War against Homeowners. News from the Front.

Today, the junior minister entrusted with rolling out the Government's latest weapon in the War against Homeowners, a device known affectionately as the Home Information Pack, or HIP, announced that the Home Condition Report (HCR) would not initially be part of it.

Previously, the HCR was paraded as one of the most important elements of the HIP. It would help buyers make their minds up and save loads of time and money for people buying crumbling wrecks which had been tarted up a bit. The Government was told that it would never work. They were told that the standard of a HCR was not high enough for mortgage lenders and not low enough for the semi-professionals entrusted with doing them to carry out without making a total mess. They were told that there was insufficient time to train the "Home Inspectors" required. They were told all these things by the Law Society, by the RICS, by the NAEA, by the Tories who in a brief burst of lucidity had probably realised what was going on. But John Prescott - was he listening? No. And Ruth Kelly? Too busy praying probably. And now some poor junior minister has been wheeled out to take the rap. Ha ha ha!

There are 152 Companies trying to market hips to agents, financial institutions and solicitors. 152. The total market for HIPs is around £1.5bn gross with a profit margin of around 5%. Even a minister with a calculator can work out that there is less than half a million pounds profit in it for each of them per annum. A whole load of people are going to be very disappointed. Millions of pounds have been invested in this fiasco by people who should know better. Most of this will be lost. The HIP providers to whom I have spoken expect 10-12 of them to be around in 18 months' time.

What is worse is that the 7,000 or so people who have signed up for Home Inspector courses at around £2,000 each will have very little to do when they do qualify. The only element of the HCR that will remain for the time being is an Energy Efficiency Report which, because it will require a Home Inspector to visit and there aren't enough of them, will no doubt also be shelved for a while. People will be reluctant to pay the full HCR fee for an Energy Efficiency Report. That's pretty obvious to us, but probably the Government will have overlooked it.

The other alarming feature of the roll-out of HIPs is that many solicitors seem to be unprepared for it. We will have no problem in arranging HIPs for clients, and we would of course suggest that they speak to us before marketing their property.

Meanwhile, a poem....


The HIP-popotamus (written by T S Eliot with no clear idea of its relevance)

The broad-backed hippopotamus
Rests on his belly in the mud;
Although he seems so firm to us
He is merely flesh and blood.

Flesh and blood is weak and frail,
Susceptible to nervous shock;
While the true church can never fail
For it is based upon a rock.

The hippo's feeble steps may err
In compassing material ends,
While the True Church need never stir
To gather in its dividends.

The 'potamus can never reach
The mango on the mango-tree;
But fruits of pomegranate and peach
Refresh the Church from over sea.

At mating time the hippo's voice
Betrays inflexions hoarse and odd,
But every week we hear rejoice
The Church, at being one with God.

The hippopotamus's day
Is passed in sleep; at night he hunts;
God works in a mysterious way -
The church can sleep and feed at once

I saw the 'potamus take wing
Ascending from the damp savannas,
And quiring angels round him sing
The praise of God, in loud hosannas.

Blood of the Lamb shall wash him clean
And him shall heavenly arms enfold,
Among the saints he shall be seen
Performing on a harp of gold.

He shall be washed as white as snow,
By all martyr'd virgins kist,
While the True Church remains below
Wrapt in old miasmal mist.

The Sordid Truth about Referral Fees

Whoever you instruct to act for you: Solicitor or Conveyancer; you need to ask them one question: "do you pay Referral Fees?" Referral Fees are a commission, bribe, or bung, call it what you will, paid by the Solicitor or Conveyancer to someone for introducing them to a client. For many agents "I know a good Solicitor" means "I know a Solicitor who pays me a good referral fee". Some of us in our profession call this corruption, but of course it is perfectly legal, and some firms even tout themselves around estate agents and other intermediaries offering considerable sums for recommendations.

And when I say considerable, I mean it. One Solicitor to whom I spoke about this: I will say no more than her firm was based in Croydon, which you might think was punishment enough; admitted that of fees paid by a client for what seemed to be an uncomplicated transaction, nearly 40% was paid to the introducer.

Now you might very well be thinking: "if these people are so stupid that they will pay all of their profit away, why should I worry?" Well, apart from the fact that your transaction is being handled by people with such clearly defective business acumen, you might conceivably think that your fee is being used to deliver an efficient and thorough service by paying for highly qualified staff who devote a reasonable amount of time to your transaction. Well obviously not! If your transaction's profit margin is paid to some greedy commission agent, then in order to make ends meet, your lawyer is going to have to take on more and more work, and that means your transaction gets off the bottom of the pile now and again, and no more.

This whole process, which makes the "cash for honours" scandal look on the level, has become instutionalised big business. Large corporate agents will have tie-ins with conveyancing factories, and their staff are penalised if they fail to introduce enough cases to them.

The bottom line is that the consumer is paying for all this. Firms that pay referral fees cannot deliver value for money almost by definition. Your cash is being siphoned off to pay bribes.

So ask that question!

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.

How the Church of England is increasing your conveyancing costs

First, some history. Many many years ago, the Church, which had extensive landholdings purchased from tithes extorted from the community and money given to it by people foolish enough to believe that their souls could be saved by bribery, created the office of lay rector. The lay rector occupied land or lands in the parish, and in consideration of his office, undertook to maintain the chancel, or main structure, of the church. The liability was charged on the land and has been carried forward over the years, although in most cases it has been forgotten about, and no evidence of the liability exists on the Deeds.

Maintaining the chancel of a church is no light affair. A few years ago, a couple got a bill for just under £100,000 out of the blue to repair a church that had been neglected for many years by its congregation. An assiduous parish clerk had done some historical research, and 'bingo', the church was in the money and the couple financially ruined. Nice, eh?

Since this time, practitioners have been looking for solutions. It is possible, for around £120, to undertake a search of the existing records at the National Archives in Kew. These are not conclusive but they are a good guide. Alternatively, a number of companies have set up databases which check if the property is in an effected parish. For £11.75 you can check this, and then for a further £50-£100, if there is a potential risk, you can insure against it.

So either way, given that there are 1.7m property transactions in England and Wales each year, the total cost of chancel searches and insurance could amount to £100m per annum. This is, I suggest, enough to repair a lot of churches, should such a thing be socially desirable.

You might ask why it is that this liability could be allowed not to be detectable. The answer is that when Land Registration was introduced, between 1862 and 1925, the Government did not want to "take on" the Church, so they agreed that this liability would be an "overriding interest". When the Land Registration Act 2002 was passed, the issue came up again. The Government could have said to the Church that in the 470 or so years since the Reformation there had been enough time to isolate who had to pay and who didn't; but instead they provided a "cut off" date of 2013 before which the Church had to register their rights or lose them. This is better than nothing, but the Church has now issued instructions to its Parish Councils to sniff around looking for people to lumber with liability.

I happen to think that this is quite disgusting. An amount equal to the cost of 4 new secondary schools a year is being sucked out of the system in insurance costs because of the avarice of a failing institution supported by a small minority of the population. If the Church is successful in registering its rights, then potentially a lot of properties will be unsaleable, causing a further cost to society.

If you agree this is an outrage, why not write to the Church and complain. This is the web page of their contacts. http://www.cofe.anglican.org/contact/feedback/

This is a picture of their Web Master to cheer you up.

Who would want to read a Lawblog?

You'd be surprised. There must be someone amongst the six and a half billion inhabitants of this earth with an anorak-like fascination for these words of wisdom. The object is to set out an occasional (it will certainly not be daily) disquisition upon a subject of interest to the Blogger related in some way to the aforesaid Blogger's practice as a Solicitor in Streatham, South London.

The medium of the Blog is fairly novel, but it allows the immediate posting of news and other items without the fancy footwork involved in setting pages of text in a web editor. It also allows comments, enabling the casual or devoted reader to castigate the Blogger, fawn over his words, or just practice typing. Of course I reserve the right to delete any posting. In fact I reserve all my rights. What did you expect?

Now some words of welcome to this virtual Streatham. The picture attached to this blog was taken by someone who had spent their lifetime trying to find a view of Streatham without any buildings in it. Well done! In reality Streatham is a very long street with loads of small shops and offices in it. A few years ago it was awarded the title of worst high street in Europe. I think this is unfair. You will hunt in vain for most of the multiple clothes shops outlets you find in every other town centre, but this is of no account to those of us who are not interested therein. Recently the council has spent money on environmental improvements.

My firm has been in Streatham since 1950, and I first worked there in 1977. No, there were no trams then, but the place has the accolade of being the terminus of London's last scheduled Routemaster service, the 159, until late 2005. These buses now run as extra buses on two routes in central London.

It is exceptionally well served by bus routes, as well as three railway stations, which is just as well, as otherwise I would never get into work.

So nothing at all about the Law in this first Lawblog. But you can't have your money back. I reserved all my rights, don't forget.