Turn your mind back to two years ago: we were coming to the end of the “first” SLDT holiday. Originally intended to end in March 2021, then extended to the end of June 2021, with tapering to the end of September 2021.
Us conveyancers were working every hour, every day, every weekend to help our clients move house because that is what we do – we want our clients to move house. And those clients wanted or needed to move house by the end of June 2021 in order to save themselves a large chunk of money.
The pressure we were all under is well-documented, both in my diaries from that time and also in other property and conveyancing fora. The spike in the housing market was real; the increase in prices was there. We really did work every hour there was.
The property market is fickle
Fast-forward two years – if anyone had said to any of us that we would now be in a market where those buyers with their two-year fixed rate mortgages were looking at increases of thousands of pounds a month, it is likely that we would not have believed it – but it is always the danger.
The property market is fickle, and homeowners had become used to cheap money by way of low interest rates. I have said before that when I bought my first home in the late 1980s, the interest rate was very high.
A little research shows us that interest rates in the UK have averaged 7.11% from 1971 to 2023, with an all-time high of 17% in November 1979 and a record low of 0.1% in March 2020. This all-time low was to try and help the economy survive the impact of Covid and stayed at that rate until November 2021 – time to get us through the SDLT holidays. Rates could only ever go up, but the question was when?
The Bank of England base rate is now 4.5%. The knock-on effect on the housing market is going to hit us all in the conveyancing world as we even saw at the end of last week that some mortgage lenders were pulling deals very quickly.
I think that we all need to be strong as we enter what could be a turbulent period – Lloyds Bank forecast that house prices will fall by 8% in 2023; other consultancy companies forecast a 6% drop.
No-one really knows what will happen. Is it going to be a crash or a correction in prices? Rising costs, including increased mortgage costs, are going to affect most of those with a mortgage.
Now is not the time to cut fees – we are worth more
I don’t know what will happen, but I have already seen many firms reducing their costs to be able to get the house moves that are happening; undercutting those firms who all sought to work together during the last few years.
If I have one message to firms, it would be not to reduce fees. With a reduction of work, now is not the time to scrap around for work, but to stand proud and remind the homemoving public and others, such as agents and brokers, that it was down to the sheer hard work of conveyancers that house moves happened in that busy time.
Now is not the time to reduce fees and hope that works comes to us, however hard that may be. We are worth more. Stand up and prove it to others: pay us what we are worth!
Let us invest in our businesses because there is no point in talking endlessly about technology and how this will improve the homemoving process if firms cannot invest in such technology.
Don’t put down your fees. Keep them high and invest in staff and technology so that when we come out of the other side of this time, we are still here – not having to close our doors due to lack of money.
2 Responses
Low cost models which also want to achieve household brand awareness now face difficult economics. Some will, and indeed are, cutting fees. I know of one “pile it high, do it cheap” operation where their answer to a downturn in work was to take in more panel work at a cheaper price. Might be good for them short term but their hard worked staff are already complaining of burn out. So hardly a long term answer, but as with so many such volume outfits out there it is basic economics at a macro level which we know is the be all and end all for them.
Conveyancing is an “event-driven” purchase, not an elective one (ie it is prompted by an event such as moving house, not just by choosing to make a purchase, eg buying new clothes). Also, unlike some other event-driven purchases (such as motor insurance) the lifetime value of the customer – the projected revenue a customer will bring to a company during their lifetime as a customer – in conveyancing is small because people don’t move house very often. Therefore it is more likely that, faced with short term requirement, fees are going to be dropped to pass through the period since that fee from the customer is unlikely to return anytime soon (if at all).
There are big challenges ahead for a low cost model, in an event-driven market, when it relies on achieving brand awareness by referral fee rather than customer service. So with that model the low cost looks the best and quickest option. Volume outfits are looking at profit only. Proper Conveyancers, of whom there are too few these days, can hopefully look more medium and long term, especially when it comes to the important area of staff wellbeing/retention.
Totally agree. Low fees have been a curse on conveyancing for far too long. I still show estate agents fees next to ours on a completion statement to show clients the discrepancy between them