Hips row banks make buyer pay twice

Major mortgage lenders, including HSBC, are unwilling to trust local authority searches contained in the packs put together by sellers.

The Daily Mail reported that banks are telling buyers to pay for their own searches, including information on drainage, planning applications and building consents, through their own solicitor.

This means tens of thousands of homeowners in a chain, making up about 80% of the market, are being forced to pay twice.

They are legally obliged to spend £500 on a HIP to give to potential buyers of the property they are selling, and are also being told by their mortgage lender to pay a similar amount for a lawyer to carry out searches of the property they want to buy.

The packs were intended to speed up the selling process by giving buyers all the information they need without having to employ solicitors to carry out searches.

Introduced at the beginning of this month for homes being sold with four or more bedrooms, three-bedroom properties will need a HIP from September 10 and the scheme is expected to cover a further 6.4 million smaller homes by the end of the year.

The present confusion centres over whether mortgage lenders can trust the information they are being given by sellers, because it is in their interests for a search not to throw up any problems.

Before the HIPs scheme was introduced, roughly 40% of searches were carried out by buyers without commissioning a solicitor, known as a personal search. Now nearly all are expected to be personal searches made by companies providing HIPs for sellers.

Several mortgage lenders are making clear they will offer home loans only if searches are carried out by the buyer's solicitor.