Survey reveals still lack of enthusiasm for HIPs
MDA SearchFlow has just conducted a survey looking at the current state-of-play of the conveyancing and Home Information Pack (HIP) market. The survey is conducted every year across conveyancing practices, large and small, to provide a behind-the-scenes look at how the current economic situation is affecting the conveyancing market, as well as market sentiment regarding HIPs, searches and thoughts about the future.
The majority of respondents – more than 70% – said their business had been affected by the recession, with 35% reporting that their business has been “significantly” affected. Clients are now placing professional fees under greater scrutiny, with 62% of respondents reporting that they have come under more price pressure in the past year. At the same time, firms are also facing a sustained increase in costs (ahead of inflation), with more than a third of respondents reporting that professional indemnity premiums had increased by between one and 10%.
The MDA SearchFlow survey also highlighted that some 60% of High Street conveyancers are still not comfortable taking a risk and diversifying into other areas like litigation and probate. This is largely because they remain uncertain about the outcome of the general election, the future of HIPs, and significant structural changes like the Legal Services Act in 2011.
HIPs were once again generally regarded negatively, with 81% of respondents reporting that their overall impression of HIPs has been poor. A large majority of those questioned said that HIPs have had a negative effect on the conveyancing process in general, as well as on relationships with agents/panels, on overall profits, and on the volume of instructions that they have received. For all of these reasons, 50% of respondents claimed that their business would benefit if HIPs were scrapped, with only 6% believing their business would be negatively affected as a result. Interestingly, if HIPs were indeed abolished, nearly half of those questioned reported that they would return to their pre-HIP practices.
The ongoing duplication of searches was also highlighted by the survey, indicating that scepticism of HIP searches remains an issue. With more than half of respondents replacing personal searches in a HIP with official Local Authority searches, caveat emptor continues to prevail over HIPs in both principle and practice more than two years after their introduction. In a similar vein, most of those surveyed also seemed lukewarm about pre-sale packs which could be offered from the seller's side, with only 44% of respondents stating that it is a “good idea”.
In addition to these reservations regarding HIPs in their current form, the survey also revealed that virtually none of those questioned were optimistic about the future of the “Exchange-Ready HIP”. When asked if exchange-ready HIPs would be suitable for exchange without further diligence for the buyer, 95% responded negatively and said they would continue to scrutinise it and follow standard processes.
For a typical caseload, 50% of those surveyed reported that they currently receive property search information electronically, 39% receive a combination of electronic and postal results, and 11% receive it by post only. 64% of respondents would choose electronic as their preferred format for receiving property search information.