Lenders want HIP guarantees
Updated on 22 August 2007
Some mortgage lenders say they will only give mortgages on the basis of the seller's HIP under strict conditions.
Another day, another crisis of credibility for home information packs. They are meant to speed up the process of buying and selling homes and to reduce the number of sales falling through at the last minute.
But only three weeks after they were introduced in England and Wales, there is a serious new setback.
HSBC STATEMENT
"Our decision to accept a search is not based on which party has commissioned it, but that the buyer's solicitor, who has a duty of care to both the buyer and HSBC, has approved it."
HIPs are compiled by the seller and contain various documents, including property searches that cover planning restrictions, development plans, environmental information and other data.
There are two types: official local authority searches and personal searches done by private companies. It's these cheaper personal searches that are in most HIPs.
The problem is that some mortgage lenders and solicitors are telling buyers they must also get their own property searches or they won't get a mortgage. One HIP provider is predicting chaos in the coming weeks as buyers who shouldn't have to pay for any searches under the HIPs scheme try to recoup their costs.
The problem is that some mortgage lenders and solicitors are telling buyers they must get their own property searches or they won't get a mortgage.
The Law Society has told Channel 4 News that the government ignored its specific warnings earlier this year, that lenders and solicitors would not accept personal searches provided by sellers.
But the government department responsible for HIPs, and the body representing HIP providers, insist most mortgage lenders must accept personal searches, and new rules mean such searches must be backed by insurance.
Many predict that buyers will pay the extra £200-300 for their own official property searches to ensure peace of mind on the biggest financial transaction they'll ever make.
