Conveyancers are “under pressure” as caseloads remain significantly elevated from pre-pandemic levels, with Search Acumen’s latest Conveyancing Market Tracker showing a 34% increase in their workloads.
The Tracker also showed that the typical firm registered 76 transactions in Q2 2022, compared with 57 in Q2 2019, an indication of the resilience of the market in spite of the current economic environment.
This level of activity also continued into the beginning of Q3 2022, with the Land Registry recording a 7.2% surge in transactions in July, bouncing back from the dips seen in June.
HMLR said the provisional non-seasonally adjusted estimate of UK residential transactions in July 2022 was 110,970, 32.9% higher than July 2021 and 7.2% higher than June 2022.
“Conveyancers have been under pressure for much of the last three years”, said Andy Sommerville, Director of Search Acumen. He continued:
“While we might see volumes go down incrementally as market activity slows, workloads will be defined by progressively more complex cases moving forwards as buyers and sellers seek to act in an increasingly difficult economic environment.”
In discussing potential factors that could impact conveyancers’ workloads, downvaluations were of primary concern:
“Downvaluations and expiring mortgage offers may add additional layers of complexity for transacting parties and those stuck in chain, which will all translate into prolonged due diligence.
Similarly, all parties will be trying hard to negotiate for every penny in the current economy – sellers because house prices might be dropping, and buyers because of inflation and the increased cost of borrowing.”
Sommerville went on to predict that, despite the cost of living crisis having the potential to but the brakes on the market, the very prospect of a dip in prices – as well as some needing to downsize due to rising bills – could itself trigger further a rise of activity:
“Although the cost of living crisis is set to slow the market further, we might also see a slew of properties come to market in the autumn as sellers look to take advantage before prices drop too far.
At the same time, as interest rates go up, homeowners may be at increasing risk of overextending themselves financially having purchased a larger home since the pandemic, adding more potential sellers to the market.
As more supply should balance out house prices, this may not translate to fewer transactions, as greater choice allows for more potential buyers to enter the market. It is entirely possible that we see an extended period of strong transactional activity despite economic headwinds.”
It must be noted, however, that with some predicting a slowdown in mortgage activity over the remainder of the year, the jury is still undoubtedly out on how conveyancers’ workloads will be impacted.
Market share
Elsewhere in Search Acumen’s Tracker, the figures surrounding market share within the conveyancing sector made for interesting reading.
The 500 biggest conveyancing firms accounted for nearly three in five (59%) completed transactions between April and June this year. This was the highest level seen since Q2 2020 in the early months of the COVID-19 pandemic, and surpasses any quarter from 2011-2019.
Similarly, the top 200 conveyancers by transaction volumes – from almost 4,000 firms who were active during Q2 – processed two in five (40%) property deals across England and Wales, up from 38% a year earlier in Q2 2021.
The top 50 firms alone handled more than one in five transactions (21%), which was the highest figure seen outside of lockdown since records began in 2011.
Number of active conveyancing firms
Despite overall workloads remaining high by historic standards, the number of active conveyancing firms dropped back to below 4,000 for the first time since Q1 2021 as activity became more concentrated at the top end of the market. The number of firms registering transactions in Q2 2022 was down more than 150 compared with Q1, falling from 4,122 to 3,963.
Overall, the top 1,000 firms recorded a collective market share of 76% in Q2 2022, their highest since Q4 2020 and higher than any period before 2020 and the onset of the pandemic. This left the remaining 2,963 firms completing over a combined 24% market share.
Sommerville commented:
“It is the larger firms that have been able to adapt more quickly to a challenging market and monumental workloads, processing more transactions at a higher rate than seen previously. These are firms which have the scale and budget to embrace technology to ensure they are on the front foot, giving them a competitive advantage.
However, the barriers to modernisation and digitisation have fallen as technology has become adopted more widely:
“As we approach HMLR’s AP1 digitisation deadline in November, it will become even more evident which firms are steaming ahead of the pack. Competitiveness today will be defined by technological advancement in modern conveyancing.”
One Response
This makes for interesting reading indeed. If smaller firms wish to remain involved in the conveyancing market they will need to take a serious inward look.
The entire market, regardless of size, has taken its finger off the pulse of customer service at the point of first contact. It is evident that many firms are too busy and don’t want more work, as the way they answer the phone and handle new enquiries says it all.
If firms want to survive when the market takes a dive they must stop giving a negative impression of themselves. I’m sure that focus has shifted from winning business to doing business, but bad habits have formed that, in any market, are less than acceptable in the eyes of the consumer who has no idea what is going on and will not be so forgiving.
We have made hundreds of calls to firms across the country to rate the customer experience and provide reporting that analyses performance and where a firm sits within the marketplace.
We would urge business owners to either ask firms like ours to provide reporting for you, or, at the very least, call your own businesses anonymously to understand what prospective clients are actually experiencing.
With demand so high, you’ll win business anyway. But when clients are fewer and you need to keep the lights lit you need to ensure that you are not turning business away by the poor practices that have crept in.