Homebuyers search fee to be abolished

Fixed £22 fee is charged for a search of a council's land charges register, but government advice is that it should be free

A £22 fee homebuyers must pay to find out about issues or restrictions that may affect a property is being abolished, the government has announced.

The fixed fee is charged for a personal search of a council's local land charges register, but it is a cost homebuyers should no longer have to face, the communities and local government department said.

The land searches tell people about potential issues affecting the property – for example, if the house is in a conservation area and it would make getting permission for an extension difficult, or if there is a protected tree that cannot be cut down.

Until now, legislation stated that a £22 fixed fee should be charged for this information when an individual inspects the records in person. But the law is now being changed to stop people being charged in order to ensure compliance with European regulations relating to "environmental information". These state that checking this type of information in person should be free of charge.

A spokeswoman for the department said that while the law had not yet been amended, its advice to local authorities was that "this should be free from now". She said there were 736,000 property transactions in England last year, and if this charge had not been in place homebuyers could have saved as much as £16.2m.

The coalition government has already suspended "costly and bureaucratic" home information packs, and this move will further help reduce costs for homebuyers, it said.

Housing minister, Grant Shapps, said: "This shows in practice how freeing up public sector data and opening up the books can benefit the whole economy by cutting transaction costs and increasing competition."

The government is liaising with councils and the Local Government Association to provide guidance on the changes, and dealing with the financial impact of removing the fee on local authority finances.

House prices fall for first time since February

Annual rate of house price inflation drops to 6.6% as demand from homebuyers remains subdued in face of uncertain climate

House prices fell in July for the first time since February as demand subdued due to a lack of credit and nerves on the part of homebuyers reluctant to make commitments in the face of the economic outlook.

The average price of a UK property fell to £169,347 from £170,111 last month, according to the figures published by Nationwide Building society today.

"So far in 2010 demand from homebuyers has made little progress in building upon the recovery seen during much of 2009," said Martin Gahbauer, Nationwide's chief economist.

"Despite the introduction of a second stamp-duty holiday for the vast majority of first-time buyers and record low interest rates, the number of properties changing hands across the UK is still running at only half the levels seen prior to the financial crisis and recession."

The recorded 0.5% monthly fall means the annual rate of house price inflation dropped to 6.6% in July compared with 8.7% in June. Demand from homebuyers remains subdued, Nationwide said.

Gahbauer said a combination of restrictive credit conditions and uncertainty about the future economic outlook means only wealthier buyers remain in the market.

"Many potential buyers still lack the confidence to purchase their first home or trade up when faced with uncertainty over future income and employment prospects," he said.

Bank of England figures yesterday show that mortgage approvals fell more than expected in June and overall lending slowed, offering further evidence that the housing market is running out of steam following price rises last year. The bank said net mortgage lending growth slowed to £665m in June from May's £838m while mortgage approvals fell to 47,643 in June from 49,461 in May.

"This is the first time the annual rate has turned negative since April last year, but it is likely to remain so in future months as comparison is made with a stronger market towards the end of last year," said Paul Samter of the Council of Mortgage Lenders.

"Remortgaging activity also remains at exceptionally subdued levels. The low demand is being driven both by the lack of demand among those existing borrowers enjoying low rates, and tighter criteria that may be constraining those borrowers who do wish to remortgage."

The outlook remained bleak for homeowners, according to Nationwide, with concerns about the medium-term impact of fiscal austerity on personal finances "more than outweighing any potential optimism about the recovery's short-term cyclical momentum".

Howard Archer, from IHS Global Insight, said the figures supported his view that prices are likely to fall by between 3 and 5% in the second half of the year and lose further ground in 2011.

"The 0.5% house price drop in July adds to a now steady stream of weak data and survey evidence on the housing market, and further fuels our belief that house prices will fall back over the latter months of 2010 and very likely soften further in 2011."

Earlier this week a Hometrack survey showed house prices falling by 0.1% in July – the first decline in 15 months according to its data. The report also indicated that talk of impending public spending cuts is hurting confidence, with a 1.3% fall in new buyers registering with agents and homes now taking 8.7 weeks to sell – back to August 2009 levels.