It seems like only yesterday that we packed away the decorations and made the treacherous post-Christmas trip back into the attic to house our festive paraphernalia until next year.
Within the blink of an eye we are here again; suffocated by additional lights, decorations and overly vibrant Christmas jumpers.
Now that you have sent your final email of 2018 and completed the last office tasks of the year, it is time to open the six pack of luxury mince pies and review the constantly shifting whirlwind that has been the conveyancing sector.
The year opened with the announcement that tenants will be given additional protection through the Tenant Draft Fees Bill. Since the New Year announcement, the Bill has made its way through the House and Lords and House of Commons.
In the Draft Tenants Fees Bill, the government claim: “But whether you’ve been forced into life as a tenant or simply decided that it’s the best option for you, you deserve to know that you will be treated fairly and not ripped off by the people you rely on for finding and renting your home.
“Yet in too many cases that’s not happening, and that’s because the lettings market is simply not designed in the interests of the people it is supposed to serve.
“Tenants rely on agents to find properties, yet they are selected and appointed by landlords. That disparity can lead to tenants paying hundreds of pounds in fees that are far from transparent, substantially raising the costs involved in renting, and causing nasty surprises for new tenants who think they’ve found a home that suits their needs and budget.
“Nor is it easy for prospective tenants to understand and compare fees, thanks to significant variation in the way agents charge for their services. This kind of opacity is not accepted in other markets, and the lettings sector – on which millions of people rely – should be no different.”
Growth Of Alternative Lending Streams
2018 emphasised the power of the alternative lending streams. As people begin to live longer and pensions fail to stretch enough for retirees, people have looked for other ways to pay for their retirement.
In 2017, over £3 billion worth of equity was released by over 37,000 homeowners. This trend has continued to grow in 2018, with quarter three statistics suggesting that over £1 billion was taken out in equity release between June and September alone. It is thought that by the end of the year, equity release will exceed £4 billion for the first time.
David Burrowes, Chairman of the Equity Release Council, commented: “These figures highlight the rise in new products and increased product flexibility, which is helping older homeowners to fulfill a host of pressing personal, social and financial needs. This innovation has brought more competition to the later life lending arena, while maintaining the standards and protections which ensure equity release products are futureproofed to provide good outcomes for consumers.
“As customers navigate their way through a growing range of product choices – including retirement interest-only mortgages – the appropriate advice, guidance and support is needed to weigh up the various benefits, costs, flexibilities and protections to ensure they are suitable to meet both current and future needs.
“Industry and regulators must continue to work to ensure customers are aware of all the options available to them when deciding how best to support themselves and their families in later life, taking all their assets – including pensions, savings, investments and property – into consideration.”
The increased and affordable availability of equity release options have allowed home owners to use this additional money generated from the exponential rise in property value to help their younger relatives climb the property ladder.
2018 also heralded and solidified the bank of mum and dad as a legitimate lending stream for property deposits.
According to research and forecasts from Legal & General and Cebr, parents will represent the equivalent of a £5.7 billion mortgage lender this year, with 316,600 anticipated to receive financial help from parents, up from 298,000 since last year.
Over the last two years, the value of property purchases helped by parents has grown by 5% to £81.7 billion; in monetary terms, this is equivalent to a growth of £4.2 billion.
However, toward the end of the year, reports claimed that relatives were placing themselves in financial difficulty to ensure that their younger relatives were able to afford a home of their own.
Paula Higgins, chief executive, HomeOwners Alliance, said: “If further proof was needed that the housing crisis will have far-ranging ramifications then this is it. The fact that some parents are postponing retirement to help their grown-up children onto the housing ladder shows how far the ripple effect of the broken housing market goes. Not to mention the fact that this acceptance and reliance we have on parents to provide financial support means those people whose parents are unable to do so are left out in the cold.
“Our 2018 HomeOwners Survey found the market is failing at every level and this L&G survey is just further proof of that.”
Brexit Uncertainty Breeds Property Value Decline
The Brexit merry-go-round has been relentless since the referendum in 2016. As the March exit deadline approached, negotiations intensified to ensure the deal was done in time.
In September, Mark Carney and the Bank of England initiated ‘project fear’ through stress testing the property market and concluding that a no-deal Brexit would be likely to trigger a housing crash on a similar scale to 2008.
The Bank of England then reignited ‘project fear’ by claiming that in a worst-case scenario, the property market and property prices could shrink by 30%. Since that point, the deal has been struck, May has survived a vote of confidence and a parliamentary vote has been delayed.
Amidst this severe uncertainty the property market has wavered, with negative annual growth faced in many regions including London and the South East of England. On average, property prices are now 3.2% cheaper than they were in October and around £10,000 cheaper overall. The last time two consecutive months yielded larger decreases in property prices was in 2012, when property values dipped by £11,836. Additionally, the fact that house hunters registered with estate agents has also hit a six-year low indicates that the property market may be averse to Brexit turmoil.
Price And Service Transparency Finally Arrived
If any words have been uttered more than ‘Brexit’ among Conveyancers this year, they have undoubtedly been ‘price transparency.’
Throughout the summer, regulators had their reform proposals approved by the Legal Services Board (LSB).
This opened the door for the regulators to consider the framework for how price transparency will work. In October, the Council for Licensed Conveyancer (CLC) offered their compliance guidance to conveyancers and announced the deadline of December 6th. Shortly afterwards, the Solicitors Regulation Authority followed this date and the legal sector readied itself for the imminent changes.
Here we are, compliant and still standing. Regulators continue to insist that the new regulations will improve the customer experience. They have also insisted that this process will take time to perfect and they intend to collaborate with firms rather than sanction them.
It has been a fantastic year and our privilege to help deliver the news to your inboxes. The entire content team would like to wish you a happy festive period and a fantastic New Year. We will see you all in 2019!