When the chancellor Rishi Sunak introduced the stamp duty holiday in July, he probably wasn’t thinking about Michael Caine inching his way down a bus teetering on the brink of disaster in the 1960’s classic movie, The Italian Job.
It seems many are fearing a similar cliff-hanger in March next year.
When the announcement was made, the SDLT abolitionists had a party while the thoughts of lawyers immediately turned to a potential collapse of the market in April.
But here we are, three months later and the petrol that Rishi threw on the property market fire is causing all sorts of delays to transactions. It does raise the question; how on earth are we going to get all these deals through?
Normal service isn’t being resumed
Early October is the traditional time when the thoughts of buyers and sellers turn to Christmas. Sadly, not with the anticipation of the latest John Lewis advert but whether everyone is going to pull their finger out and complete before their turkey gets delivered by Ocado to their new home.
Only this year, things are a little different.
Now the discussion is whether we can squeak deals over the line before the end of March 2021. SIX months away.
I know we’ve got Christmas in the middle of all this threatening to slow things down, but I doubt many businesses will be shutting early to enable people to spend more time at home. Judging by the number of divorce cases we are seeing, increased “quality family time” is the last thing some people want.
It does seem those worrying about missing that SDLT deadline could be over-reacting somewhat.
So what is going on right now?
Let’s be clear about this.
Deals are proving an absolute pain to get through at the moment and I believe the responsibility lies with the owners of law firms.
While cases have increased significantly – our pipeline has gone up by 150% since May – delays are definitely self-inflicted. I say this because, and heaven forbid someone accuses me of self-promotion, our deals are taking LESS time than last year – exchanges in September took on average 63 working days compared to 65 in 2019.
For those cases not exchanged yet, cases that started in June make up only 5% of our pipeline and have been running for an average of 73 working days. Cases started in July make up 17% of our pipeline and have been running for an average of 52 working days. Not brilliant but not sickeningly horrendous.
Other firms will admit they are not performing to the level they would like, and are blaming lenders and local authorities for the delays.
Unfortunately, this does not stand up to close examination.
Mortgage offers are taking longer – at least a month in many cases – but offers run in parallel with the conveyancing process. While it may delay reporting on the mortgage to clients and we are all wasting a lot time on hold to lenders, this doesn’t explain the glacial performance of many law firms.
According to our search provider, InfoTrack, the average time nationally for personal local authority searches in August was only 10.5 days. There are a couple that really do need to improve, for example, Tower Hamlets in London is running at about 25 days, but they are a minority.
What have lawyers been doing?
From interviews I have been having with lawyers, many are either furloughed or working from home in archaic conditions. For all the talk of the pandemic accelerating change, we see precious little evidence of this, with lawyers manhandling suitcases of files and only having basic remote access to network drives.
Although some small progress is being made with on-boarding clients, mistrust in technology continues to abound. Online articles typically generate comments from lawyers clinging to the view that innovations such as electronic signatures on deeds are somehow more insecure than a wiggly line on a piece of paper.
The other problem that we see is that remote working in conveyancing, even when paperless, is not as efficient as office working. We are constantly battling to speak to lawyers on mobiles and the support and infrastructure of the office environment simply isn’t there.
Finally, despite the large numbers of lawyers sadly being made redundant, firms are being highly cautious with recruitment, meaning that caseloads are much higher. This does introduce delays and is a difficult problem to address.
The fact that people are questioning whether current deals are at risk at not exchanging within 6 months is deeply depressing.
Owners of law firms need to step up and start investing in innovative technology and people. If they don’t have the confidence and ambition to do this, they need do the decent thing and shut their doors before they meet the same end as Michael Caine’s Minis.
Because, frankly, right now, we need all the exchanged cases we can get.
Published in Property Industry Eye: https://propertyindustryeye.com/opinion-you-were-only-supposed-to-blow-the-doors-off/