HIP-free ways the Government could improve the house buying process - No 1

Defective leases are a major cause of delay. The Government and its predecessor have done a lot to help. We now have, by statute:

• A right to extend leases;
• A right to join with other leaseholders and buy the freehold;
• A right to take over the management of a building;
• A right to apply for variations to leases;
• Various other rights and remedies.

But with the notable exception of the third of these (taking over the management of a building) all of these require a fair amount of legal work and/or surveyors' time, and are little use to someone who has a dodgy lease and wants to sell it now.

A simple improvement would be to impose compulsory and retrospective standard lease terms which would prevail over vague or poorly drafted clauses in leases, or where their terms were out of date. For instance

1. Covenants with the freeholder by leaseholders should be enforceable by other leaseholders within the same building so long as they are relevant to the repair, maintenance or insurance of any part of the building.
2. Insurance obligations should be to insure against all normal comprehensive risks in the full value of the property insured.
3. Depending on the number of units and the nature of the original arrangements for the building, standard provisions should regulate the repair and insurance arrangements for:

• Self-contained maisonettes;
• Converted houses with some common parts
• Purpose built blocks.

We have similar legislation which imposes standard terms in relation to the sale of goods, so why not the management of property? It's far more important.

Hey, so HIP, or what?

Before John Prescott was taken away from things he could do harm to, he used his extensive experience at occupying property to concoct a scheme for increasing the cost of house moving in England and Wales to no particular benefit.

From June 2007, if you want to market your property in England or Wales, you'll first have to get a Home Information Pack. In this bundle you (or someone paid by you to do it on your behalf) will be collated:

• Local and Water Searches (now done by the Buyer) ;
• A Home Condition Report and Energy Audit (which will not be accepted by mortgage lenders) and seems to serve litle useful function, and may be carried out by a variety of half-qualified persons;
• Responses to various property information forms;
• Copies of your title;
• A list of the items to be sold with the property (which would be of interest, but may be left completely blank)!

Now this may well have seemed like a bright idea to someone, front loading the conveyancing process to speed it up, and that is. Indeed for several years, solicitors have prepared much of the above and sent them out with the draft contract within a day or two of an offer being accepted. But there is little enthusiasm for compelling sellers to survey their own property. Even the Government acknowledges that the Home Condition Report won't be a substitute for a survey and there will be a considerable degree of duplication (and therefore increased expense) as a result.

Searches, too, may end up being duplicated. Home Information Pack providers are likely to seek personal search solutions as they are cheaper. Not all mortgage lenders are prepared to accept them, for the very good reason that if there is an error, there is likely to be a problem fixing liability on the information provider. For example, if a local council in an official search erroneously states that there are no road schemes within 200m, and there is; or a water company does not disclose a sewer running under a house, then a person with an official search has a solid case for compensation. But if they had a personal search, there will be a dispute as to whether the information was given wrongly or taken down wrongly. So poor customer will lose out. My advice will be: get an official searches.

Time may be wasted by all this, and is unlikely to be saved. The HIP is clearly intended to "dumb down" the conveyancing process, and difficult cases are likely to cause more serious problems, as it is likely that less qualified persons will get involved in this work: indeed they already are!

At the moment, local and water searches take between 3 and 10 working days, which is on a par with a mortgage application. A really keen buyer can put themselves in a position to exchange therefore in 2-3 weeks.

So what will happen?

It is almost certain to go ahead. John Prescott's successor in this is Ruth Kelly, who you may recall has been involved in overseeing the destruction of comprehensive education, and who is no stranger to blind faith in untenable propositions, being a member of Opus Dei.

Some people will avoid it simply by advertising their properties on foreign websites. It's worth buying shares in Jersey Estate Agents. Others will risk a fine of £200.

Likely problems:

• HIPs produced by people with no legal experience will be peppered with omissions and errors. If the title is complex this will lead to further delay.
• Poorly supported and qualified conveyancing staff will be used to "deal with" conveyancing, leading to the interests of the client being prejudiced in favour of small cost savings.
• Negligence-related litigation is likely to spiral. The cost of claims, particularly against those who provide Home Condition Reports, may make insurance of these people uneconomic, leading to a shortage of people able to undertake the reports. Expect this to unsustainable.
• Local authorities will see a considerable reduction in revenue as the income streams which they have used to finance considerable improvements to their systems of processing local searches dry up. Expect more parking fines to make up for this.

All these points were made prior to the current regulations being issued, and they have been ignored at every stage.