Rising PII costs see crippling affects for conveyancing firms

Rising PII costs see crippling affects for conveyancing firms

It’s starting to feel like the era of the small law firm is over. More and more, smaller firms are closing their doors or being absorbed into bigger networks in order to survive, and the driving factor behind a lot of these closures is the continually rising cost of PII.

In the last quarter of 2021 alone, PII costs rose by over 20% on average. As the economy reels in the wake of the Covid pandemic and the lengthy lockdowns, and the cost of living spirals ever higher, it’s the sort of increase that’s always going to impact the smallest firms the most.

The reasons for this “hardened” PII market are manifold and can be traced back to inciting incidents like the Grenfell Tower fire, which brought into sharp relief just how much insurers might be exposed to claims. That said, it’s been generally agreed for some time now that the rising cost of PII for law firms particularly has related to the increasing number of claims being made against firms.

Indeed, in 2020, around two thirds of firms had no claims against them at all, but the value of the claims against that remaining one third exceeded the sum total of premiums being collected. This was never a situation that could last.

Though probate is catching up as one of the primary sources of claims being made against firms – an area where errors can be very costly indeed – the bulk of claims still originate from conveyancing matters, with many of these relating to Stamp Duty errors picked up after the event by claims farms approaching clients about missed opportunities to claims reliefs such as mixed-use and Multiple Dwellings Relief which may have significantly reduced the client’s SDLT bill.

There’s also the factor of the increasing complexity of SDLT as new elements are introduced all the time – the 2016 introduction of the Higher Rate on Additional Dwellings (also known as the 3% surcharge) caused a number of errors as buyers found themselves advised to pay the surcharge when it wasn’t necessary, or had been advised it wasn’t due until after exchange of contracts, forcing them to borrow more or lose their deposit.

This year a 2% surcharge on non-UK resident buyers has been introduced, and it’s easy to predict more confusion and chaos with this, carrying as it does similar complexities and caveats to the previous surcharge.

In the last month alone, two established firms – J Pearlman from North West London and Bradleys Property and Probate Lawyers, who have operated in Frimley since 1991 – have found themselves absorbed into the 360 network, unable to continue trading due to the spiralling costs of PII. Experts predict that though this hardening of the market cannot continue indefinitely, it is unlikely to ease significantly for several years.

Reducing risk therefore needs to be at the forefront of every small to medium sized law firm, now more than ever. Reduced risk cannot lower premiums across the market, but may help in reducing your own operating costs. Part of the strategy to mitigate risk can include using SDLT Compass to deal with the SDLT calculations on all transactions.

Unlike the HMRC online calculator, Compass provides a comprehensive tool which takes into account all relevant factors in a transaction which may impact SDLT. It is also fully and constantly updated, to ensure it is in line with the latest changes to legislation. Importantly, it also carries the back up of a fully insured team of experts, de-risking the SDLT calculation process for your firm by outsourcing responsibility to Compass themselves.

SDLT Compass is the best solution to navigate your firm away from the troubled waters of SDLT and PII – speak to one of our advisers today to find out more.

This article was submitted to be published by SDLT Compass as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.



UK Conveyancing has a problem, and Stamp Duty Land Tax is at the heart of it.

  • Increasingly complex legislation
  • Opaque guidance and lack of support from HMRC
  • An "official" calculator which struggles to keep pace with an increasingly complex, ever-evolving tax, and which HMRC themselves describe as merely "a guide"
As a result, as many as one in five purchasers in the UK are likely to be paying the wrong amount of Stamp Duty. Too little and clients may be looking at significant extra borrowing, fines, possibly even the breakdown of a purchase. Too much, and they may lose thousands of pounds at a time when few can afford it. Many firms are already feeling the bite of this issue in terms of claims and complaints from clients. That’s where Compass comes in. Designed in conjunction with tax advisors, conveyancing solicitors and technical experts, Compass is a bespoke, accurate calculator for the SDLT due on any kind of property transaction. It’s also tuned for Scotland (LBTT) and Wales (LTT). It’s backed up by a panel of individual tax experts ready to offer detailed advice to your clients where required. It features a portal for provision of answers to questions direct from your clients and a submission tool to seamlessly capture data and pull through to the direct HMRC submission screen. Using Compass:
  • Indemnifies your firm by passing on the risk for SDLT calculations
  • Delivers on your CQS compliance obligations
  • Saves fee earning time
  • Eliminates risk of future claims, helping to reduce PII costs and avoid reputational damage and loss of client trust
Call us today, and find out how Compass can guide your way.

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Name: Neil Wood Emailnwood@compass.tech

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