The property market has certainly been a rollercoaster ride in the last couple of years, from the pandemic and stamp duty holidays to higher mortgage rates and the cost of living crises that property buyers are now having to contend with. All of these circumstances, and more, have impacted the way conveyancers work and the landscape of the property sector as a whole.
Record rises to the base rate
There have been numerous developments that have contributed to delays to property transactions, from the outbreak of war in Ukraine to inflation, which have dampened the confidence of buyers and also impacted affordability and the housing market generally. Recently, one of the largest mortgage lender in the country, announced that house price growth had actually turned negative – just one month after reporting that the prices had soared to record highs.
Now, the Bank of England has increased base rates by 0.5% – the largest rise in 27 years, making the base rate 1.75%, which will spell difficult times ahead for those with mortgage products but also for conveyancing teams.
Many home buyers have been subjected to delays during the transaction process and the increase in base rates will increase an already staggering workload, putting pressure on conveyancers who have been impacted by the pandemic, capacity issues and processes that are no longer fit for purpose.
The transaction backlog is a reflection of a system that needs to be updated to accommodate the rapidly increasing fall-through rate. Innovation and digitalisation of the processes are necessary to automate the more laborious, time-consuming tasks and to deliver a more efficient service to customers who are bearing the brunt of slower transaction times.
Challenges for contractors and self-employed individuals
Self-employed borrowers have always faced more challenges when it comes to acquiring mortgage products, but the state of the financial market has posed more difficulties. Cost of living and energy bill rises have impacted affordability, coupled with rising inflation and base rate increases, making it harder for contractors to buy property. Online Mortgage Advisors shares a few examples of the restrictions self-employed borrowers could encounter from specific lenders when looking for a contractor mortgage:
- TSB – require at least two years’ history working in the same field or have been contracting under the same employer for 12 months minimum and at least six months left to run on that agreement.
- Natwest – restrict lending to sub-contractors only if they’ve been working in that capacity for at least 12 months. Natwest also asks to see evidence that further work has been offered, if the applicant’s income is £75,000 per year or lower.
- Halifax – insist that zero-hour contract workers have at least 12 months’ history with the same employer or others in the same field to be considered for a mortgage.
One of the biggest challenges that people in this position face is a lack of education on situations that are specific to people outside of standard full-time employment, from applying for products with specialist lenders to understanding tax efficient solutions to release more income.
Conveyancers need to put in additional time presenting applications for these types of clients, in order to reduce the need for additional information that only serves to lengthen already long-winded processes.
Cost of living increases
High inflation isn’t just a burden to consumers, but it also affects businesses, including small and medium-sized businesses, which is most agencies in the UK. Cost of living is already putting pressure on the property market and agents need to be conscious of where they’re investing their money in order to save time and much-needed funds, without compromising the quality of service they can deliver.
This includes software and online tools that streamline processes and cut down on admin, while also generating more efficiencies within businesses. It can also help to increase business opportunities by creating more time for agents.
Changes to green mortgage criteria
EPC ratings are something more and more prospective homeowners are thinking about, with 39% of homebuyers claiming it’s a very important factor in their search. What’s more, 20% stated that an EPC rating of C or above was essential to them. In a bid to help buyers make greener choices, selected new build developers are now able to access preferential rates for green mortgages.
Homes make up 15% of the total climate emissions in the UK, so being able to address the problem at the source is a big step in tackling climate issues and supporting customers who want to have a positive effect on the environment. Since green mortgages were introduced, more customers have displayed an interest in purchasing eco-friendly homes, not only for the environmental benefits but the savings that an energy efficient home can provide.
As an industry, lenders and conveyancers need to continue to integrate the right products to stimulate this activity and help borrowers understand that green mortgages aren’t simply a gimmick but a valid and worthwhile solution for the future. The more knowledge that conveyancers can accumulate and provide to prospective buyers, the easier it will be to drive this initiative forward and make substantial changes to the mortgage market.
Final thoughts
The property market has started to dip, following the intense highs of the pandemic boom, but there is still a hive of activity that is keeping conveyancers busy. The primary changes are centred on the changes to the economy and shifting interests from buyers, which means that conveyancers need to utilise tech and innovative software in order to tackle time constraints and ease the concerns of buyers and sellers.
In some cases, chains are collapsing due to long wait times, resulting in a loss of thousands of pounds and wasted fees, while others are seeing mortgage offers expire before the transaction completes. Conveyancers need to look to automation and digitisation to speed up processes, protect clients against time-related losses and deliver a smoother service.
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