Local authority searches – swinging like a pendulum

Local authority searches – swinging like a pendulum

Local authority searches have long been debated and there is now fierce competition between private search companies and councils over price, turnaround times and data quality.  Whilst such competition should benefit the consumer, with the housing market at an historical low and many conveyancers struggling to make ends meet, Alan Thorogood, CEO of STL Group plc considers the future. 
15 years ago, 95% of searches were ‘official’, ie, compiled by the local authority.  When HIPs were introduced, official searches fell quickly out of favour due to higher costs and slower turnaround times.  Industry experts estimated that 95% of searches in all HIPs were ‘personal’ however concerns about the quality of some searches resulted in a heavy swing back towards official searches following the demise of HIPs.  Personal searches are now estimated to account for around 30% of all local authority searches.
So were concerns about quality justified?  In a few cases, yes.  The proliferation of HIP providers and DEAs with little work in a steadily declining housing market drove some to carry out searches with very little knowledge or experience.  Not surprisingly, many of them went out of business overnight when HIPs were scrapped.
Whilst some are quick to criticise the personal search, however, the lack of quality is largely a myth.  Indeed the results of a mystery shopping exercise undertaken by Birmingham Trading Standards earlier this year found personal searches to be on a par with those sourced from local authorities.  The OFT’s homebuying and selling market study also confirms that transactions rarely fail due to problems with the actual searches.  Open access to public data under the Environmental Information Regulations (EIR) now means that personal searches should mirror the data in an official search, so there should not be any difference in content or quality.  And as some local authorities supply data electronically to private search firms who package this into a local search, the defining lines between official and personal searches are becoming increasingly blurred. 
Although personal searches backed by the Search Code, the industry’s ‘gold standard’ of search quality, are already endorsed by the CML and BSA, the private search industry is not resting on its laurels and knows it needs to maintain quality and in some cases to improve it.  This includes the introduction of strict penalties from January 2011 to ensure that search companies comply with the requirements of the Code, protecting consumers and conveyancers alike. 
Quality aside, since the Government announced that local authority data is covered by the EIR and should be made available for inspection free of charge, the price gap between personal and official searches has grown even further as have turnaround times. 
Whilst almost all councils now accept that CON29R and LLC1 data is covered by EIR, debate continues as to how access is to be provided.  Under EIR, access to such information must be given no later than 20 days after it is requested and if information is inspected in situ, access must be free.  Councils may impose a ‘reasonable’ charge if they make the information available in a different format.  Not surprisingly, many local authorities have interpreted this very widely, with some arguing that they are not able to allow inspection of building control and highways information in particular and insisting that private search companies purchase a collated report.  Other councils have adjusted their pricing to offset the removal of the statutory fee to inspect the registers.  And some insist on taking the full 20 days to respond under EIR; delays that are often avoidable and do nothing to help the consumer, conveyancer or the housing market.
Councils that are restricting access are already being challenged.  Several cases are being heard by the Information Commissioner and further cases are pending which will provide detail about how the EIR should be implemented, restrictions on the general right of access and the ability to charge. These are expected to conclude by early February.
In the meantime, Councils are facing a difficult decision about what they should charge from April 2011 in light of Government guidance that focuses on cost recovery.  Do they increase fees to compensate for the loss of revenue caused by the housing market decline and by stiff competition from private search companies (estimated at £100,000 per council per year)?  Or do they reduce fees so that they can compete with private search companies but risk being accused of anti-competitive behaviour or further staff cuts which may increase turnaround times? 
With lower costs, exacting standards and faster turnaround times, the pendulum could well swing back towards pre-HIP levels for personal searches.  Only time will tell.

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