor," he 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," he added.

So, those who include private searches in their HIPS will indeed find that HSBC will not accept them and that potential buyers will need to conduct their own searches: ones that solicitors will sign off on.

Clearly, I made a serious error there for which my apologies. I’ll not assume again that The Guardian is factually correct, shall I, get my information from The Telegraph instead?

In

5 responses

  1. Mark Avatar
    Mark

    This is a re-run of the problem where sellers were supposed to commission a survey of the property. Lenders said they wouldn’t accept the surveys unless they themselves commissioned them. And again, it’s about who instructs the search / the valuation and so who benefits from the professional indemnity insurance of the lawyer / valuer…..
    I mean, this isn’t rocket science, is it? You’d think that government ministers and civil servants and advisers might be up to working things like that out for themselves…… (pause for hollow laughter)

    Reply
  2. Jim Avatar
    Jim

    In other words, this is nothing new, some banks require local searches to be signed off by a solicitor just as they did before, and HIPS have not been ‘turned to dust’ as you super-excitedly told us beforehand. No doubt you’ll find another *cast-iron* reason to declare them dead in the water soon enough.

    Reply
  3. Mark Avatar
    Mark

    So there’s no change on the liability side for information used. Hmm. In that case, other than
    1. making another way for a few Brylcreemed wunderkind with oversized tie knots, who’re involved in the property market to extract money from the pockets of sellers; and
    2. creating an instant market for people who’ll convert your bedroom into a games room
    what value is there in HIPs that’s equal to or greater than the cost?

    Reply
  4. Katherine Avatar
    Katherine

    Mark, no this is not a rerun of the survey issue. Searches issued by local authorities are not the same as searches or surveys done by private contractors – that is comparing apples and oranges – they are in entirely different categories.
    And by the way Jim, no local searches are required to be “signed off by solicitors” – solicitors would never “sign off” a search – they commission them, digest them and report on them, following up with further questions if necessary.
    It’s also worth making the point generally in the field of searches done by local authorities versus those done by personal search agencies – that banks are breathtakingly hypocritical about it.
    In commercial property transactions they are more than happy to rely on personal searches in most instance – I have personally seen multi-million pound deals (and I mean in the hundreds) done on the basis of personal searches because they are generally a bit quicker overall. The reason being that the odds on a search coming back with something that seriously impinges on a property that then can’t be inexpensively insured against is breathtakingly small.
    The chances of a local search producing a result that seriously impinges upon the value of a residential property or renders it unusable as a residence is, well, virtually nil. Doesn’t stop the banks being tick-box obsessed when it comes to residential property transactions though, to the expense of everyone except themselves.
    The value of HIPs is, in theory, that it will lower the number of transactions that fall through after offers have been made – which is extremely costly to all – by having everything on display upfront.

    Reply
  5. Katherine Avatar
    Katherine

    PS It’s not the solicitor’s insurance that the banks want to rely on, it’s the local authority’s insurance. Both of those “spokespersons” are talking out of their ignorant arses.

    Reply

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