Really Moving demonstrates an 18% real decline in conveyancing prices in the last five years.
Conveyancers all know just how stiff competition is in this market. There are lots of firms in the market offering conveyancing services. It is hard to explain why your service is going to be so much different to anyone else’s to allow your price to command a premium, and its easy to get quotes. Economists call this a perfect market.
So when demand falls with a recession and the supply of conveyancing is more than the demand for the service its not really surprising that Adam Smith’s “Invisible Hand” drives prices downwards. A recent RBS report indicated that we still have a 5% surplus of lawyers in practice in this country.
The fees generated by conveyancing are shown to have decreased by 4 per cent when compared with average fees since 2007 in absolute terms but by 18% when the retail price index is taken into account.
The statistics below are based on the average of all quotes generated by reallymoving.com over the years specified.
|
year |
sale |
purchase |
re-mortgage |
Sale and purchase total |
S&P (RPI of 17%) |
|
2007 |
£253.27 |
£255.90 |
£172.65 |
£509.17 |
595.7289 |
|
2008 |
£234.57 |
£232.89 |
£164.86 |
|
|
|
2009 |
£221.58 |
£222.03 |
£145.76 |
|
|
|
2010 |
£235.79 |
£238.87 |
£157.02 |
|
|
|
2011 |
£239.95 |
£243.43 |
£157.92 |
|
|
|
2012 |
£243.10 |
£247.11 |
£157.19 |
£490.21 |
£490.21 |
|
|
|
||||
|
% change from 2007 |
|
-4% |
-18% |
With these figures it’s not really that surprising that the number of firms making applications to the Land Registry have been considerably reduced.
Chris Harris who owns Today’s Conveyancer but also provides consultancy advice to the conveyancing market said “When I meet a new conveyancing firm I like to ask them how much it costs that business on average to service a conveyancing transaction. Most firms have no idea. So I then ask them how do they choose to price their work and the common response is they follow the local market price. If you don’t know your input cost and you just follow the market price downwards many firms will operate at a loss. Particularly if everyone else is doing the same and people are blindly following a model of reduced prices to attract work without measuring the impact on profit.”
Chris went on to say ”It is no wonder that errors and mistakes are made costing the sector millions of pounds in claims on the compensation fund and professional indemnity insurance claims when firms chase price downwards without seeking to drive down internal costs or understanding margins.”
If you are thinking about selling your business or seeking merger opportunities please contact chris.harris@practicalvision.co.uk to discuss your options as he has clients who may be interested in talking with you.
Today’s Conveyancer, bringing you the latest conveyancing news and updates.
