A large number of lenders have made the decision to use panels of solicitors to handle property transactions and they are seemingly lowering the number of firms on the panel. Their reasoning behind this is due to the increase in mortgage fraud, by using solicitors that are accredited by The Law Society’s Conveyancing Quality Scheme and within their panel they hope to limit this. Not only does this reduce the customer’s choice but it is also very limiting and problematic.
HSBC have stipulated that you can use one of their 43 law firms for all their legal work- or use your own solicitor and pay an extra fee of £192 ( £160 plus VAT). This has caused delays to purchases. One particular buyer- who was a first time buyer had to exchange contracts and complete in a the same day to meet last week’s deadline for the stamp duty holiday offered to first-time buyers. She described the whole process as a ‘nightmare’.
Other homebuyers have reported two to three week delays in their purchase as a result of this. Many have spoken of their frustration at not being able to speak to the HSBC solicitors directly. It leaves buyers very much in the dark and This slows down the whole process to such an extent that some sellers have been suspicious that the buyers are delaying the process purposefully.
Colin Calderhead, director of architect firm 3D Reid has bought a property in Fulham with an HSBC mortgage. Overall his experience with HSBC has been a positive one however, he agrees that this panel of solicitors are a bad idea. He points out that dealing with this third party means that everything is slowed down as they are ‘not accountable to you.’ He had to get his own solicitor involved who they would then speak to. Countrywide – the law firm explained that they are only able to discuss the process with HSBC or another solicitor. Calderhead quite rightly points out that when hes ‘paying for them’ its pretty poor they ‘would not speak to [him].’
This whole system really could throw things into jeopardy for property buyers; and with the housing market so competitive at the moment it could mean the difference between getting that new home or not.
HSBC commented on this new scheme and explained that clients wouldn’t be charged for any legal work if the sale falls through. On a positive note the delays highlight HSBC’s competitive mortgage deals as there is clearly high demand for them. HSBC have stated that they will be adding 33 more solicitors to its panel, so hopefully this problem will be resolved promptly.