BUYING A PROPERTY IN THE LONDON BOROUGH OF HACKNEY?
Local Authority Searches In Hackney Delayed
Since Covid-19, local authorities have been experiencing delays in producing local authority searches. With the stamp duty holiday ending on 31 March 2021, any delays in transactions have been producing anxiety for clients who wish to buy before the end of the stamp duty holiday.
Since Covid-19, Hackney Council have been experiencing significant delays in producing local authority searches. After Covid-19 struck, their turnaround times increased and ended up being approximately two months. Then the Council experienced a Cyber attack which has meant that for some time, their systems have been down while they deal with the after effects of the Cyber attack and during this time have not been able to produce any local authority searches. Even regulated local authority searches (which is where a search agent attends the local authority’s offices in order to carry out a search themselves) are not being produced as their offices are closed to search agents during this time. Whilst their offices have been closed, the Council have been unable to provide any further estimated turnaround times as they need to deal with the situation, then assess the backlog before giving any accurate turnaround times.
How long do local authority searches take in Hackney?
Whilst Hackney’s systems are still closed the Council have now given an estimated turnaround time for local authority searches. They have given an estimated turnaround time of 171 working days. This means that any local authority searches which are now ordered will not be available before the stamp duty holiday deadline of 31 March 2021. Local authority searches are an essential document in conveyancing transactions. It answers numerous questions and provides a large amount of information from the Council’s records. It gives details of local land charges such as financial charges registered against the property, planning designations, information regarding planning and building regulations for the property, information regarding any orders noted against the property such as compulsory purchase orders or tree preservation orders, traffic and transport schemes, etc. Normally you need to receive the local authority search before you can exchange contracts as it contains such useful information and a search could reveal adverse entries. It is also usually a lender’s requirement.
Should I take out search insurance?
An alternative to proceeding to exchange of contracts without a local authority search could be search insurance. There are two options. One is search insurance which is an indemnity policy where a local authority search is not ordered. The second option (which is a bit cheaper) is search delay insurance which is where you take out the indemnity policy where you have already ordered the local authority search and wish to proceed before the results are received. The second option is probably better than the first as sometime down the line when the search arrives you will find out what the search contains rather than having to potentially deal with an issue later down the line such as when you come to sell.
Search insurance is a legal indemnity policy which covers a buyer and their lender for costs in the event that it is later revealed that the local authority search would have revealed adverse entries. Costs can include costs of dealing with and removing an adverse entry and can also cover loss in value of the property due to an adverse entry.
We usually advise waiting until a local authority search arrives as it is much preferable to have all the information at hand before you commit yourself to exchange of contracts. If the local authority search does arrive before exchange, then you can ask the seller’s solicitors to provide any appropriate documentation or further information and you can ask the sellers solicitors to deal with any adverse entries. For example, if there are any charges registered against the property such as a Community Infrastructure Levy liability notice or a home improvement grant, you can require the sellers solicitors to pay off the charges. If the adverse entries are significant, then you can make an informed decision on whether to proceed or pull out or ask for a price reduction. It is normally better to deal with such entries before you commit to exchange of contracts rather than try to deal with them after you become the owner of the property and to deal with an insurer. However, with Hackney Council’s backlog for local authority searches being delayed for approximately half a year and due to the stamp duty holiday deadline, search insurance would appear to be the only option in order to purchase a property in the London Borough of Hackney before the stamp duty holiday deadline or to buy a property in the London Borough of Hackney for in the near future.
A potential issue with proceeding with search insurance is that a lot of lenders do not accept search insurance in connection with a purchase. They are more likely to accept search insurance for a remortgage where the borrower already owns the property. There are, however, a few lenders who do accept search insurance for searches. If you are considering buying a property in the London Borough of Hackney and wish to take out search insurance in order to proceed before the end of the stamp duty holiday deadline, then it would be worth speaking to your mortgage broker in order to identify particular lenders who will accept search insurance. It is also worth checking Part 2 of the UK Finance Mortgage Lenders handbook for conveyancers which is available online. Below is a link to the particular question which asks if the lender accepts search insurance and the answers are listed by lender:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/2081/
If you have any property-related legal questions please do not hesitate to contact us for a no-obligation chat on 0207 7035034 or email us at info@meaby.co.uk.
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