Conveyancing
Into the conveyancing future: major challenges and aims and ambitions
Eddie Goldsmith outlines the major challenges for the conveyancing market in 2016 and highlights the Conveyancing Association’s (CA’s ) aims and ambitions for the year ahead.
About the author
Eddie Goldsmith is chairperson of the Conveyancing Association.
2016 has undoubtedly begun with the conveyancing market, and its practitioners, under more scrutiny than perhaps ever before. There are a number of reasons for this, but at its heart is a greater understanding about the role of conveyancers and the importance they have to the overall property-purchasing process. This sounds rather obvious, but when you have a government pursuing an all-encompassing , pro-home ownership agenda, it is maybe not so surprising that the ‘legals’ to make this a reality become rather pivotal to delivering on that.
Not only do we have this overarching pro-home ownership theme, but we have a government that is increasingly willing to play a far more interventionist role in order to achieve this. Since its general election victory last year, the Conservative party has, in many senses, gone against type and has been less willing than its predecessors to ‘let the market decide’ , specifically when it comes to firsttime buyers’ ability to get on the housing ladder. Thus, we have had the changes to stamp duty for those purchasing additional properties, which of course mainly affects buy-to-let landlords, and from next year we will see a cut to mortgage interest tax relief over a three-year period from the higher rate to a flat basic rate.
At the time of writing, the 2016 Budget is just a few weeks away, and there is again the possibility that chancellor of the exchequer George Osborne will again determine that the growth in buy-to-let needs curbing, plus there is always the potential for further intervention, particularly in areas such as Help to Buy, building new ‘affordable’ homes and other measures which might support the government’s home-owning focus (see box below and page 4 of this issue).
As stated above, all this does mean that the conveyancing market has to have its wits about it when it comes to the work we carry out, and the potential changes that might be brought in. If you were looking at the pressures being brought to bear on firms, then you need only look at the stamp duty changes that are due to be introduced on 1 April.
Again, at the time of writing, these are just over a month away; however, the final rules for these changes are not due to be announced until the day of the Budget. This gives conveyancers a little over two weeks to, first, get their heads around these changes (and one can only suspect from the consultation paper that there will be a number of exemptions and some complicated rules to process) and, second, to be able to put them into practice and have systems, resources and employees ready to hit the ground running on 1 April. It is expecting a considerable amount of all conveyancing firms, especially at a time when demand for our services has grown significantly due to - not in small part - the fact that the stamp duty deadline was introduced and many purchasers are trying to get their transactions completed before they have to pay the extra 3% charge.
Recent news stories about the conveyancing market and its ability to deliver for customers pre-31 March tend to forget that traditionally this was always going to be a busy time of the year, ie, just before Easter, and that managing expectations, particularly for those purchasers who unfortunately are unlikely to complete before the deadline, can be a full-time job in itself.
The author comments on the Budget: Overall, we are slightly disappointed that the measures (in terms of the increase in stamp duty land tax for the purchase of additional properties) have not been watered down as we believe they will have a significant impact on the smaller landlord, in particular, who may now leave the private rental sector resulting in a widening of the housing gap. The true result of these measures, and their impact on overall housing market activity, remains to be seen but we suspect there will certainly be a tailing-off in buy-to-let purchases for some time to come.
All this is evidence, in just the first two months of the year, of how the environment that conveyancing firms work in is constantly changing and the demands placed on the sector continue to grow. It is perhaps no surprise, therefore, that the CA is seeking ways to ease the burden and help all stakeholders and parties work together to understand the conveyancing process far better. By doing this, we hope to cut out some of the, quite frankly, unnecessary delays that can blight the process for all concerned, and to also open up the communication channels between all parties to ensure that no one is labouring under misinformation or a misrepresentation of when actions are going to be completed.
To do this, part of the focus of the CA this year is to work, not just with our member firms, but also those other parties heavily involved in conveyancing. So, for example, we recently launched our progression training for both estate agents and mortgage brokers - not because we are suggesting that every agent or intermediary is clueless about conveyancing - but because, for some, there is a slight knowledge gap about the process, and understanding this will allow them to help their clients understand what the steps are through to exchange and completion, and perhaps also to iron out any potential bumps in the road before they are raised.
Our recent announcement of this course was met, in certain quarters, as a full-frontal attack on agents: a suggestion by some that we are blaming agents for delays, etc; however, nothing could be further from the truth. This is all about getting a smoother conveyancing process for all parties, but especially the client. If we can educate and inform those within the process about what is happening from a conveyancing perspective, we believe that we can get better outcomes for all.
The important point we are trying to raise is around managing the client’s expectations when a case begins; how it progresses; and the likelihood (or otherwise) of meeting their anticipated exchange/completion date. Those active in conveyancing will know that a case which looks utterly straightforward on arrival has every potential to be one which, after further work, brings up a whole host of questions. Our aim here is to help those who are charged with providing documentation, evidence, etc to be aware of why they are being asked for this information and the impact this will have on their case.
Alongside this, CA want to ensure that the conveyancing process itself is fit for purpose and 2016 will, again, be a year when we look to work closely with the lending community in order, hopefully, to get a more standardised approach to information requirements and the documentation needed. CA’s work across multiple lenders, which will all have their own unique requirements, means that we have a variety of service-related issues that differ depending on the lender concerned. Our aim here is to work with lenders to develop a more collaborative approach to conveyancing, and from this we believe that there will be considerable positive outcomes for all.
There are two further major projects that the CA will be working on throughout the year, which aim to deliver real benefits both to our members and all others involved in the process. First, is the continuation of our leasehold campaign, which is aiming to change negative leasehold management practices in order to ensure a fair outcome for clients, and, again, a quicker transaction process. To do this, we are actively promoting an adequate redress scheme for clients and a faster release of leasehold information.
Second, is our ongoing work in an increasingly important area: cyber security and property fraud. This is a fast-growing risk to the conveyancing industry, and we are supporting our members in tackling this evolving issue. To do this, we have brought together a number of experts across the cyber-security industry, who have inputted into a soon-to-be-launched protocol which will highlight best practice in this area. Our hope is that as more law firms adopt the new protocol, we will reduce exposure to fraud and, at the same time, provide a common-sense training tool which is accessible to all conveyancing staff.
All in all, therefore, 2016 presents both a challenging year for the CA - and also an exciting one - as we widen our remit and broaden our reach and membership. Growth in the number of firms under the CA umbrella is a further ambition, as we will be growing the number of our affiliate members. We recently announced eight new affiliates in separate conveyancing-related sectors, and we hope to announce more in the very near future. In the CA, the conveyancing market now has a trade association committed to supporting its members, but also encouraging higher standards and a continuing focus on communication and collaboration. These challenges will not be faced alone, and the more stakeholders work together, the stronger and more effective we will become.