Jane Bradley’s report “HSBC criticised by solicitors over paperwork based on English law” (The Scotsman,11/2/2012 ) requires comment.

It is incorrect to say that “Previously rules allowed the buyer’s solicitor to also carryout transactions on behalf of the lender”. In my legal experience which covers thirty five years, lenders have allowed buyers’ solicitors to join lenders’ panel provided the solicitiors met certain criteria.

The difference now is that HSBC has decide unilaterally to restrict its panel of solicitors firms to four instead of around one thousand.

HSBC appears to be justifying its unilateral act on the pretext that it will help in the prevention of mortgage fraud.
I attended the Council of Mortgage Lenders’s mortgage fraud conference in London in September 2011. There were serious concerns amongst lenders that mortgage fraud was a major issue as a result of several high profile instances of mortgage fraud in England and Wales. It was clear from several speakers that there has been a breakdown in trust among lenders and solicitors south of the Border as well as among solicitors themselves, due in large measure to the chaotic lack of regulation of solicitors in England and Wales and the high instance of mortgage fraud involving “legal” firms in that jurisdiction. No representative of the Solicitors Regulation Authority, which is charged by statute to steward every solicitor in England and Wales, even bothered to turn up despite being invited so to do and on the agenda to speak. All other stakeholders and law enforcement agencies contributed to the conference.

By contrast, all speakers whose remit included Scotland including representatives of the main mortgage lenders were unanimous in their acknowledgement that the regulation of solicitors in Scotland by the Law Society of Scotland was much more robust.

HSBC’s actions are already causing real concern to consumers in Scotland and they need to resolve matters immediately. The suggestion that by restricting their panel will reduce mortgage fraud does not hold water as purchasers’ solicitors are already under Law Society of Scotland instructions to go to great lengths to determine the source of personal funds from clients and their identity. As lenders do not provide solicitors with copies of mortgage applications the solicitors are denied the opportunity to check statements by clients made to a lender against the information solicitors obtain themselves. Save for this change in HSBC’s current practice it is hard to conceive of what extra diligence HSBC’s panel will undertake which is not being presecuted by Scottish solicitors at present.
It behoves HSBC to come clean and publices these extra measures, otherwise one might conclude that this an attempt to manipulate the conveyancing market for its own ends by tarring Scottish solicitors with the same brush as their counterparts south of the Border. Over the last 300 years our legal system has been the primary institution which has preserved Scottish identity. How ironic would it be if the robustness of that system in Scotland and the thousands who work within it were to be sacrificed by UK Lenders just as we are within touching distance of regaining our political independence.

SUBMISSION FROM CONVEYANCING DIRECT

1. Biographical Note: My name is Graeme McCormick. In 1978 I qualified as a solicitor in Paisley. As Renfrewshire was the first operational county for land registration in 1981 I have been closely involved in the land registration process since its inception. I established Conveyancing Direct, Solicitors in Glasgow in 1997. We undertake around 4000 domestic conveyancing transactions each year from Shetland to Gretna. I personally check and draft around 2000 title deeds every year for purchasers and their lenders. My firm is an associate member of the Council of Mortgage Lenders.

2. My Firm’s Conveyancing Philosophy: Around 66% of adults in Scotland own heritable property through the purchase of their homes. Many more aspire to home ownership. Many commentators state that the process is potentially the biggest and most stressful transaction most people will make in their lives. Consequently my firm’s focus is quite simple: If you are a buyer you expect your keys on time. If you are a seller you expect your money on time. If either of these objectives is delayed or doesn’t happen then the system has failed. That system involves various professions and agencies; these include estate agents, mortgage brokers, lenders, surveyors, banks, insurers, factors, solicitors, local authorities, Scottish Water, British Coal, law enforcement agencies, private searchers and sometimes many more; but most crucially, The Land Register of Scotland.

3/1 The Purpose of the Bill: In my opinion the purpose of legislation is to make life better. This Bill may appear extremely dry and technical and primarily designed for administrative convenience and a wish-list for the Keeper of the Land Register, but in my submission, it offers this Committee and this Parliament the opportunity to develop the land registration system to be more equitable, robust, clear, efficient and in the public interest while greatly improving the conveyancing process for the property buyer and seller and their lenders. The land registration system must also be capable of correction without undue cost or delay to the consumer.

3/2 While I appreciate that this Bill is largely an enabling one there are serious issues which are not addressed in it which have a major impact on the practice of conveyancing and, as a result, the general public. I passionately believe that Parliament should take this opportunity to consider these issues and seek to enforce and direct change. My comments are of a general nature but if thought worthy of further consideration I am happy to make more detailed suggestions.

3/3 While the following issues are not exhaustive they do highlight some of the existing deficiencies which are not directly addressed by the Bill but which the land registration process could and should address.

Issues:

4/1 Title Descriptions
Most title descriptions in Land Certificates are adequate. However that cannot be said for tenement flats where the descriptions range from floorplans, compass points, various descriptions such as” righthand”, “second from the left”,”second left”, etc. to even reference to a floor in the tenement where one flat cannot be accurately identified from another. Failure to be accurate can cause transactions to be delayed or even fail or involve clients paying for expensive private sector title indemnities. In a robust title system adequacy of a property’s description should be paramount. As far as I can judge the proposed measures in the Bill do not provide for a single means of describing a tenement flat.

4/2 Remedy: the Keeper should be required to insist that on any purchase or grant of a standard security (mortgage) on a property there must be a floor plan of the property in a form prescribed by the Keeper indicating the location and extent of the property.

5/1 Servitudes Rights
The Scots Law of Prescription creates rights of access and others through the uninterrupted use over time even if these rights are not conveyed in any written deed. Rights can also be ended by failure to use over a prescribed period. As a general rule the Keeper refuses to mark the Title Sheet or Burdens section with any reference to these rights. As a result the Land Certificate may not be a definitive expression of the extent of the title of a property. As such prescriptive rights do not appear in Land Certificates one of the objects of land registration- reference to one title deed- is not achieved as the full title picture requires examination of other properties’ titles and documents and knowledge of local practice.

5/2 Remedy: The Keeper, if requested so to do by the applicant, should be obliged to enter or remove such rights in the Land Certificate but suitably endorsed to exclude her indemnity with the date of said endorsement.

6/1 Errors in Existing Land Certificates
If a solicitor submits an application which the Keeper considers has an error the Keeper may reject the application and charge the solicitor a penalty for the rejection. If however the solicitor finds an error in an existing land certificate or the Keeper’s response to an application, the Keeper is not obliged to compensate the solicitor for the error. The solicitor’s only recourse is to charge his client or write-off the unpaid work to experience. If these were isolated incidents then the matter would not be worth raising but they can take hours of investigative work by the solicitor. We alone see on average two Keeper’s errors in our title examinations each week so if that is multiplied across the land registration activity it is significant and causes delay and extra costs to the consumer. If we assume that on average there are dealings on a property every four years I guesstimate that there are around 40,000 titles with significant defects already registered in the Land Register.

6/2 Remedy: The Keeper should be legally obliged to pay solicitors a correction fee where solicitors identify errors in land certificates as the solicitors are doing the Keeper’s work for her.

7/1 Very Important Ancillary Documents
As copies of registered title deeds can be obtained online through Registers Direct there is generally no need for original deeds. However domestic conveyancing transactions regularly require additional documentation to enable transactions to complete. Many mortgage lenders do not now retain title deeds and ancillary paperwork, and with the passage of time and regular remortgaging, such paperwork is lost. There is no national register for this paperwork. Such paperwork would include: NHBC ten year guarantees, planning permission, building warrants, completion certificates and plans, letters of comfort, road bonds,property enquiry certificates, SEPA certificates, specialist guarantees and reports, home reports, architect supervision certificates, etc. Replacement of even one item can cost £100 or more thus adding to the house owners’ costs.

7/2 Remedy: There is no reason why the Keeper could not register copies of that paperwork with the land certificate again endorsing same with exclusion of her indemnity. The Keeper could charge a separate fee for registration. The effect of this proposal would streamline sales and purchases and provide a much more useful record of a property and reduce the cost of buying and selling to the consumer.

8/1 Time Limits to Register Titles
While dealings on existing registered titles can be registered within three months of the date of application, first registrations regularly take in excess of one year, and new build properties a staggering five years is not unknown. These timescales are outrageous. Despite solicitors have cobbled together a practical way of undertaking sales and dealings while land registration is incomplete, there are considerable risks to consumers, their solicitors and lenders in the event of the original applications being cancelled, or the Keeper raising requisitions many months and even years after the original application was made.

8/2 Most lenders who lend in Scotland base their mortgage processing and deeds departments in England. The English and Welsh Land Registry appears much more efficient than the Land Register of Scotland so these lenders do not accept that the Land Register should be significantly slower than their English and Welsh counterparts. These mortgage lenders (quite rightly in my view) refuse to adjust their audit processes to take account of the much slower Scottish land registration process. These delays result in lenders and the instructed solicitors in considerable extra work and cost while the land registration is ongoing. Six monthly audit reports are required to be lodged by the solicitor with the lender while land registration is incomplete. If land registration takes 5 years that amounts to 10 audit reports which, on a time-cost basis to the solicitor and lender at a modest rate of £30 per hour, adds £300 to the cost of a purchase all because the Land Register takes so long to complete a title registration.

8/3 Furthermore, solicitors are regularly threatened with losing the right to act for lenders through no fault of their own but through the delays in the completion of land registration of a property title in the Land Register. If solicitors lose their panel status with lenders they may as well close down their businesses given that around 80% of house purchases involve mortgage lenders. Each year I visit mortgage lenders’ deeds departments in England offering them a free seminar explaining to them the vagaries of the Scottish land registration system just to keep them onside with their Scottish panel solicitors.

8/4 Remedy: The Keeper should be required to complete the registration of the title within six months of receipt of the application ( subject to specific exceptions) otherwise the Keeper should be in default and liable to pay compensation for delay. Six months would appear to be a reasonable timescale as most lenders will not accept an application for a loan on a property to be purchased where the current seller has owned the property for less than six months. The effect of this would be that the land registration system would be more robust as only dealings where land registration had been completed would be permitted thus avoiding the risk of dealings on incomplete registrations. The principal reason given by the Keeper for the delay in new builds is the updating of Ordnance Survey mapping. I understand that OS rejects this reason, but in any event measures could be put in place to address this before any new build purchase application was submitted.

9/1 Money Laundering and Identity Fraud
Solicitors, mortgage lenders, brokers, estate agents and many more are charged to carryout various checks to help the law enforcement authorities to prevent money laundering, identity and mortgage fraud. It is estimated by the Council of Mortgage Lenders that there is over 1 billion pounds of mortgage fraud in England and Wales alone. I do not have the figure for Scotland, but although the CML acknowledges that the problem is less severe in Scotland due to the Law Society of Scotland’s more robust and coordinated compliance regime, Scotland is not immune. Much of this unpaid work on behalf of the state involves considerable repetition with no sharing of information among these enforcement agencies and the professions.

9/2 The police etc. spend millions of pounds each year in detailed detective work to bring fraudsters and money launderers to justice and to deprive them of their ill-gotten gains. The Law Society of Scotland’s Financial Compliance Department has detailed guidelines for solicitors which have been created so that almost as much time is spent by a solicitor on an individual transaction assessing whether the client and others involved in the transaction are financially and legally clean than in the conveyancing process itself. This adds greatly to the cost of a conveyancing transaction.

9/3 The purchase of and dealing in property are very popular routes for money launderers and fraudsters yet no attempt is made by the law enforcement agencies to share information with solicitors to prevent these dealings in the first place and radically reduce, if not prevent, criminals using the property system in Scotland. It amazes me that the Keeper has not sought to include some mechanism to help prevent crime using the land registration process. At a recent pre-Bill presentation by the Keeper’s staff in Glasgow all the solicitors present were astounded to discover that the Keeper has a stand-over file of title transaction applications which may be fraudulent. The status of these files is never disclosed to the submitting agent or the mortgage lender or worse still another solicitor who may be undertaking a subsequent dealing on the property in the honest belief that there was nothing nefarious about the original application whose registration is ongoing. This was the first we had ever heard of such a secret file.

9/4 Remedy: Since law enforcement agencies and Registers of Scotland are all parts of government, the law enforcements agencies could provide the Land Register with names and aliases of all criminals, their historic addresses, their relationships with other criminals, the properties they have owned, their spouses or partners and children. On application by a solicitor, the Land Register, for a fee, would provide any information it received from the law enforcement agencies to the solicitor so that the solicitor could then decide if he or she was prepared to act for the individual concerned. Given the Law Society of Scotland’s Compliance Regime and the risk assessment solicitors are obliged to undertake, there would quickly be established a practice convention which prevented solicitors acting for such people and thus squeeze the criminals and their associates out of owning or dealing with property in Scotland.

10/1 ARTL Automated Registration of Title in Land
I have participated in any consultation to which I have been invited by the Land Register since ARTL was first suggested. From the start I indicated that our case management system was open access and have been assured over the years that ARTL would be compatible with open access systems in line with government open access policies. Despite several assurances by Land Register staff and visits from them this has not been the case, and we have been forced to use a Microsoft word system. ARTL is very slow and takes much longer to work in a transaction than traditional case management systems. The Keeper tries to encourage solicitors to use ARTL through pressure from lenders (who should know better) and charging less for land registration using ARTL when all that this does is increase the time devoted to each transaction by the solicitor and potentially increases the legal fees accordingly. I am aware that some Land Register officials believe that the ARTL is not fit- for- purpose.

10/2 Remedy: Solicitors welcome a streamlining of the systems of dealing in property. Any involvement by the Land Register must take account of, and be fully compatible with, case management systems which are a considerable financial investment by small businesses. Ninety five per cent of the 1200 legal businesses in Scotland are small businesses. Such investment could be a costly waste of money because the Land Register has failed to incorporate within its system the ability to work with all case management systems. There should be a mechanism that if the Land Register decides to introduce a successor to ARTL which involves solicitors in significant costs to adapt their case management systems to allow them to continue in business, the Land Register should contribute to the cost of adaptation.

10/3 With the advances in technology wherein much of any transaction type can be undertaken by internet exchanges among solicitors and other professionals, the Land Register should be required to restrict its participation to the Stamp Duty Land Tax and land registration process and not be a participant in the completion of the sale/purchase transaction itself. Instead of the Keeper actively promoting ARTL in its current inadequate format a public acknowledgment of its deficiencies, abandonment of its reduced fee regime and a commitment to work with the ten most active conveyancing practices in the land to develop a functional system would be a major advance on the present situation.

11 Extending Land Registration

While I welcome attempts to increase the number of properties registered, in the light of the guesstimated errors in the current registered titles, I suggest that the Keeper concentrates on completing the land registration of all tenement flats and houses in housing schemes where the bulk of properties are already registered. In many cases the only difference between the title to two properties is the property description, purchaser’s details and lender’s details. All other title conditions are broadly similar. A drive to fast-track these types of properties at a one-off land registration charge of say £60 (the current basic Land Register charge to register a property purchase under £50001) would be a tremendous help. This approach would provide the Land Register with the opportunity to review existing land certificates to check and correct errors or inconsistencies.

12/1 Measure to Reduce Mortgage Repossessions
My firm was among those consulted by the former Scottish Executive prior to the introduction of the Mortgage-to- Rent Scheme. A short time after its inception we were approached to act for all the sellers which we did for about three years. During that time, which was before the Credit Crunch, it was clear that in many cases the lender promoting the repossession proceedings was not the first security or charge holder, but the second or even third charge holder. What basically had happened was that the house holders were using their houses as cash cows for fund raising and seeking second mortgages from specialist companies at far higher interest rates than the standard mortgage rates charges by their principal and first mortgage lender. In many cases the house holder did not even appreciate that the second loan was charged against his property. Many people will have lost their homes due to unsustainable secondary and tertiary borrowing against their homes. The Land Register has not sought to address this problem.

12/2 Remedy: While not wishing to promote a nanny state there is an issue here for Parliament and government. The first mortgage company invariably has a greater financial stake in the mortgaged property than the householder. The Mortgage-to-Rent and other initiatives involve the state in considerable expense to support distressed householders. Would it not be reasonable and in the public interest therefore for the Keeper only to accept an application for such a second security or charge from a specialist secondary or tertiary lender provided that the holder of the prior charge consents to the secondary or tertiary charge?

13 Conclusion
Where legislation on the face of it may appear technical and administratively enabling there is no point to it unless its end result improves the experience of the consumer and the society the legislation seeks to serve. The Keeper may argue that this Bill is not the forum for considering inadequacies of the present service provided by the Registers of Scotland nor to detail the incremental improvements the Register could provide in a cost neutral way due to its ability to charge for its services. I, and I hope, you reject this. While Civil Service vision is important, that vision should not obscure the fact that much public money, including some expended by the Registers of Scotland, has been lost due to systems which were not fit-for-purpose when less sophisticated but more incremental and less technically challenging processes can produce greater practical benefits to more people and reach a similar or more enhanced destination than that originally envisaged. I trust this Committee will not look on this Bill as a technical yawn but an opportunity to investigate current practices and how changes can be made from which home owners present and future, who make up the majority of your electors, will see the benefit soon.

Graeme McCormick
Senior Partner, Conveyancing Direct, Solicitors
11 January 2012

A comparatively recent aspect of the housing market is the significant increase in sales of houses where the seller receives as little as 60% of the Home Report valuation from which to repay any mortgage secured on the property. These owners are content to sell just to move on with their lives and rid themselves of properties which in the owners’ minds have become a liability.
There is surely an opportunity here for the Scottish Government and social landlords to identify these owners and buy their properties at these undervalues then either rent the houses to waiting list applicants or establish a modern version of the deposit and instalment sales which were a regular feature of the property market up to the 1980s.

Such a scheme could involve the sale to waiting list applicants paying no deposit but an agreed instalment every month higher than the normal rent for such a property with the incentive to the purchaser to mortgage the property within two years of the first instalment to secure a less onerous monthly payment when they qualify for a mainstream mortgage.

After the initial capital outlay of purchase the social rental sector would see an immediate and constant return from the instalment payments, many more houses would be available to reduce the waiting lists, and the instalment purchasers would have the opportunity of home ownership without the need of securing large deposits nor exposure to high loan- to- value borrowing.

The Scottish Conveyancing Environment
by Graeme McCormick
Conveyancing Direct, Solicitors
The Salmond Chambers
53 Morrison Street Glasgow G5 8LB
0141 420 5040
graeme@conveyancingdirect.co.uk

The Current Housing Market

Apart from Aberdeen and its Hinterland which has remained stable due to the continued investment in the energy industry house prices have generally dropped between 10% and 20% since 2007. This is confirmed by the Lloyds TSB Scotland report which was published on Monday which has seen prices rise to 90% of 2007 levels. But there are wide variations. Forced sales, particularly of houses built 2004 to 2007, show more dramatic reductions reflecting the excessive new build premiums previously demanded by house builders.

Builders have largely cleared their backlog of completed houses with various incentives and are now reopening and developing new sites. In my local area of Dumbarton which is classed as a deprived area there have been four new sites in the last year with more to follow. The house types range from first time buyer ones through to larger luxury villas all of which are being sold at a steady rate.

Many are straight sales while others involve incentives, part exchange, shared ownership and equity schemes involving the builders and/or the Scottish Government.

Most sales in Scotland are marketed through Solicitors Property Centres with areas such as Aberdeen covering 90% of the housing market. Only in the Glasgow do non solicitor estate agents such as the UK brands, Countrywide, Your Move and Allen & Harris, a subsidiary of Connells, plus a few local agents take around 50% of the market while the Glasgow Solicitors Property Centre takes the other 50%.

The Property Centres’ brand is being slowing diluted as people attempt to sell online themselves, use online agents and sites while some solicitors use Rightmove as well as the Property Centres’ own website. There has also been a dramatic increase in auction sales by both private sellers and lenders resulting in considerably reduced prices.

The market is moving. Prices are keen. There are many cash and buy-to-let purchasers in the lower end of the market (up to £125000). Credit Unions are now significant lenders. There is even a noticeable increase in first time buyers. We have experienced a 17% rise in turnover of transactions over the last year.

You can buy a good flat or three bedroomed family house in desirable areas in virtually every district of Scotland within the £70000 to £120,000 range. Thus the current market allows a young couple to buy their first house in a decent area with good schools and community facilities for £70000, more than adequate to raise a family.

Conveyancing Consequentials

There are around 1200 legal firms offering domestic conveyancing in Scotland. As the top ten firms struggle to secure more than 1% of the market conveyancing is very much a cottage industry.

Competition is fierce with most consumers seeking quotes for conveyancing work. People are generally relaxed about instructing firms such as ourselves as the Law Society of Scotland is on record that whatever fee is charged consumers are entitled to a certain service level laid down and enforced by the Law Society.

Home Reports are now an essential and legal requirement for all established homes being marketed. Commissioned and paid for by the seller, the Report comprises a Seller’s Questionnaire, Energy Performance Certificate and very detailed Survey Report which includes a valuation both prepared by a chartered surveyor. If the purchaser discovers a material fault with a house he or she has a right of relief against the surveyor.

Despite widespread objections to them lengthy Home Reports have proved worthwhile and popular. Prospective purchasers actually read them, and the price paid for a house rarely exceeds the Home Report valuation. The Law Society decreed that they are deemed time-expired after three months so sellers also pay for a refreshed Home Report until the property is sold.

Most lenders will now accept transcripts of them instead of the borrowers incurring the cost of a separate valuation.

Offers are now submitted in writing subject to the Home Report being acceptable to the purchaser and his/her lender. Although there have been some instances of significant variations in valuation between an up-to-date Home Report and a separate lender required valuation these have been relatively few.

The Scottish Government has already undertaken a review and is looking to improve the Report but they are here to stay.

Stable Conveyancers

Only Solicitors who hold a practicing certificate and are insured through the Law Society of Scotland Master Policy and contribute to the Society’s Guarantee Fund can practice in Scotland. Despite the Recession most firms are not wholly dependent on domestic conveyancing, however incomes have still dropped; Around 10000 employees in legal offices have been made redundant, and a small number of firms have ceased trading. There has been little sign of amalgamations.

The Law Society pays close attention to firms’ liquidity through regular inspections. Small firms can expect annual inspections while larger firms are inspected every three years. All firms require to submit financial certificates every six months to the Society. The Law Society inspections are currently concentrating on money laundering issues and revolving deposit purchases. The Society impress upon firms their risk strategies but there is no unequivocal instruction. Given that many lenders abhor revolving deposits a Law Society instruction would be more re-assuring.

The Legal Services (Scotland ) Act 2010 which comes into force next Autumn will allow non solicitors to hold a 49% stake in legal firms. This will permit complimentary professionals such as accountants, surveyors and financial advisers to form multi disciplinary businesses or allow a capital injection from outside organisations in return for an equity stake.

Groups like Quality Solicitors and other conveyancing specific hubs are recruiting firms of solicitors to brand services under their banner. How successful they or Tesco- law equivalent projects will be, I don’t know. Attempts so far have foundered because the fees quoted to date have not undercut existing firms nor do I think they can.

Leaving remortgage business aside, The back-hander euphemistically called an “arrangement fee” or similar often hidden within estate agents, brokers and builders’ special legal packages make legal fees quoted significantly more expensive than obtaining quotes direct from many solicitors.

The Land Register of Scotland

The Scots Parliament established the world’s first compulsory national property register in 1617, the General Register of Sasines. It is a word based system albeit with plans attached to more recent titles. In 1979 the Land Register of Scotland was established to provide a map based Register with a state guarantee. It was intended to register all land in Scotland within ten years. Thirty two years later around 50% of all titles remain to be registered.

More recently but after many false dawns the Registers introduced ARTL, Automated Register of Title in Land, which was promoted to dispense with paper registration and provide instantaneous registration at settlement of a transaction. Despite some lenders trying to force solicitors down the ARTL road there are major problems with it: it’s very slow, only suitable in certain case types and is incompatible with the variety of solicitors’ own case management systems. Land Register insiders admit that it is not entirely fit for purpose, and I understand outside consultants employed by the Land Register have been disparaging as to the technical mechanics behind the platform on which it sits.

Lenders will be well aware of the delays in land registration in the Land Register of Scotland. Registration of a remortgage or the purchase of an existing registered property takes about three months, but a first registration purchase takes a year or more and a new build one can take up to five years. Despite the excuses by the Land Register these delays are totally unacceptable but lenders will know there is nothing solicitors can do to expedite the process. Sales of properties still at the application stage are accomplished through the cooperation of solicitors and a prayer. I carry out seminars with various lenders’ deeds departments throughout the UK trying to explain the vagaries of the Scottish Land Register in the hope of reducing the volume of computer generated title chasing letters and deeds delivery report. If any lender requires my services please contact me. I’m more than cheap. I’m free.

The Land Register (Scotland) Bill 20T11 is about to be laid before the Scottish Parliament this week. This is an enabling bill to allow the acceleration of land registration and ARTL and various other wish-lists the Keeper of the Land Register has. It will also replace personal obligations given by Sellers’ solicitors to Purchasers’ solicitors with a system of Advance Notice. If implemented, we are told tat our Master Policy Premiums will reduce but we shan’t hold our breath.

I attended a preview for solicitors last Friday in which the solicitors present told the Land Register staff to sort out the present inadequacies as priority before considering expansion. I suspect that submissions to the Parliamentary Committee examining the Bill will not pull any punches.

Crystal Ball Gazing

There are presently a number of initiatives to stimulate the housing market. One Local authority East Lothian is already indemnifying first time buyers’ mortgages through Lloyds TSB. Other councils are considering similar schemes.

The Scottish Government has been asked to evaluate a scheme whereby the top 15% of a mortgage to a first time buyer would be indemnified for four years provided the purchase price did not exceed 80 % of the Home Report valuation.

Given that the revolving deposit schemes have revealed sellers who are genuinely content to sell for 60% of the Home Report valuation Government and registered social landlords have been asked to consider acquiring these homes which are considerably less than the cost of new builds for waiting list families.

Scotland already has an expanding self build and one-off build market. Although rural populations have increased in some areas over the past fifty years moves are afoot to consider deemed time limited planning consent for four homesteads on every owner occupied farm. This would create 120000 plots which could be developed by the farmers or sold to social landlords or the private sector to develop. This initiative would bring marginal land into use at no cost to the public purse but because of the time limited nature of the permissions it would be in the interests of farmers to sell at below development value yet still get a reasonable return above current use value. Such a scheme has the potential to repopulate rural areas, save local schools and provide a sustainable lifestyle.

Some solicitors are trying to persuade their peers that contracts to purchase should be value added by requiring environmental and more detailed planning searches than at present required. There is resistance to this but in the interests of transparency I a confident that these reports will become the norm.

We have initiated a requirement in all our contracts requiring sellers to warrant that no substantial part of the net proceeds of sale are being paid to third parties to again prevent revolving deposits transactions.

Approaches are being made to the police and other law enforcement agencies to share information with solicitors to prevent mortgage fraud. We are pioneering a scheme with a firm of genealogists to spot-check some clients’ mothers’ maiden name as an extra security check.

I rather think that house valuations will rise modestly over the coming years but houses will remain inexpensive and affordable for those in employment who don’t have a cavalier credit adventure. As a result the pressure to use houses as cash cows will diminish if not disappear and the extra cash available to families will be used for other purposes.

Constitutional Change

Within the next three years there will be a Referendum on Scottish Independence and few would bet on the outcome. What is known is that various government and independent policy papers will be spoon fed to the public so that voters can assess the challenges and opportunities. Already civic Scotland is debating the potential effects of Independence. The Scottish Landowners’ Forum is hosting a major regional Conference in Argyll this Friday, and many institutions are being asked for their positions. Whatever Scotland’s constitutional destination is it will affect the rest of the UK as well. Lenders will receive letters from Scots borrowers and investors and here are some of the questions you will have to consider: Will you lend in Scotland,? Will the mortgage process require the creation by you of a separate Scottish unit? Will there be a separate regulatory system? Will there be separate mortgage and investor products and interest rates?

If your institution has not given much thought to this most significant event in three hundred years might I respectfully suggest that you do so now. The CML may even care to invite the Scottish Cabinet Secretary for Finance, John Swinney, MSP to speak at the CML’s next UK Annual Conference.

29/11/2011