Home buyers face higher costs with extra solicitor

HOME buyers are facing a potential rise in costs which could deliver a blow to the fragile Scottish housing market.

Lawyers will vote on proposals on Friday, which would require buyers and mortgage lenders to be represented by separate solicitors.

As well as raising costs, the move would make buying a house more complicated by adding another professional to the mix.

Some lawyers believe the desire for extra scrutiny, following the housing market crash, with lingering concerns about mortgage defaults, means the same solicitor should not represent both buyer and lender.

However, the proposals have split the legal profession in Scotland and are opposed by the Council of Mortgage Lenders.

It is not clear how much additional cost buyers may have to foot. HSBC already charges people £150 if they want to instruct their own solicitor.

The Law Society of Scotland will vote on “sep rep” – separate representation – at its annual general meeting, on Friday.

If the plans are approved, they could be introduced after the society’s special general meeting in September.

Austin Lafferty, the society’s president, said: “Changes in bank and building societies’ practices have resulted in increased pressure and risk to solicitors in continuing to represent both parties.

“In recent months, the ‘sep rep’ movement has grown, and increasing numbers of solicitors are in favour of removing the exemption, meaning lenders would have to appoint their own solicitors, which immediately removes the risk to the buyers’ solicitors.

“While there would be clear benefits to introducing this change, as might be expected there are some potential downsides to having separate representation, such as the possibility of increased costs and paperwork.

“However, given the increased pressures imposed by lenders on solicitors up and down the country, this is a crucial debate to have and it will be for our members to decide what they want to see happen.

“I would urge any of our members involved in conveyancing to come along to the AGM to take part in this debate.”

There have been signs of a resurgence in the Scottish housing market, although it remains early days.

The number of first-time property buyers increased by 13 per cent last year, compared to 2011, according to the Council of Mortgage Lenders in Scotland (CML Scotland).

The total of 19,000 was the highest number of first-time buyers in Scotland since 2008, when there were 22,100.

According to surveyors, sales of houses have increased month by month. However, prices have remained subdued, and fell at the start of the year, according to the Royal Institution of Chartered Surveyors (Rics).

Meanwhile, “second-steppers” are still struggling to get the necessary deposit to move up the housing ladder.

CML Scotland believes the Law Society’s plans are unnecessary and potentially damaging.

“We are concerned about the proposal from the working group of the Law Society of Scotland to move to compulsory separate representation for lenders and buyers in all transactions,” a spokesman said.

“In our view, separate representation is only necessary in certain circumstances, or in cases where the buyer’s and lender’s choice of conveyancer differs.”