The Government has this week published a further consultation on local authority charges for property searches. The report outlines the Government’s preferred approach to future charging arrangements following an earlier consultation on this topic published in January 2008. It also sets out the draft legal framework to implement them.

The report focuses exclusively on amendments to the existing 1994 regulations on charging for land searches. It does not take forward the wider proposals set out in the January consultation ie charges for personal searches of the local land charges register. These will be the subject of separate consultation by the Ministry of Justice.

Overview

The main body of the consultation document reiterates the Government’s commitment to implement the 2005 OFT recommendations for reform of the search market. In particular there are welcome commitments to delivering the framework for open and fair competition, open access and a level playing field – and an acknowledgement that too many local authorities are still imposing unacceptable barriers to access.

The Government clearly sees cost as being intricately linked to access, and uses the consultation document to send some very clear messages to all parties. Existing failures in the market are reiterated – restricted access to data hampers the quality of search products, the imposition of unreasonable charges gives local authorities a competitive advantage and 41% of local authorities impose non-cost barriers to access. Local authorities are told bluntly that the introduction of a transparent framework for the recovering of ‘reasonable costs’ removes any justification for this. For PSC’s the message is uncompromising - cost recovery is the price to be paid for full and open access. Finally, other professionals are told that these proposals will remove any objection they may have to the quality and completeness of personal searches. 

However the charging framework proposed by the Government is based on local cost recovery. Although this is a consultation, this is clearly not a matter for further debate. Much of the latest consultation document is spent in revisiting the arguments as to why this will deliver open and fair competition in the delivery of property searches. The consultation therefore focuses on the likely impact of the revised draft charging regulations on personal search companies and consumers. Will it deliver a more efficient and effective property searches market – better quality searches at lower prices?

The Legal Framework

The draft regulations set out a clear and transparent legal framework for LAs to charge for the provision of access to unrefined data. Nothing in the regulations imposes a duty on them to grant access to property records, but if they do grant access they are allowed to charge a fee to cover the costs of that.

Local authorities will be able to charge for allowing an individual to inspect physical records, making a copy of relevant records or for electronic transmission of data. This applies to all records excluding LLCR and free statutory information. They may also charge an additional fee for compiling answers to specific enquiries about a property, for dealing with urgent requests or different fees for different levels of service.

The cost must be no more than the cost to the local authority of granting access to property records – staff time, creation and maintenance of records and potentially any capital investment in electronic infrastructure. The consultation also states that the LA and private companies should pay the same unit cost for the same data set.

The unit cost will be based on an estimate of the likely total costs to the LA in granting access divided by the estimated number of requests received in a year. At the start of the financial year, the LA must publish the estimates on which this calculation is based and subsequently in July the actual figures for income, costs and number of requests received in the preceding year. Over a 3 year period, income received must not exceed the costs of providing the service and any over/under estimate in any given year must be reflected in the unit charge for the following year.

Implications for PSCs

Before introducing new legislation, officials are obliged to carry out a regulatory impact assessment to determine its likely effects. The impact assessment for these proposals makes clear that no other charging mechanism has been seriously considered.

Based on a worst case scenario, the assessment assumes that the cost of introducing a new charging framework for local property search services will be around £31 million per annum. However, they will realise some £38-42 million of benefits.

The Government has assumed that PSC’s carry out 65% of all searches, 780,000 per annum, at an average cost of £70-100 per search and a £7 insurance cost per search. It believes that 15-22% of PSCs pay for unrefined data and 15-30% access some for free. On this basis, LAs receive some £4-5 million revenue a year but should be receiving closer to £14 million.

If all data is charged for, on these assumptions,  local authority revenue will rise by £20-22 million but they are likely to lose £9-11 million of duplicate search revenue. In contrast, PSCs will pay £20-22 million more for data and only realise savings of £3-4 million from the ending of the insurance requirements. If this cost is fully passed on to the consumer, then the true cost of a PSC search could rise above the current average cost of £101 towards something closer to the average LA compiled search cost of £115.

Although not part of the consultation, the cost benefit analysis assumes an average cost of £33 for an unrefined data set. This may be indicative of considerations of LLCR charges.

Responses

The consultation document gives a clear signal that local cost recovery is the only mechanism under consideration – it has been the Government’s preferred option since 2005 when they published their response to the OFT recommendations. Continuing to fight this on the grounds of principle is likely to prove unprofitable and will only alienate officials and Ministers, whose support is crucial in pushing on access. Moreover, time is of the essence in ensuring the necessary framework is in place to deliver open and fair access – can we afford to reopen the debate?

It would be more fruitful to provide a forensic assessment of their cost/benefit analysis. The document acknowledges that these assumptions are not strongly rooted in robust information and we may be able to challenge them to show that the costs outweigh the benefits eg will the consumer be significantly worse off and/or the reform will not deliver the stated policy objectives.

There are two main areas on which the consultation document is largely silent. The first relates to the timetable for implementation. The consultation closes on 30th September and final legislation would then need to be tabled before Parliament. The earliest they could take effect would be December 2008, but an implementation date of April 2009 is being discussed. We must press for early implementation to resolve concerns about the removal of the insurance provision.

The consultation document also skims over the very real concerns of the sector about monitoring and enforcement of the new arrangements. The Government believes the requirement to issue annual statements, coupled with LA Performance Framework and the Best Value Approved Code of Practice provide sufficient safeguards against unreasonable charges. We may find we are able to push for more stringent requirements.

See also: CoPSO questionnaire: Government charging proposals

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