House hunters face hike in lawyer costs

Senior News Reporter

Saturday 23 March 2013

SCOTTISH house hunters will have to pay hundreds of pounds in extra costs to seal the purchase of their homes after lawyers voted for more red tape in the property market.

risks: Austin Lafferty of the Law Society blames pressure of the recession.

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Alison Campsie

Up to £400 will be added to the expense of moving after members of the Law Society of Scotland ruled buyers and lenders can no longer use the same solicitor during property transactions.

The move by the professional body for solicitors north of the Border means buyers will need to find separate legal representation. Mortgage providers will almost certainly pass on the added costs to consumers given that the buyer carries the risk during a deal.

The development comes four years after home reports, costing up to £800 each, were introduced, requiring sellers to provide a single survey for potential buyers.Banks and building societies are bringing a rising number of insurance claims against solicitors when problems arise with mortgage deals, such as defaulting on payments and loss in equity.Lenders have already restricted the solicitors they will permit to act on their behalf during property transactions as the high-risk lending climate continues.The Law Society of Scotland said the vote will further remove any risk of conflict of interest in the house purchase process.The Council of Mortgage Lenders criticised the move as protectionist and one which will hit buyers further in the pocket, with reservations also aired by estate agents.Austin Lafferty, president of the Law Society of Scotland, said the move was necessary, given the pressures of the recession. He said the exception to the conflict of interest rule that allowed the use of the same solicitor by both lender and buyer was introduced in 1986 to help ensure a smooth house purchase.He added: "The world is a very different place now. The severe economic downturn, increasingly complex transactions, increasing risk of mortgage fraud and the additional pressures from lenders mean it is no longer appropriate, and indeed is arguably not in the public interest to continue."We are fully aware of the potential for increased costs for buyers and increased paperwork for solicitors. However, these costs are not the borrowers', they are costs associated with lenders satisfying themselves on their own lending risk – and it will be for the lenders to decide on whether they are prepared to pass on these costs to their customers."A total of 58 solicitors backed plans to remove the current exception to conflict of interest rules, with 27 against and three abstentions at the society's annual general meeting. Paul Smee, director general of the Council of Mortgage Lenders, said: "It is disappointing that a measure which is so blatantly against consumer interests and will impose added costs and added scope for confusion and delay has been voted through, with not even the pretence of wider consultation."

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House hunters face hike in lawyer costs

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