Some important points for practitioners, compiled by the Society's Conveyancing Committee
CML and new-build
The Council of Mortgage Lenders' (CML) disclosure of information form (DIF) was introduced in September 2008, with the purpose of drawing together all relevant information about newly built, converted and renovated property transactions. The aim was to improve transparency and to simplify the flow of information to all key parties to the transaction. The CML has announced that from 1 October 2011 builders and developers will be required to fill out an updated version of the DIF.
As before, the solicitor acting for a purchaser who is obtaining a mortgage from a CML member lender should obtain the completed DIF from the developer's agent. The solicitor should then check with the client that the information regarding the agreed sale price and any incentives accords with the client's understanding of the position. The solicitor may also be required to report the information in the DIF to the lender in line with the lender's instructions as set out in part 2 of the CML Handbook. For example some lenders only require to receive information on incentives where they represent over 5% of the price. Further information, including the updated form and FAQs, is available on the CML website: www.cml.org.uk/cml/handbook/form
RBS revises home report policy
The Royal Bank of Scotland (RBS) recently announced that a revised lending policy for RBS Group mortgage lenders relating to home reports and transcription valuations in Scotland took effect from 15 August. The Group includes RBS, NatWest and The One Account. From that date Group lenders will accept transcripts on residential purchase mortgages prepared by the inspecting valuer who prepared the home report valuation, provided that the following criteria are met:
- the date of the original inspection by the valuer was no more than three months earlier;
- the valuer's firm is on the RBS valuers panel;
- the valuer verifies that the customer is registered with the selling agent as a recipient of the home report; and
- neither the valuer nor the valuer's firm provided written or verbal valuation advice relating to the potential sale of the property prior to undertaking preparation of the home report.
If any of these criteria are not met, the lender will insist on instructing its own valuation, at the expense of the borrower. As it is common practice for selling agents to seek valuation advice from a surveyor on behalf of prospective sellers before commissioning a home report from that surveyor, the Society believes that these criteria will significantly reduce the number of transcripts which RBS Group lenders will obtain from the home report valuer. It would be prudent for purchasers' agents to obtain confirmation of the position before concluding missives.
HMRC concerned at SDLT errors
HMRC has raised concerns regarding errors which are being made by practitioners when submitting paper SDLT returns. These errors are resulting in returns being rejected, which causes unnecessary additional administration as well as delays in submitting applications for registration. It should be noted that there is no issue with returns filed electronically, as such errors cannot arise when using that medium.
The problems are as follows:
(1) Box 49 - NINO & date of birth (DOB) of purchaser (1)
HMRC need both NINO and DOB for a return to validate and be processed. Agents are supplying a NINO without a DOB, or vice versa, and such a return will be sent back to them for correction.
(2) Box 50 - VAT registration number
HMRC need a valid VAT reference number for a return to validate and be processed. Agents are supplying references which are not VAT reference numbers and such a return will be sent back to them for correction. A VAT reference number is nine digits long, has no alpha characters and does not start with "00".
(3) Box 51 - UK company or partnership UTR number
HMRC need UK company or partnership unique tax reference numbers (UTRNs) for a return to validate and be processed. Agents are supplying references which are company reference numbers (CRNs - maximum eight digits and supplied by Companies House), and not company or partnership UTRNs (10 digits, supplied by HMRC), and such a return will be sent back to them for correction.
(4) Combinations of boxes 49-51
HMRC need only one data set for a return to process: only one of questions 49, 50 or 51 need be answered, as is made clear in their guidance (SDLT6, p41). Answering more than one data field will cause the return to reject at the processing centre.
HMRC are currently preventing such rejections being returned to agents by manually inputting rejected returns, but will have to reconsider taking this corrective action if the current rates of rejection continue.
(5) SDLT version 1
HMRC are still receiving SDLT1 version 1 return forms despite giving wide publicity to the changes that took place on 4 July, including mailing all known paper filers with a small supply of SDLT1 version 2s and updated guidance booklets SDLT6. Version 1 forms are simply no longer valid and will be rejected and returned to the agent.
Conveyancing Committee vacancies
The Society is inviting applications from conveyancing practitioners who are interested in joining the Conveyancing Committee. The committee's purpose is to consider matters relating to the law and practice of conveyancing and where appropriate to provide guidance and information to the profession. Meetings of the committee are held every two months, with occasional additional meetings as required.
Members are expected to have a working knowledge of all areas of conveyancing law and practice, together with a good knowledge of their particular specialised area of practice, both gained through at least five years' experience (whether in private practice or in-house) or in academic study or through working in a related field. They should also have a commitment to and enthusiasm for the work of the committee, an understanding of conveyancing issues as they relate to both the public and the profession, a willingness to listen and learn from other members, and the ability to think creatively and innovatively. Members may also be required on occasion to act as a spokesperson for the Society on conveyancing issues, to prepare articles and to present at seminars and conferences.
The initial term of membership is three years, with a maximum of two repeat appointments. Members of the committee are not remunerated but travelling expenses are reimbursed.
Prospective applicants should contact the secretary to the Conveyancing Committee, John Scott (email@example.com) by 30 September 2011.
HSBC and duty of care
Practitioners should be aware that HSBC Bank, which does not subscribe to the CML Lenders Handbook, has been issuing loan instructions which seek to impose an enhanced duty of care. The relevant report on title contains an undertaking that the firm has investigated the title to the property in question "in accordance with current best conveyancing practice". The Society has raised this with HSBC, who agreed that the required standard is in fact "current conveyancing practice". However despite assurances that their documents would be amended accordingly, HSBC is continuing to issue loan instructions which contain the incorrect wording. If necessary, practitioners should qualify any reports on title submitted to HSBC, to ensure that they are not offering a duty of care above the level covered by the Master Policy.