What a HIP-free property landscape will mean for conveyancers

Jan Boothroyd considers the new HIP-free property landscape and what this will mean for conveyancers

Controversial as this might seem, I believe that, despite all the problems home information packs created in the property market, they did also bring some benefits. More conveyancers were encouraged to embrace e-commerce and interact via browsers, as most packs were disseminated online. Homebuyers benefited from the useful information contained in energy performance certificates, which the government is retaining. The competition between private search firms and local authority (LA) local land charges departments resulted in many LAs improving on service delivery, bringing in new value-added services and more competitive pricing. The demise of the pack has returned control of the conveyancing process to its rightful owner – the conveyancer. The general public are benefiting too, in that now only one consumer in the conveyancing chain pays for land and property searches, which are generated at the point in the buying process where they are at their most effective and, in such a slow-moving market, can be relied upon.

Open house Following the demise of HIPs, the focus has turned even more sharply towards the LA search market and access to LA data, including possible fees and data reuse licenses – other authoritative data providers will similarly be affected in future. These issues have been under discussion for some time, and although the Information Commissioners Office has made its views known, LAs are still awaiting formal guidance. However, as open access to property search data widens, so too does the risk of using wrongly interpreted data, or of being provided with data that has been manipulated – for example, by being taken from a previous search on an adjacent or nearby property, or simply by being old and out of date. If a conveyancer does fall foul of these mistakes, this could lead to damaged reputations and an increase in indemnity insurance claims, time-consuming administrative tasks and additional costs.

At present, the amount of data being made available is fairly limited, and some conveyancers may feel that this means concerns about wrongly interpreted data are not pressing. However, solicitors need to be aware that, as the amount of data being made available increases, more responsibility will fall onto the procurer for ensuring that all relevant data has been collected and that the information has been correctly interpreted.

Contents assuranceTo reduce this risk, conveyancers need to be sure that they can rely on the quality of the searches, and that the data returned is current and complete. Purchasing official searches sourced directly from source data providers such as LAs, Land Registry, the Coal Authority and water authorities is a good idea, and will provide extra assurance because they all carry statutory indemnities which are transferred to end customers. As well as providing indemnity, LAs have the power to rectify and remediate, and will still exist in 10, 20 or 30 years, should a search issue arise – a valuable asset in these difficult times. The insurance cover attached to LA searches does not expire on the day of completion; replies are covered for many years, giving the purchaser assurance that there will be no nasty surprises after exchange of contract.

The recent case of R (One Search Direct Holdings Ltd (trading as One Search Direct)) v York City Council [2010] EWHC 590 (Admin); [2010] WLR (D) 87 provides an interesting indication of LAs’ obligations in relating to open access to data. In his conclusion, Mr Justice Hinkinbottom said: ‘I do not consider that the council is obliged to allow open access to all of its unrefined property information, and I do not consider that its ­policy document of 6 April 2009, which is based upon that premise, is unlawful.’ So, while a council may choose to release ‘interpreted’ data, the level of interpretation is open to debate. Although it is clear that more land and property data should be available to both private search companies and the general public, what that data should consist of, in terms of the level of refinement, is still open to interpretation. The Information Commissioner’s Office’s 2009 guidance, outlining its view that the majority of property search data is unrefined data and should be viewed free of charge, and the High Court comments, appear to be contradictory. For conveyancers, though, the question is whether or not they will prefer products which have been expertly interpreted by those responsible for maintaining the data.

Source of securityOne of the greatest success stories of e-conveyancing to date has undoubtedly been property searches. The digitisation of data by source data providers brings a multitude of benefits to the conveyancer, and the improved ease, speed and lowered costs in supplying the data means it is now easier than ever to buy interpreted data electronically, direct from source. Over 18 million electronic searches via the National Land and Information Service (NLIS) have been carried out in the past nine years, and with three NLIS channels licensed to provide the service to conveyancers – SearchFlow, Thames Water Property Insight and GlobalX – that figure is expected to climb steadily as market confidence and lending returns. In 2009, the NLIS Hub processed more than 167,000 CON29 forms, making the NLIS channels by far the largest purchasers of official electronic searches nationally. And that was ­during one of the hardest periods for conveyancing solicitors in recent years, with the recession in full swing, and HIPs still in operation. It is likely that, now HIPs have been abolished, conveyancing solicitors will continue to choose the NLIS Hub as an easy and reliable way to order a wide range of property searches, backed up by strong customer support and security.

There may still be large discrepancies between the costs and turnaround times of LA searches, with charges ranging from £40 to £287 for a full search, and turnaround times from a couple of hours to 25 days, but we have seen huge improvements over the past couple of years. Today, just under a third of all LAs charge less than £90 for a combined LLC1 and CON29R search via NLIS, compared with just 13% two years ago. Turnaround times have improved, too, with more than a quarter of LAs now taking between two and three days to return a combined electronic search, compared with just 17% of authorities two years ago.

As the quantity of electronic search transactions begins to increase, the issues of data security and ease of retrieval become more critical. NLIS is the only regulated land and property information process on the market, and the NLIS channels operate under strict licence agreements, which ­protect users, client and data providers, thereby providing an environment which is secure, robust and fully supported.

Fair feesLast month saw the removal of the fee for personal searches of the local land charges register, and Land Data believes that the LA fee structure will come under further scrutiny. As income levels fall and LA budgets shrink, it is likely that the provision of open access will be affected. Guidelines linked to data availability and provision will help, but without specific ‘ring-fenced’ finance, many LAs may be unable to implement new ‘access’ services, needing instead to focus on their core service provision. As data access and current charging policies develop, Land Data believes that now might be the right time for the introduction of a national fee. Although we believe that, due to financial constraints, it will take LAs many years to instigate full open access to data provisions, the official search service provided by LAs and others should not be threatened by this. There will always be a need in the market for interpreted search information products, and LAs are still best placed to provide this. Ultimately, though, we believe this information will be supplied at a lower fee.

At a time when LAs are under huge pressure to demonstrate savings, if the official search product is not in demand, then we may see the local land charges service reduced. This will not only affect those who do want official search information, but also those who want to view and access that information.

Looking aheadOur vision for the searches landscape is of a system with greater emphasis on the electronic delivery of information, leading to faster speeds, lower costs and, with the demise of substandard methods of data collection and warehousing, higher standards and quality. With almost half of all LAs connected to NLIS at level 3 (its highest level of automation), we have seen how greater efficiencies can be achieved through less manual intervention to process a search, and faster response times. During a question and answer session in the House of Commons in July, Eric Pickles, secretary of state for communities and local government, referred to the fact that the housing minister, Grant Shapps, was looking at ways to speed up the introduction of e-conveyancing. This is good news, and with Land Registry’s e-conveyancing system and the Law Society’s own planned portal, let us hope this vision is not too far from being realised.

Jan Boothroyd is chief executive of Land Data, a community interest company which regulates the National Land Information Service

• This article first appeared in the September 2010 issue of Property In Practice, the magazine of the Law Society’s Property Section. To join the Section, visit the Law Society website .