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The Law Society packs model (and there will be more than one variant) is being developed
through a joint venture with MDA Advantage. This company is part of MacDonald Detwiler
Associates Limited (of Canada),
www.mda.ca, who developed the National Land Information
Service (NLIS) infrastructure and hub which handles most of the electronic searches available
in the market (www.nlis.org.uk). MDA are a software developer well able to locate, search,
collect and distribute information and it is information assembly which is at the heart of the
content of the pack.
Whilst changes to the structure of the property market and the performance needs of any pack
system cannot be predicted there are some reforms which are more certain to take shape in
coming months. These flow from the OFT report on the local search market published in
September 2005 and adopted by the government in December. There will be radical changes
to the way in which search information is stored and made available for public inspection and
for search reports. Local land registrars and local authorities and other data holders will have
to reorganise their methods of working and charging and their delivery structures. A new Search
Industry Accreditation Scheme is being launched by personal search companies.
The intended beneficiaries of these improvements are consumers, but as the electronic hub
owned by NLIS is liberalised and opened to competing providers it is solicitors who will be the
first to appreciate the changes. The initial impact will make a broadband connection a necessity
for everyday operations as virtually all search providers move to providing on line delivery
systems at a preferential rate.
When it comes to providing a pack, whether a basic pack or a more complete pack with
“authorised documents”, MDA will provide for solicitors an on line menu from which to “pick and
mix”. The solicitor will then direct the choice of content and type of information that is contained
in the final pack, and require MDA to perform their tasks to agreed standards. The practitioner
will be responsible contractually to the seller, or if arrangements are made through an
introducing estate agent, then to the estate agent who undertakes responsibility to the selling
client. Either way, solicitors will have an important role to influence the quality of the content of
packs.
The estate agents’ sale particulars or property details including the price of the property will be
separate from the pack and their initial contribution could be limited to introducing the client and
sending a draft sale statement with the bare bones of the property address and ownership. The
solicitor would take full instructions and having checked ownership and the client’s
understanding of the pack requirements, proceed to order the elements of the pack on line. At
this stage the overall cost of the pack and possible credit arrangements for deferred payment
terms will need to be addressed. It is clearly intended that the solicitor led pack should be
competitive in the marketplace.
A solicitor’s involvement will call for preparation work, checking title and advising on other
content required. In the case of leaseholds and new homes there are many additional elements.
For the input of documents which may not be available from a digital register such as leasehold
documents and title documents for unregistered land these will need to be sent to MDA or
scanned in and sent on line so as to be copied into the relevant folder for the pack. The solicitor
may be involved in completing the otherwise blank Home Contents Form and Home Use Form
(these roughly correlating to the current Transaction forms). Crucially, the solicitor will need to
complete and check the pack index.
The NLIS procedures will be engaged for local land charges searches, local enquiries and
water and drainage searches which are all required documents. Additional searches where
helpful to a particular property can be obtained on line also. Where additional search
information within the “authorised” category is relevant, it can be included with the pack.
Otherwise relevant and useful information must be presented separately and not attached to
the pack.
Most importantly the introducer will need to confirm instructions to a Home Inspector. The Home
Condition Report will follow the Home Inspector’s physical inspection of the property and will
be registered with the Home Inspector’s accrediting body. It will then be forwarded as an
electronic document for inclusion in the pack. If no Home Inspector has been chosen then MDA
will offer a network of surveyors countrywide for solicitors and agents to contact. This is
expected to be relevant if there are local delays caused by a shortage of Home Inspectors
should the implementation go ahead as planned in June 2007.
Estate agents are not likely to have any wish to become involved in dealing with queries on the
content of the pack and here solicitors can provide valuable further services for both sellers and
buyers. Above all, sellers and sellers’ estate agents will want protection from any mistakes or
shortcomings in the pack, not for fear of the penalty charge notice sanction of £200, but rather
because of a well founded desire on the part of professionals to avoid involvement in
complaints. These are set to burgeon, since the pack and its contents will need to satisfy the
critical requirements of the sellers, the buyers and lenders.
This observation has been given force by a publication from the Council of Mortgage Lenders
(www.cml.org.uk). This contains two papers firing warning shots across the bows of the ODPM.
There is the unambiguous warning of disruption and instability that could be caused to the
property market both prior to and after implementation of the current proposals. Both volumes
and prices would be adversely affected and this draws on the analogy of the post 1988 market
which was destabilised by the sudden withdrawal of double mortgage interest relief. Much will
depend upon the way the government scheme is implemented and without a live pilot outcomes
are impossible to predict. This is therefore a high risk strategy. The second paper reminds the
ODPM that lenders are not committed to rely upon the Home Condition Report and that they
will not automatically give up their right to a Home Buyer’s Valuation Survey and Report.
Importantly they are not prepared to commit themselves yet to giving up valuation reports in
favour of reliance upon desktop valuations. Most of the lenders argue for delay.
In this context the Law Society solution being developed with MDA is more than just a placebo.
It enables solicitors to develop services for the new market. The Law Society has grasped the
opportunity to lead the profession forward into a new era irrespective of the other structural
changes that government seeks to impose on the profession. The vision and enterprise being
shown shoulders a good deal of the risk that firms of solicitors would otherwise bear through
the development stage of the project.
The government would do well to let these initiatives develop and phase the introduction of the
HCR leaving that to a later date when there is no shortage of inspectors and lenders are ready.
That may enable solicitors to focus on joining up all the new bits of the new systems and
concentrate on the Land Registry pilot for e-conveyancing which is due – you have guessed –
in June 2007!!!
Michael Garson is a solicitor and an estate agent. He is a former Law Society Council Member
for Residential Conveyancing and he is now chair of the Property Section. He has lectured
extensively on Home Information Packs and has been commissioned by the Law Society to
write on the topic. He offers training and consultancy on HIPs, solicitors’ property selling and
other related e-conveyancing topics, see www.hipsis.co.uk. You can contact him at
michael.garson@kaganmoss.co.uk or 0208 891 6312.
Back to Contents.
Home Information Packs - and Law Society Initiatives
On professional chat lines everywhere “pack talk” is breaking out like a bad rash. The Office
of the Deputy Prime Minister (ODPM) consultation on the draft pack regulations at the end of
last year has provoked an avalanche response (see
www.odpm.gov.uk).
From every side of the
property industry there are challenges to both the policy and to the detail of the government
proposals. The ODPM have reached a point of no return and must now make decisions
regarding the implementation timetable and what is finally proposed by way of a Dry Run.
by Michael Garson
The Home Information Pack
The Home Information Pack is a creature of statute (thirty sections and a substantial set of
regulations that refine the legislation) and are a great deal more than window dressing. They
will take many forms - ‘thick’ and ‘slim’ ones, ‘complete’ and ‘incomplete’. For any given location
or property they will differ according to the type of property, the point in time when created and
the options chosen by the seller or seller’s adviser.
Ongoing Maintenance
Once a target date for marketing the property has been set and a pack that is compliant
prepared it will need to be checked prior to delivery to the marketing agent. There will then be
ongoing maintenance requirements after the pack has been delivered and marketing has
begun. In certain situations ‘required’ documents will need to be updated or removed and
‘authorised’ information can be supplemented where relevant. The terms on which sellers are
prepared to allow the pack to be distributed will be one of the matters on which solicitors can
give essential advice. Where a property is withdrawn from the market and then remarketed it
will be necessary to monitor constituent elements to see if their ‘sell by’ date can survive the
off-market period.
Competition and the Dry Run
Competing groups of estate agents and pack providers will have competing relationships and
arrangements with their chosen surveyors. There are any number of arrangements in embryo
and it will be for the market to decide which of the formats prove to be the most popular. The
lenders have been conspicuous by their “wait and see” approach but will ultimately have a
considerable say in what develops.
Conclusion
The Law Society model HIP envisages that solicitors will be instructed by their clients to prepare
a pack, either on the recommendation of an estate agent or because the seller has been
educated (and that is a separate marketing issue) to know that the solicitor’s input will be helpful
in making decisions about the preparation of a pack, its costing, and the marketing of the
property. The solicitor will then give instructions to MDA for the searches when needed and can
instruct a Home Inspector via the MDA network when required. The elements of the pack can
be pulled together on screen and downloaded for copying and use.