Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

Supplementary Memorandum by NLIS (National Land Information Service) Searchflow (DHB 27(a))



  There is a substantial danger of creating a "grey market" in unreliable search information unless the HIP proposals are carefully constructed.

  Insurance is no substitute for buyers for reliable and comprehensive property information which is readily available.

  The National Land Information Service (NLIS) facilitates the provision of reliable and comprehensive information for buyers and minimises delays and inefficiencies that existed in requesting and processing searches.

  Central and local government need to fully commit to the NLIS initiative to deliver the Home Information Pack (HIP).

  The way forward is for Government to encourage private search companies to join NLIS rather than creating alternative methods of obtaining search information.

  NLIS should be the provider of search information for the Home Information Pack.


  NLIS Searchflow a trading style of the Conveyancing Channel Ltd—is a service that facilitates the home buying and selling process through electronic provision of searches. It achieves greater efficiency and certainty than traditional methods by harnessing service-relevant technology.

  NLIS Searchflow is a government licensed channel in the National Land Information Service (NLIS).

  NLIS is a government initiative to automate and integrate the provision of land and property information. The infrastructure and services have been built and delivered by private investment and enterprise through the government's channel implementation policy procurement process. The infrastructure comprises a hub (facilitator) and three competing channels (retailers).

  The first application of NLIS is to serve conveyancing searches but it was recognised from the start by both government and the investors that the resultant structure always had the potential (and the expectation) to deliver wider services within the house buying and selling process. The first stepping stone of this is to extend NLIS to facilitate the HIP. NLIS and the HIP share the same founding principles:—

    —  greater efficiencies in communication and information provision, leading to increased speed and certainty in the home buying and selling transaction; and

    —  reducing stress for the citizen.

  Transparency through NLIS is delivered through more efficient and earlier provision of information by harnessing technology.

  Given the above, our response to this consultation on the contents of the HIP covers the issues raised in chapters 4, 5 and 6.


Para 4.10:

  We support the proposal that the HIP should contain evidence of title upon which the seller intends to rely as set out in the proposal on page 12 of the consultation paper.

  It is our view that the HIP should also include copies of documents referred to in the registers even when the registers quote the relevant extracts from those documents—on condition that these documents can be easily provided. The buyer (no doubt, under advice) usually asks for these documents subsequently. Hence inclusion in the HIP would mean that this area of potential delay could be removed.


  It is essential to the viability and credibility of the HIP that reliable and comprehensive search information should be contained within the Home Information Pack ("HIP").

Para 5.9:

  We support the proposal that the information (including search results) should be not more than three months old at the date that marketing is commenced.

  We appreciate that the seller may be marketing the property for a considerable period of time and should not have to repeat the exercise of obtaining search information every few months. However, it would defeat the purpose of the HIP if the information was so out of date that it could not reasonably be relied upon by the buyer.

  We would therefore propose that the regulations introduce a "long stop date". This would provide that if the property was to be continued to be marketed after that date then fresh search information should be obtained by the seller. Without a long stop date a property could be marketed over an extended period with the result that the search information was of no practical use but was merely being provided to comply with the HIP Regulations.

  The Paper notes that information which is up to six months old is reasonably useful to the buyer. This argues for a long stop date of six months. However, it may be sensible to give the seller a small margin here, and the government may feel a long stop date of eight or nine months (with a facility to update searches—see below) may be more appropriate.

  In addition, however, the nature of the search is such that the information contained within it could be materially inaccurate immediately after it has been carried out—for example a financial charge notice on the property could be served the day afterwards. The HIP process must consider who should become liable if information contained within a search which is relied upon by the buyer changes in a way that results in consequential loss in value not reflected in the sales price.

  If liability remains with the buyer then it is likely that the buyer will invariably undertake further searches immediately prior to exchange thus defeating the object of up-front provision of this information. If liability is left with the seller a similar position and result will pertain.

  There appear to be two possible solutions—both of which are considered in the consultation document:

  (a)  The search information contained within the HIP is insured. However, if this option is pursued the seller may have to repeat the search process immediately before exchange in order to comply with a condition in the insurance. In our view, insurance should be viewed as an option of last resort where it is not possible to provide the search information and thus the transparency that is the driving principle of this initiative.

  (b)  The better alternative would be for search information providers to offer an "update search option" to the buyer—effectively an exceptions report comparing search information contained in the HIP with their current records—quickly and cheaply—within a short period before exchange. This could be done with the present largely postal system but in order to be undertaken efficiently and speedily, in practice, this should lead to all local authorities providing electronic access and electronic search facilities in a format (eg XML) capable of rapid automated interrogation of their records. To date only 43 local authorities provide a capable facility (level 3 connection) via NLIS. If this option is to be developed, it is essential that local authorities accelerate their plans to develop their NLIS Level 3 connections in order that the up-front searches contained in the HIP can be updated quickly. It is also important that local authorities provide this update facility for a reasonable fee, which should be significantly less than the fee charged for the original search. It may be possible that there would be several update requests form several buyers of particular property during the process of its sale at a particular time.

Para 5.23:

  We support the proposals that a search of the local land charges register and responses to the additional enquiries set out in form CON29 Part I should form part of the standard search information provided in the HIP.

  It is our view that the optional enquiries set out in form CON29 Part II should also form part of the standard information to be included in the HIP—unless the seller gives the buyer a legally enforceable warranty that none of these enquiries are relevant to the property. Given the ease with which replies to these enquiries can be provided by authorities using computerised systems and offering electronic access facilities we would recommend that all local authorities are encouraged to acquire this capability. The HIP is, after all, about reducing uncertainty and risk as far as possible. Warranties and insurance should only be used where information is not available. It is simply a question of encouraging local authorities to acquire and harness the appropriate technology.

Para 5.28:

  We support the proposal that replies to the drainage enquiries set out in the form at APPENDIX I are appropriate for inclusion in the standard local searches to be included in the HIP.

Para 5.33:

  We support the proposal that there should be Environmental Searches as a standard part of the HIP. However, our experience to date is that the Environment Agency may not hold all the environmental information required by conveyancers. In addition, it is not yet commercially established that the form at APPENDIX J provides the information required. In recent years, conveyancers have purchased environmental search reports in large numbers from private search organisations and these companies have developed service led proven forms of reporting.

Para 5.37:

  We do not support the proposals here.

  In April 2003, conveyancers ordered "non-standard searches" (ie in addition to local authority, drainage and water and environmental searches) in 28.69% of the property transactions where NLIS Searchflow was used. The absence of these searches from the Home Information Pack will result in the very delays the pack was set up to avoid in a significant number of cases.

  Existing technology through NLIS can be engaged to identify the relevant searches to be undertaken—and the ones that are not necessary.

Paras 5.38 and 5.39:

  These paragraphs show the important contribution that NLIS can make to delivering high quality and timely search information to buyers and sellers.

  The most significant barrier to delivery of "a speedy, efficient service" has been the slow rate at which a significant proportion of local authorities have computerised their data and linked into NLIS. The potential is demonstrated by the fact that one local authority is able to provide a search report within 15 minutes of a conveyancer instructing NLIS Searchflow.

  We would suggest that, as part of the roll out of the HIP programme, central and local government should commit itself to combining to improve the computerisation of local property data held by local authorities and its connectivity to NLIS.

  A key part of this is to increase the level of differential pricing which is a catalyst to the use of the electronic channel. This is the most effective way to improve the service given by local authorities to both buyers and sellers, as the Consultation Paper rightly notes.

  The moves towards differential pricing have been slowed by:

    —  the conflicts inherent within the local government community;

    —  concerns about limiting the potential use of search fees for cross subsidy on other council services; and

    —  concerns that the short term returns made by local authorities in their investment in upgrading to level 3 connectivity may be thwarted by differential pricing.

  There is an urgent need for a strong lead (which unfortunately is so far lacking) by central government to overcome these conflicts by committing itself to NLIS and to the long term benefits of differential pricing as the way to move activity patterns away from postal and towards electronic searches.

  While criticism of the time taken by some local authorities to respond to search requests is valid it is not the whole story—a point we made at length in our response to the original consultation ("The Key to Easier Home Buying & Selling") in March 1999.

  A further significant source of delay occurs within the search requesting process undertaken by the conveyancer. The search request requires:

    —  an unambiguous identification of the property description (address and/or plan); and

    —  identification of the correct information source and fee.

  Without an acceptable property description accompanied by the correct fee (sent to the correct search information provider) the search request will be rejected resulting in significant delay.

  Pre-NLIS Searchflow, the search request process was notoriously time consuming and fraught with error. In fact, approximately 15% of postal local authority search requests are still rejected for the above reasons.

  Even worse than rejection, the conveyancer and local authority may not have been aware that the description provided is ambiguous; this may lead to incorrect search replies rather than a returned search request.

  By making gazetteers, the national Ordnance Survey data-set and search information provider databases available to the conveyancer via a web site, the NLIS channels have significantly reduced instances of search request rejection for these reasons. Through NLIS a much smaller percentage of search requests are rejected (currently around 4% and falling).

  The conveyancer simply types the address onto an electronic form on their desktop computer; NLIS validates the property address, provides a property location plan, identifies the correct fees, and automatically sends the search to the correct search information provider. If the address information is unclear then the conveyancer is unable to process the search and thus the ambiguity is corrected at source.

  In addition, Local Land Charge Departments at local authorities constantly have to deal with enquiries concerning whether a property is in their area, what the correct fees are, how long the search will take etc. This diverts human resources from the task of processing searches. This is also significantly reduced when searches are sent through NLIS.

  Through NLIS, potential delays in requesting and processing searches are minimised and human resources at local authorities are used more efficiently.

PARAS 5.40 TO 5.56:

  These are arguments about the reliability of the information set out in the HIP.

  We would invite the government to reject the option that anyone should be entitled to provide the required property information. That would not give the buyer any confidence that the information provided by the seller was either accurate or comprehensive. It would create a "grey market" in unreliable property information which was available to satisfy the strict legal requirements of the HIP but where both buyer and seller knew that the search exercise would have to be repeated. Such an approach would negate the whole purpose of the HIP and would bring the HIP process into disrepute.

  We can understand the reluctance of the government to prescribe that the information must come from local authorities and statutory bodies. However it is the statutory duty of these public authorities and statutory bodies to hold information concerning property. It therefore follows that virtually all reliable information concerning property must have come from these statutory bodies originally. All that other organisations do is to collect this information and add value to it.

  The middle option proposed is for information plus insurance. This is superficially attractive but one must start from the proposition that buyers and sellers need and are entitled to have information which is comprehensive and reliable, not just a combination of partial information plus the right to sue an insurance company if the information proves incomplete and/or inaccurate. Buyers want the home they agreed to buy, not just an insurance claim!

  Leaving a member of the public to sue an insurance company for the provision of inaccurate information may be a wholly illusory right. Insurers may come back with a host of technical defences and, in practice, most buyers just want accurate information up front rather than being embroiled in litigation, particularly when that information is readily available.

  Whilst it is correct that search information could be collated by organisations other than local authorities, the buyer needs a dependable assurance that the information is both comprehensive and accurate. If it is collected by a local authority or other statutory body, the buyer has that comfort. If it is collated by an independent source then it can only give that comfort if the seller (or possibly his insurer) can warrant that the relevant information is materially identical to the information held by the relevant local authority or other statutory body, even if other information is also provided.

  If the above conditions are complied with then insurance should become relevant only in a tiny minority of cases. However the buyer also needs to know that the insurance provided is comprehensive and will provide cover for the duration of the buyer's ownership. An insurance policy which is tied down by many conditions and qualifications, and is subject to a low financial limit, would be a policy that was not worth the paper it was written on.

  If this option is pursued insurance is essential, but it is not sufficient. We would suggest that the following minimum additional conditions must be complied with if this option is taken and the HIP is to do its job in providing reliable and comprehensive search information:

    —  the information must be provided by a local authority or relevant statutory regulated body or be substantially identical to the information held by them

    —  the policy of insurance backing it is in a form that has:

    —  been approved by the Secretary of State in advance; and

    —  contains specified features so as to ensure that both the buyer and the seller can claim without any reasonable difficulty under in the event of any reasonably foreseeable loss.

  The most favourable option in terms of accuracy and reliability is Option C. It is not correct to conclude that this would amount to a state monopoly. There are three competing service providers within NLIS and others (including private search companies) will have the chance to join the system once the period of exclusivity ends in 2004.

  Our view is that by adopting Option C, NLIS will be expanded and private search companies would thereby be encouraged by government to invest in the government's own initiative to provide search information more efficiently.

  By joining NLIS:

    —  private search companies would become regulated by government (as would be essential in one form or another if they were to provide information for an HIP)

    —  the accuracy and reliability of property information would be assured

    —  local authority resources could be solely focused on realising the full potential of NLIS rather than diverted into facilitating and financing separate and several forms of access for private search companies

    —  the existing choice of three providers would be extended to others providing the necessary competitive spur to all

    —  customer choice would be assured whilst those customers would be protected by the provision of reliable information

    —  there would be a level playing field on price, provision and access—thereby ensuring that choice would be based on service quality and value for money

    —  government would not be putting private search companies out of business


  We support the proposal that the HIP should contain any documents as described on page 22 of the consultation paper on the basis that they may be required by the buyer—thus removing the possibility of subsequent delay if they are.

PARA 6.15

  In addition to the above:

    —  We do not believe that approved plans and drawing should also be included in the HIP. This information would be required only where a detailed inspection of the property is unable to establish that physical development matches the application

    —  We agree that only consents less than 10 years old should be included

    —  We agree that section 106 agreements, Article 4 directions and building control certificates should be included

    —  Tree preservation orders should also be included.

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