In August 2019, the Law Society published its latest thinking on the Government’s proposals to reform the process of residential conveyancing, based on the results of a consultation paper published in 2017.
Most recently, the Government released new guidance on what residential property conveyancing consumers should expect when buying or selling.
What are the proposals in brief?
Among a series of proposals, the Government recommended changes to:
- Reservation agreements – specifically to develop a standardised agreement and find ways to encourage buyers and sellers to use them, with a view to reducing the number of failed transactions.
- Quality standards for conveyancers – driving price and service transparency to improve how consumers decide which conveyancer to use. Kite marks and quality standards may be introduced to help achieve this.
- Gaining information for leasehold purchases – due to delays in receiving property information in leasehold transactions, there are plans to require sellers to gather the necessary information before placing their leasehold property on the market. It is also proposed to put in place timescales and capped costs, a requirement to publish information electronically, and to standardise the information provided.
- Search performance – LA’s may be required to respond to searches within 10 days and could be subject to performance-related action if they do not meet the target set.
- Estate agent qualifications and enforcement – the government are considering the enforcement of existing regulations and the creation of a qualification for estate agents.
- Referral fees – fees for the referral of clients from estate agents to conveyancers and mortgage lenders may be stopped under the current proposals (this is to be reviewed), and fees may be made more transparent to consumers.
The Law Society’s assessment of the changes
Given that over a quarter of property transactions fall through each year, the Law Society appears to be receptive to the changes, but it is clear they want to see the industry being consulted on the impact of specific legislative changes before making substantive decisions. Beyond this, in their view, the efforts of the government should be focused on efficiency, promotion of consumer trust, and improvement in transaction success rates.
In terms of the Society’s take on how Solicitors will be affected, they consider that given the intention of the government to take a step-wise approach to changes and their intention is to simplify the process and improve the consumer experience, conveyancers should not be unduly impacted by any changes.
For their part, the Law Society have revised their Conveyancing Protocol to encourage conveyancers to work more closely with clients and lenders in relation to information being shared, and also to drive efficiency in the scheduling of transactions at all stages.
Changes to the Law Society Conveyancing Protocol
In July 2019, the Law Society published the latest iteration of the Conveyancing Protocol, driven in part by the Government’s proposals for residential home buying and selling, but also to bring them into line with the new CQS and the Court of Appeal’s decision in Dreamvar [2018] EWCA Civ 1082, which relates to the liability of Solicitors and estate agents in transactions involving identity fraud.
Broadly, the 2019 Protocol reduces the number of steps in the conveyancing process and seeks to boost transparency, requiring that conveyancers should “recognise the value of making the process as transparent as possible”.
The Protocol also seeks to improve how digital documents are handled and identified – for example, if a conveyancing document bundle is to be emailed to the client, they should be informed of this fact from the outset, and each document emailed should be individually identifiable. It also brings renewed focus to the increasing potential for scams in conveyancing, and the steps needed to assure clients that their money is safe from Friday afternoon fraud.
Final words
It remains to be seen what the governments proposed improvements to residential conveyancing will be in reality, but the Law Society for one would appear extremely open and receptive to their intentions. Any changes intended to raise consumer confidence and operational efficiency within law firms will be well received. Given the much-anticipated need to reform the leasehold sector, the information gathering change will likely be well received by conveyancers who know from first-hand experience the frustrations caused by delays in getting information from freeholders and agents. This should start to bring leasehold transaction times more in line with those of freehold sale/purchases.
Until the Government brings forward further changes, including legislation, consumers should be encouraged to read the new government consumer guides for buyers and sellers (separate documents). By doing so, all parties can be assured of ‘singing from the same hymn-sheet’ from the outset of the conveyancing process, and not resorting to operating on a wing a prayer that their sale or purchase completes smoothly.
