Bringing the house down

‘I have thought over the last few days about the barristers’ strike,’ sole practitioner Sarah Dwight, a member of the Law Society’s Conveyancing and Land Law Committee, says. ‘I see conveyancing in a similar vein, but nowhere near as bad as the criminal side.’

While Dwight and her fellow conveyancers are not reliant on public funds, the profit margins on transactions are worryingly low for many, and the pressures have increased significantly. She cites ‘delays at the Land Registry, the Probate Registry, the pressures from agents’. The result is that ‘many very good solicitors are leaving the profession’.

’Since the end of the first lockdown, the increase in volume in the market has been staggering. We had hoped for some respite after September 2021, but this has not happened’

Sarah Dwight, sole practitioner

A dysfunctional market

This is not how it should be during a residential property boom. Measured by transaction volumes and value, the market is experiencing a sustained level of intense activity. HM Revenue & Customs data for July this year showed residential transactions up 36.7% on the previous year, and 3.2% up on June 2022. The seasonally adjusted figure for the month was 104,470 transactions.

Andy Sommerville, director of property data company Search Acumen, says these figures ‘show signs of a new normal for property transaction volumes for the immediate future. Although the heat of the post-pandemic property rush has cooled, we are left with a strong residual market as families grow, downsizers relocate, and employment remains buoyant. This formula has ensured the wheels of the market have kept turning at a steady pace’.

Sommerville predicts ‘an extended period of strong transactional activity this autumn despite economic headwinds’. So how can that be bad news for conveyancers? ‘Many caseloads remain victim to stifling backlogs and inefficiencies,’ he says, which heralds ‘a turbulent time for the conveyancing market’.

While transactions all but halted with the first Covid-19 lockdown in March 2020, pent-up demand was turbo-charged by the Treasury’s stamp duty land tax ‘holiday’ introduced in July 2020. Originally intended to finish at the end of March 2021, it was eventually given a staggered ending – first in June 2021, and then for lower-priced properties in September 2021.

‘Since the end of the first lockdown, the increase in volume in the market has been staggering,’ Birmingham-based Dwight says. ‘We had hoped for some respite after September 2021, but this has not happened. The market has continued to boom, with little respite for conveyancers.’

Next generation

Rebecca Swain, head of residential conveyancing at Kent firm Thomas Snell & Passmore, confirms this picture. Asked about the long-term effects of the SDLT holiday, she observes: ‘I think the main effect is the sustained high levels of activity. As a team, we struggle to remember what “normal” levels feel like. The market has been like a treadmill getting faster and faster. Whereas before the pandemic we would have natural peaks and troughs… since 2020 there have been no troughs, just peaks.’

Such pressure has consequences, she adds: ‘Related to this is the fact that some people in the industry, although not in my team, have left the profession.’ That has happened through early retirement or leaving for a different profession altogether, ‘perhaps because they felt the pace was unsustainable’, Swain says. ‘This has compounded the issue and also led to recruitment challenges for everyone.’

Thus, far from a ‘boom’ attracting talent, the effect of the market has been to make conveyancing less attractive to junior lawyers. As in criminal law, there is a succession problem. ‘The continuing pressure in the conveyancing world has led many very experienced conveyancers to leave the profession,’ Dwight says. ‘With such experience leaving, it is necessary to train a younger generation to fill those shoes – which will be hard to fill.’

It takes many years to become a good conveyancer, she points out: ‘It is not only about the law, but also about soft skills such as being good with people, time management, handling expectations and life experience - not things that can be acquired in the first week in the job.’

This has consequences for conveyancing, Robert Barham, partner at Mayfair firm Forsters, explains. ‘The general trend of conveyancers requiring every small point to be answered continues with ever more detail being required,’ he says. ‘Sometimes this applies even where the answers are not helpful or even particularly relevant and would have no impact on a buyer’s decision to proceed. Increasingly solicitors are not willing to “take a view” nor to permit their clients to, even if they want to, particularly where there is a mortgage.’

One reason for this, Barham contends, is that ‘a lot of conveyancing is now done by paralegals with solicitors in a supervisory role. It is more difficult for paralegals to decide what is important and what is not, hence the concentration on small details referred to above which may not be that important either legally or to the client’.

'Although the heat of the post-pandemic property rush has cooled, we have a strong residual market as families grow, downsizers relocate, and employment remains buoyant'

Andy Sommerville, Search Acumen

Digitisation

Residential conveyancing long stood out for its reliance on manual searches, ‘wet-ink’ signatures – and even the routine use of fax machines. A ‘fat fingers’ error by a lender entering data could delay or derail a transaction at completion. Modernisation of process and practice in residential conveyancing was widely accepted as overdue. Yet digitisation at the Land Registry had struggled to move beyond pilot programmes – the subject of delays and uncertainty.

Then came lockdown restrictions. Digitisation, including the use of digital signatures, was swift. Swain notes: ‘Client onboarding and checking of ID is certainly more streamlined and user friendly now. It actually works better for both us and the clients… In general, the pandemic helped us to massively speed up the process of becoming paper-light. What would have potentially taken a long time to achieve under normal circumstances happened seemingly overnight.’

But modernisation has increased the pressures on conveyancers while enhancing the risks they face in transactions.

Lara Murrell, senior associate at London firm Russell-Cooke, explains: ‘With increased digitisation, there is the increased risk of identity fraud. Further checks are therefore essential, but this then slows down the file-opening process, to the frustration of the client and the agents who want to see quick action on receipt of a sales memo.’

There is still a reluctance by many to accept digital signatures, Murrell adds: ‘While lawyers appreciate the current views of the Registry regarding electronic signatures, until they have been brought before the courts and tested, some firms will still insist on wet-ink signatures.’

Digitisation has also gone hand in hand with reduced accessibility, she continues: ‘Removing the ability to call lenders and the Land Registry, with communication limited through the use of portals, means that questions or issues which could take five minutes to resolve over a phone call take days or weeks to get a response… which is slowing down the conveyancing process overall.’

Swain says: ‘The digitisation of Land Registry applications appears to be an improvement for the more straightforward residential purchases and remortgages. But it is a shame that the same focus has not been placed on working through the backlog of pending applications, as this causes us a lot of extra work having to keep clients and lenders updated.’

Digital solutions, such as digital signatures, can actually add complexity and slow the process down, Swain points out. ‘Of course, I appreciate the need for secure processes,’ she says. ‘But we often find it easier and quicker for clients to go back to the traditional way of witnessing and signing documents. We also need all lenders and those involved in the conveyancing industry to adopt or accept these practices and make them more easily accessible to our clients.’

Lenders’ processes also play a part, Murrell explains: ‘Lenders do not want to engage with solicitors directly, with more and more opting to use a legal portal system. On standard transactions this is fine. But where contact with the lender is required this can be cumbersome, which again slows down the transaction.’ 

Clients

Murrell identifies increased pressure from clients as a further stress on the conveyancing process and conveyancers: ‘Clients are becoming more and more impatient with expectations of instant replies, with some almost aggressive in their approach to communication with their solicitor.’

‘With the advent of Amazon Prime,’ Dwight observes, ‘the clients want everything within 24 hours, and agents try to pitch us all against each other’. There is, she says, a ‘natural rhythm to conveyancing – seller’s solicitor sends contract, buyer’s solicitor checks contract and raises necessary enquiries’. But, she adds, ‘it has become harder to keep that rhythm going when we don’t answer unnecessary enquiries in a few hours’. In addition, ‘necessary information’ may ‘not be readily available’, she notes.

The Land Registry’s performance, Barham notes, adds to the pressure on solicitors. ‘Land Registry delays are a huge cause of frustration,’ he says. ‘Pre-pandemic they had got to the position where simple freehold transfers might be registered within a day – now it seems to take weeks. And new leases take over a year.’

When thinly stretched solicitors succumb to pressure, errors occur. Those errors lead to claims against solicitors and are a key reason why professional indemnity insurers take a cautious approach to cover for firms with significant conveyancing practices. This pushes up premiums, further reducing the profit margin for those practices.

'Conveyancers have come to recognise that conveyancing is not easy and simply cannot be done at knock-down prices, particularly leasehold property. Therefore, charges have risen over the last few years and are now more realistic'

Robert Barham, Forsters

Turning it around

The pressures on conveyancing solicitors and their teams have created a damaging cycle, whereby price competition has suppressed fees, increasing the need to take on more instructions. Too much work reduces the amount of time experienced conveyancers have to train and teach junior recruits. It also leads to so many quitting. Frustrations with lenders and the Land Registry add to the stress, while clients demand the swift turnaround offered by the digital and logistics economy for simple consumer goods.

Therefore, paradoxically, property’s sustained boom has the effect of deterring junior lawyers from building a career in conveyancing.

What would break that cycle, and turn busy market conditions into an advantage for conveyancers? An increase in fees would be a good start, and to a degree this is happening. ‘Conveyancers have come to recognise that conveyancing is not easy and simply cannot be done at knock-down prices, particularly leasehold property,’ Barham says. ‘Therefore, I think charges have risen over the last few years and are now more realistic.’

It is a point Dwight is keen to promote. ‘My one message to all conveyancing firms,’ she says, ‘would be to increase fees so we do not end up in a similar position to criminal lawyers. The SDLT holiday and the continuing boom in the market mean that we are busier than ever, but there are still those firms who charge so little. But clients are prepared to pay more.’

Some problems, of course, are beyond the control of conveyancers. As Barham observes: ‘The government continues to make the process more complicated by adding new legislation, and [it’s] never simple. For example, SDLT is hugely more complicated than stamp duty – with associated risks for conveyancers – and the new “Register of Overseas Entities” will considerably complicate matters in some cases.’

Still, Barham ends on an optimistic note: ‘Eventually, the Land Registry will get its act together. And when it does, that will make a real change to the way things are done.’  

For now, though, Dwight concludes: ‘My passion for conveyancing endures while seeing it crumble around me… I would have walked away from this job if I did not run my own firm and could therefore restrict the number of transactions I do and charge a good price.’

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