Sales progressors have endured a hard time since the property market reopened in mid-May. An additional 200,000-300,000 sales, backed up from before and during the original lockdown, spilled out into property sales pipelines with such gusto that many of the traditional processes within the system have been overwhelmed or have at least creaked very loudly.
The timing of the lockdown is somewhat ironic because it comes as many are warning that parts of the conveyancing system are struggling to cope with the current volume of transactions.
Estate agency sales progressors have faced delays as all the professions and services that normally keep their sales moving along have struggled, including local councils, surveyors, lenders, brokers, removal firms and conveyancers. This has been a result of the extreme volumes funnelling through the system but also because many of these organisations furloughed or laid-off staff during the lockdown or have struggled to set up IT and phone systems for home-working staff.
“The timing of the lockdown is somewhat ironic because it comes as many are warning that parts of the conveyancing system are struggling to cope with the current volume of transactions,” says a Knight Frank spokesperson.
“That fact is unlikely to change and some parts of the system may come under more strain during this second lockdown.”
Talking to many of the players in this system, it’s clear that few, if any, predicted that the housing market would rebound so fast, or that so many buyers would react so strongly to Chancellor Rishi Sunak’s Stamp Duty suspension or ‘holiday’ for anyone buying property under £500,000.
On top of all that, everyone has also had to deal with the thousands of high-rise apartment sales that have been complicated or suspended by the ongoing cladding scandal, which has trapped some 500,000 people, preventing them from selling or re-mortgaging their homes.
In a nutshell, the system has been tested to its ultimate limit and has been found to be wanting. This has been particularly so for brokers, whether independent or working in branches, who have faced appalling waiting times to get through to lender to chase up mortgage applications.
Broker Daniel Lee, of Total Landlord Mortgages, caused a stir on social media by posting a picture of his office phone showing a two hour wait to get through to one lender.
Another broker, who didn’t want to be named, said it was taking at least 45 minutes to get through on a good day.
Miles Robinson, Head of Mortgages at online broker Trussle, also says the Government’s Covid ‘mortgage holidays’ are an extra drain on lender resources, who are having to move people away from underwriting to process hundreds of mortgage holiday requests many of which are as complicated as mortgage applications to process.
Mortgage holidays are an extra drain on lender resources, who are having to move people away from underwriting to process hundreds of mortgage holiday requests. Miles Robinson, Head of Mortgages, Trussle.
Conveyancers have been enduring verbal lashing both from agents but also industry commentators in the press and on social media.
So much so, the usually reserved Society of Licensed Conveyancers (SLC) and the Conveyancing Association (CA) issued a joint statement last month urging agents to understand that transactions are going to take longer than usual to progress and to “be patient”. They also highlighted that “continually chasing” conveyancers makes them less productive and indirectly is a further cause of delay in the process.
Simon Law, Chair of the SLC says that conveyancers are ‘stretched to the limit’ but that other problems are not helping. This includes councils struggling to complete local searches or provide data to personal search companies; lenders being swamped by demand, many of whom are now taking longer to supply offer letters; and valuers being under extreme pressure.
But David Jabbari of conveyancing giant Muve says that, while smaller high street solicitors may struggle with the overwhelming demand for their services since mid-May, the larger call-centre firms like hi have been able to cope.
“Capacity is no longer such a big issue,” he says. “Property solicitors and conveyancers have got their act together and specialists are emerging to support the industry. They have invested in people and technology and are able to ramp resource up and down to cope with demand.
Capacity is no longer such a big issue. Property solicitors and conveyancers have got their act together and specialists are emerging to support the industry. David Jabbari, Muve.
“Land Registry statistics show that the top 100 conveyancing firms by Land Registry volume, i.e. firms that have invested in technology and process management, have grown their market share.”
Proptech to the rescue?
Talking of tech, agents will not be surprised to hear that many proptech platforms claim to have the answer to the ‘capacity problem’ too.
One exponent is the youthful founder of ExchangeTrain, Alex Beagrie. He worked in estate agency in Surrey prior to setting up his proptech conveyancing platform and says he founded the business after realising that the system which enables agents to earn fees from conveyancing is fundamentally unfair to consumers.
The current set-up has served the industry well for decades, but home movers are now more digitally savvy and are looking for online support to help them. Alex Beagrie, Founder, ExchangeTrain.
“The current set-up has served the industry well for decades, but home movers are now more digitally savvy and are looking for online support to help them,” he says.
One of the best-funded outfits to try and speed up conveyancing, and who takes an opposite view to Jabarri on the conveyancing industry’s efficiency claims, is Dan Salmons, the CEO of proptech firm Coadjute. Backed by £4million of venture capital cash, it claims to be on the brink of a revolution for property sale in the UK.
“The UK property market has been demanding improved connectivity for years, and in a rapidly changing environment needs it more than ever,” he says. “We’ve spent 18 months developing our unique blockchain network in industry pilots and are now preparing for launch. Our new investors will marry up global reach and deep knowledge of both property markets and blockchain technology.
The UK property market has been demanding improved connectivity for years, and in a rapidly changing environment needs it more than ever. Dan Salmons, CEO Coadjute.
“Coadjute is now in a very strong position to offer the UK the first secure, open network set to revolutionise property sale transactions forever.”
Coadjute is now in a very strong position to offer the UK the first secure, open network set to revolutionise property sale transactions forever.
Conveyancers are understandably piqued that, along with lenders, they have been singled out for criticism.
Asked if Covid had impacted the performance of conveyancing professionals, a spokesperson at The Law Society responded, “There are many aspects of a conveyancing transaction that can be dealt with remotely or virtually. However, some clients lack the confidence and/or technology to be able to engage remotely or virtually with their solicitor and there are some procedures where lenders or others require that clients are seen in person.
“Where occupants or people who are not on the title as owners need independent advice, it is best practice usually for this to take place physically – although some requirements are being relaxed to accommodate the new circumstances.
There are many aspects of a conveyancing transaction that can be dealt with remotely or virtually. However, some clients lack the confidence and/or technology…
“Many aspects of identification can be carried out remotely although more investigations need to be made when there is no face-to-face interaction. “The use of electronic and digital signatures is developing at pace but at present most transactions do not use this methodology.
“HM Land Registry is now accepting witnessed electronic signatures and is working hard to further develop their requirements so that more conveyancers can use these methods of execution.”
Patrick Milne from the Land Registry recently highlighted the ongoing development electronic signatures within the conveyancing process which, when rolled out, will remove many of the delays. “So far electronic signature have only been employed to create ‘digital mortgages’ and only in very limited circumstances,” he said. “But we’re looking at how the existing legislation can be used for dispositions [e.g. sales contracts] generally which would be a big development.”
Milne says this would likely involve a digital, encrypted signature which would be a lot more secure than an electronic signature, because it would need the signatory’s identity to be verified at the start to a very high standard.
One thing is clear listening to all the experts interviewed here is that Covid has shone a very bright light on the weaknesses of the home selling process in the UK, so much so that it will – many agents are hoping – create a much faster and leaner system once the pandemic is over and normal market conditions return.