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The conveyancing industry at breaking point?

conveyancing

When Chancellor Rishi Sunak delivered the 2021 Spring Budget on 3 March, the property sector listened with bated breath. We were eager to find out what approach the Government would take: would it continue with temporary relief measures to support homebuyers amid the pandemic? Or would it choose to bring these policies to an end in order to focus on tackling public debt?

Of course, the Chancellor opted for the former. Most notably, Mr Sunak announced that the Stamp Duty Land Tax (SDLT) holiday would be extended until 30 June. This means that for three more months, homebuyers are able to take advantage of the tax relief if purchasing real estate in England or Northern Ireland.

Introduced in July 2020, the stamp duty holiday has certainly kicked the property market back into gear, and the extension has fuelled activity further. According to MoneySuperMarket, first-time buyer enquiries increased by 472% in the first week of March when compared to the first week of February. Rightmove also received over 9 million site visits on the day the extension was announced – the highest volume of daily traffic recorded.

This is welcoming news for the Government. After all, the aim of the holiday was to ensure the market was buoyant and there was a boom in transactional activity, which should improve the health of the wider economy as the country transitions out of lockdown. The big challenge now, however, is ensuring that as many buyers as possible can actually complete on their transactions before the holiday deadline.

There is understandably a great of focus at the moment on the delays many buyers are facing when applying for mortgages. However, we should not overlook the strain being felt by those involved elsewhere in the property transaction process – most notably, conveyancing.

Under pressure

In the early months of 2021, it was clear conveyancers were under significant pressure to complete as many property transactions as possible prior to the original SDLT holiday deadline on 31 March. The extension provided some relief, but in reality, this has only delayed the inevitable bottleneck of sales that conveyancers will have to manage prior to end of June.

The effects are already on display. An in-depth analysis of public data by GetAgent.co.uk revealed that the total time to sell a property – from the initial listing to the completion of the sale as recorded by the Land Registry – is now sitting at an average of 295 days. It also noted that while sales are being agreed to, the delays arise at the closing stages of the transaction when the necessary legal work needs to be completed. Suddenly, a three-month extension of the holiday does not seem that long.

As with any line of work, the introduction of high demand and tight deadlines can drastically increase the chances of human error. What’s more, given the number of parties involved in a transaction, delays at one stage of the buying process can lead to frustrations and mounting pressure on other stakeholders. The fallout is significant – in the worst-case scenario, a buyer could ultimately miss out on tax savings of up to £15,000 if their purchase is not completed by the end of the SDLT holiday.

From a policy standpoint, it would make sense to extend the SDLT further or initiate policy so that sales agreed to prior to the 30 June will still qualify for the tax relief, even if the sale is not finalised until after this date. Unfortunately, this does not look like it will be the case.

For conveyancers, then, they must look elsewhere for a solution to the problem. Specifically, they must openly embrace technology to ensure they can streamline existing processes and communicate transparently and effectively with all parties involved in the transaction. By doing so, they will also reduce the chances of human error or unforeseen complications. Fortunately, the adoption of technology by conveyancing firms is not a new phenomenon; it is a trend that had already taken hold prior to the pandemic but has since been accelerated due to Covid-19.

Embracing technology at a time of need

As with large sections of the property industry, conveyancing firms have slowly been coming to realise the benefits of technology in delivering a superior service or achieving efficiency gains. The initial resistance to technology by conveyancing firms was not a stance taken by choice. Rather, I believe it was more of a consequence of these firms simply not having the knowledge.

Yet the pandemic, in preventing human interactions and travel, has driven home the value of technology. For example, eSignatures and automated communication can shave days off a transaction. Client onboarding, which typically takes around two weeks, can now be completed in as little as 40 minutes by embracing digital solutions. 

Taking all this into account, technological innovations like these are permanently transforming how conveyancers function. And the timing couldn’t be better, with the SDLT holiday naturally making it near impossible for conveyancers to meet demand if relying on outdated practices.

All that being said, I call for the property sector to be understanding of the pressures faced by one another at the moment. Every organisation is doing what it can to ensure transactions are completed before the deadline, even with the obstacles posed by the pandemic. That’s why InfoTrack is backing the industry’s ‘call for kindness campaign’, which asks solicitors and conveyancers to be mindful of their peers. We live in extraordinary times, and these coming months are set to be a busy period for everyone.

Overall, buyers and sellers are seeing first-hand just how technology can be used to simplify all parts of their lives. Naturally, these expectations are spilling over into the property and finance sectors. That’s why it is safe to assume that we will be seeing significant investment into technology beyond the SDLT holiday period by conveyancers. Doing so will ultimately serve to benefit the property sector as a whole.

Original Article from Financial Reporter 06/04/2021

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The factors that are to blame for conveyancing delays

delays

It has been a year since the country entered its first lockdown, a milestone none of us could have envisaged back then. It also marks what was the start of one of the most tumultuous years the property market has ever witnessed.

From the initial drought that the first lockdown brought, to the flooding of the market in July post-lockdown, all aspects of the industry whether they be estate agents, conveyancers, or lenders have had to demonstrate flexibility.

Since the start of the first lockdown, the Council for Licensed Conveyancers has been regularly surveying our regulated community to see how the firms we regulate are managing and adapting through this period. It has also provided snapshots of how the wider market has been performing. In November we provided an overview of how the industry had fared over the previous eight months. Now, a full year on, what are the continuing effects of the pandemic?

As we are all very aware, the much-vaunted Stamp Duty holiday had the desired effect of boosting the property market, to the brink of collapse if you’d believe all the media hype around it. While it is true that that market did quickly become flooded overnight, our experience of speaking to our firms, in November, showed that less than half (46%) told us that they had to turn work away.

More recently, the backlog of transactions, in part, prompted the Chancellor to extend the holiday until September, a move welcomed by the industry. In November, 78% of our firms were concerned about a steep drop off in work come the end of March and said they would welcome a phased exit from the SDLT holiday. So, has this phased exit helped eased case-loads?

In our latest survey, which ran in February, just 41% of firms said that high caseloads are causing matters to take longer than usual. In fact, just over three quarters (76%) of our firms told us that it is delays arising from the impact of the pandemic on third parties such as local authorities and HM Land Registry that are causing delays. While 65% of firms told us that lender response times are also contributing to delays.

22% of firms surveyed said their current levels of work are at 100-125% of the level in February 2020, with 17% of firms saying work levels were at more than 126% of the February 2020 levels. These increases appear modest. We always encourage firms to be mindful of the levels of work they take on, to ensure that it isn’t more that they can manage, and the data seems to be bearing this out. We hope that the tapering effect of the SDLT extension will also allow firms to more effectively manage their workloads, and reduce risk.

In November when we spoke to firms about their financial situation, 42% had used the Coronavirus Business Interruption Loan Scheme, with the highest proportion being those with a turnover of £1-3m and £3-5m where 67% and 75% respectively had utilised the financial aid. When we spoke to the same firms again recently, 61% said their debt levels were now unchanged from this time last year, 23% said their debt levels are currently higher, but 10% said they were actually lower.

Seemingly, stronger financial positions alongside a more gradual withdrawal of the SDLT holiday have contributed to an uptick in industry sentiment. A very heartening 93% of our firms told us that they feel very or quite confident now about the future. This is certainly good news, and really quite telling. This is an industry that has had to adapt very quickly and demonstrate flexibility and innovation in order to not just survive but thrive.

In November, we said that the industry has much to be proud of in its handling of the crisis to date, a statement we stand by as estate agents, conveyancers and lenders alike have shown resilience in their navigation of the crisis to date.

The survey ran from 14 to 28 February and asked conveyancers about their work in the week ending Friday, 5th February. 150 firms participated.

Stephen Ward, is Director of Strategy and External Relations at the Council for Licensed Conveyancers.

Original Article from Property Industry Eye 29/03/2021

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Allow agents to undertake conveyancing to make transactions ‘smoother’

Gazeal

More needs to be done to improve the “antiquated” conveyancing system in order to speed up property sales, according to Gazeal.

The PropTech supplier says that the additional pressure on the conveyancing process caused by the stamp duty holiday has highlighted its shortcomings and that evolution is needed as soon as possible.

Bryan Mansell, co-founder of Gazeal, believes that the conveyancing process could become a lot smoother if it followed a similar path to the lettings system where the agent stays with the tenant and landlord from start to finish.

At the moment, tenants find properties in the same way as buyers with a similar viewing, offer and negotiation process, but that is where the similarities end, according to Mansell.

He said: “During the homebuying process, once the offer has been accepted, buyers and sellers go off independently which is where many of the problems start.

“Of course, the lettings process will always be faster than sales as a title is not being transferred, but the way in which letting agents are plugged-in to the whole process has a range of benefits.

“If more of the conveyancing work could be carried out by agents, with them able to guide consumers through the process, transactions could become smoother and more efficient.

“In the lettings sector, there is an onus on agents to provide documentation and information to both sides of the transaction. This moves the process along and ensures everyone knows where they stand.

“There is plenty more to be done to improve the conveyancing process, but mirroring some of the most effective parts of the lettings system could be a good starting point.”

Mansell says that improving the knowledge of the conveyancing process among homemovers would also have a positive effect and help to minimise issues.

He continued: “With people moving home less frequently, their knowledge of the conveyancing process is understandably patchy. It would make a huge difference if movers had a better understanding of what they need to do when it comes to providing upfront information and instructing solicitors as quickly as possible.

“What’s more, the language and complexity of documents used by agents and conveyancers is counter-productive as it scares consumers and adds to their confusion.

“The other issue revolves around the price of conveyancing services. If consumers were better educated not to choose their representation solely on cost, this could prevent fall-throughs and reduce the chances of buyers and sellers running into problems before they’ve even started.”

With the stamp duty holiday deadline fast-approaching, Gazeal says the conveyancing system is likely to struggle in the coming weeks as the rush to complete transactions continues.

As well as the unusually high number of transactions, the ongoing impact of the pandemic on the resources of local authorities continues to cause delays.

Mansell added: “The conveyancing system has been struggling to cope with demand during an unprecedented period. However, even before the pandemic, there were still significant issues with fall-throughs, delays and confusion,” adds Mansell.

“Post-April, there is still likely to be a huge backlog of transactions in the pipeline and a high level of activity could be sustained thanks to an economic boost associated with a successful vaccine rollout.”

Original Article from Property Industry Eye 26/01/2021

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Your 6 Step Guide to the Conveyancing Process

Finding the house of your dreams in Chelmsford is exciting and your next step is to secure the property as soon as possible. But buying a new home can be a complex process, particularly when it comes to understanding the conveyancing procedure.

Here at Essex Homes And Lettings we always endeavour to ensure your sale and purchase runs smoothly, with no surprises along the way. So, with this in mind, we have created a no-jargon guide to the conveyancing process to help you.

But, first things first.

What is conveyancing?

Conveyancing is the legal term for the transfer of home ownership between a buyer and seller. The process begins once your offer is accepted on your chosen property and completes when you have the keys in your hand on moving day! This conveyancing process is absolutely essential to ensure that all the legalities of your sale or purchase are covered and to make certain the transfer of ownership happens with as little stress as possible.

Who does the conveyancing?

Although you can do it yourself, we always recommend that the conveyancing process is undertaken by a professional solicitor or a conveyancer as it can be a multifaceted process. You’ll need to instruct a legal professional as soon as your offer on a property is accepted, so it’s wise to make enquiries and carry out due diligence so that you have several options ready and can start the process without delay. Once you have chosen and appointed a conveyancer or solicitor, they will draw up a draft contract and advise you of their charges.

The 8-step Conveyancing Process

Step 1: Initial contact is made between legal representatives

The first task undertaken by your solicitor or conveyancer will be to contact your seller’s legal representative to request a copy of the draft contract, the property’s title and other standard forms. Your solicitor or conveyancer will thoroughly examine these documents and raise any initial queries. They will also action a number of ‘searches’ to make sure there are no issues you need to be aware of that are not in plain sight. The most common searches are local authority searches, environmental searches and drainage and water searches.

Step 2: Mortgage and survey requirements are confirmed

At this point, if you need one, you should make sure your mortgage is in place as your solicitor or conveyancer will require a copy of your mortgage offer for the next stage of the conveyancing process.

You will also be required to get a mortgage valuation. This is carried out on behalf of your mortgage lender and is to satisfy the lender that the property is secure against the amount of money they are loaning you.

A necessary survey may also be required at this stage. Whilst not a legal requirement, whether you decide to instruct a survey on the property or not will depend on both the property and your specific circumstances.

Step 3: Contracts are signed

Once all the searches have completed, queries have been answered, you have provided your mortgage offer and are satisfied with the survey that has been carried out on the property, your solicitor will agree details regarding the transfer of your deposit funds along with a completion date. You will then be ready to sign the contract in preparation for exchange and completion.

Step 4: Contracts are exchanged

Next comes the exciting part! Exchange of contracts between buyer and seller. Your deposit will be paid on exchange and at this time you will be in a legally binding contract. The good news is that the seller can no longer accept another offer on the property and must sell the property to you. However, if you back out of the purchase at this stage, you will lose your entire deposit. There is usually a deliberate delay between exchange and completion to allow the deeds to the property to be transferred into your name.

Step 5: Finally, it’s completion day!

Completion is usually set for 12 noon or 2pm on the agreed date, however, in reality it can happen as soon as the sellers’ solicitor confirms that all monies have been received. You can then collect your keys to your new home from us – a moment that always makes us smile!

Step 6: The final legal work is completed

Whilst you move into your new property, your solicitor or conveyancer will tie up all the loose ends from a legal perspective. They will ensure stamp duty is paid on your behalf, send your title deeds to your mortgage lender and make sure you receive copies of your legal documents.

They will also send you your final bill for legal work undertaken.

Now all that is left for you to do is to unpack, settle into your dream home in Chelmsford and enjoy your perfect surroundings.

If you require further independent advice, help and assistance regarding the conveyancing process, the Essex Homes And Lettings team are happy to help. Contact us on 01245398466 or email sales@essexhomesandlettings.co.uk.