The money spent on personal searches is often a total waste, because most buyers’ solicitors won’t rely on them. Last month, Birmingham Trading Standards investigated how accurate personal searches were. They randomly selected some estate agents and checked the local searches in their HIPs. It turned out that most of them were inaccurate. One even had the property in the wrong county, and another failed to pick up any of the ten planning decisions. These new search agents may be authorised, but using some of them is a bit like getting in a late-night mini-cab – usually better to wait for a bus to come along. I bet the insurers who back these searches are going to be picking up a large tab in the future.

I wouldn’t rely on a pesonal search in a HIP for a property we are buing for a client. We’ve come across ones where the search agents completely failed to spot the planning permissions.. So now we won’t even think of relying on a personal search in a HIP. We’re always going to get our clients to let us do a proper official search, or at least a personal search done through a genuinely reliable search provider – one who has been around for years, not someone trying to cash in on the HIPs gravy train.

It is a year since HIPs were introduced. It’s obvious they are a waste of time. I’m sure no buyers actually read them. One problem which is emerging for sellers is that they have to replace the local search after six months. In the current market, it is not at all unusual for properties to be on the market for a few months, then there’s a potential purchase which falls through, and before you know it the sellers are having to pay out more money to keep the HIP up to date, still without actually getting any money in from the property.

With banks seemingly collapsing every day, and thousands being put out of work, mortgage payment protection insurance sounds like a brilliant idea. What it does is pay your mortgage when you can’t, due to losing your job through redundancy or ill-health. Sometimes payments start immediately, and sometimes after a couple of months. Policies usually only pay your mortgage for 12 months. After that, even if you haven’t got a new job, the State gives you protection to some extent because it meets some of the interest on your mortgage.

The ‘con’ is that a lot of banks and building societies have been offering the insurance at vastly inflated prices - sometimes five times what you might have to pay if you shopped around. Some banks have been getting people to pay an annual premium of 5% of the year’s mortgage interest which is the maximum payout. That’s equivalent of having a £500,000 house and paying fire insurance premiums of £25,000 a year! And you might go on paying this year after year. After 10 years you would have paid half the amount you might need if you then got made redundant. At those rates, you’re better off just relying on savings.

However, there are some much cheaper deals around. The law says that solicitors aren’t allowed to recommend specific policies, so all I can say is that you shouldn’t just look at those comparison web sites because they only list companies they have a business relationship with. You should check around on the web a lot more carefully for the best deals. If you shop around, you can find prices which are about one fifth of the cost of the deals offered by mortgage lenders. By the way, a lender isn’t allowed to make taking out this kind of insurance through them a condition of the loan, so you can always shop around.
You can get separate cover for redundancy or for health problems. You don’t have to cover every risk, and that can make it cheaper as well. (This whole sector of the market is called “payment protection insurance” or “ASU cover” for accident sickness or unemployment.)

It’s well worth looking at the Financial Services Authority website which has a
section called “Money Made Clear” which explains payment protection insurance in simple words.