To say the housing market has surprised us all in the last year would be an understatement. We’ve seen prices increase at their fastest rate since 2014. We’ve witnessed a record average house price of £336,073 for England and Wales. And all of this has happened while the UK’s GDP (usually such a reliable barometer for how housing is set to the fare) has plummeted. 

However, nothing grows forever. Economists of all stripes agree that the housing market is due to slow down at some point between now and late 2022. Even the Bank of England, hardly know for its alarmist nature, recently described the market as “on fire” and “feeding inflationary forces.”

The question is, when? 

What Do the Figures Say? 

According to the Reallymoving House Price Forecast for May, the market’s stratospheric growth will continue for much of the summer. However, the forecast also predicts that the monthly rate of growth will dwindle to just 0.4% in August. 

Likewise, RightMove lists June’s growth of  0.8% as significantly smaller than May’s (1.8%) or April’s (2.6%). The online real estate portal has described this as an early sign that the past few months’ rapid growth may finally be slowing. 

Why September?

There are a couple of reasons why September is the most likely month for the slowdown to take effect. 

The first is the stamp duty holiday. Up until 30th June, stamp duty was only paid when the purchase price exceded £500,000. But from the 1st July, this threshold has reduced to £250,000 and will revert back to the standard cap of £125,000 on 1st October. So, all that considered it’s reasonable to describe September as the end of the stamp duty holiday (provided, of course, it isn’t extended again). 

This is important because, for many commentators, stamp duty has been a key driver of demand since the turn of the year. By September, most of this demand will have dried up and the holiday will be in its final few weeks, meaning anyone still thinking of buying by then will likely hold off.

It’s hard to predict exactly how the market will look once this booster is removed, but we can say with some certainty that it’ll be considerably less hectic. 

The second reason is something that doesn’t get enough coverage, but could prove very important. Ask any economist and they’ll tell you that household disposable income is a key factor in housing prices and demand. It’s a pretty simple equation: less disposable income, less people buying houses.

Throughout the pandemic, household income has been held relatively stable due to the government’s furlough scheme. In fact, so much so, that even when GDP took a huge hit household income stayed relatively stable. This could all change once the furlough scheme ends in September. 

According to research from Bristol University, a 1% reduction in disposable income has historically led to about a 2% reduction in house prices. So, even in the event the economic fallout from the end of the furlough scheme is small, we’re still likely to see some reduction in house prices and demand. 

Does This Mean a Crash? 

With everything we’ve covered so far, you could be forgiven for feeling a little nervous. Does this mean we’re heading for a 2008-style crash?

Not necessarily.There is a very pessimistic reading of our scenario which posits that the end of the stamp duty holiday will lead to a credit-driven housing bubble bursting spectacularly. In this scenario, the crash rips through the UK financial system and plunges us into another recession. 

If you’re feeling masochistic, this piece from the Guardian is an excellent introduction to how it could happen. 

However, as we mentioned, that’s a very pessimistic scenario. The optimistic view is house prices and demand drop slightly or flatten but this doesn’t lead to anything more serious. The market remains reasonably buoyant due to our changing working habits and the demand this creates for property outside of major urban centres. 

Which scenario plays out over the next few months is impossible to predict and making grand proclamations is probably unwise. However, it should be said there is still plenty of room for optimism. The housing market has proved resilient throughout one of the largest shocks in recent human history. Who’d bet against it doing so again? 

Although it was announced to little fanfare back in February, mid-June will mark two months since the government-backed 95% mortgage scheme launched.

Intended as a leg-up for ‘generation rent’ – that’s most people under the age of 40 – the scheme allows first-time buyers to purchase a property up to £600,000 in value with a 5% deposit. The scheme has been taken up by Lloyds, Santander, Barclays, HSBC, NatWest, and Virgin Money, all of whom have launched mortgages. 

The scheme is effectively a government-backed shot-in-the-arm for first-time buyers and lenders. Under the scheme, the government has committed to compensate the lenders for some of the net losses should a repossession occur. This guarantee applies down to 80% of the purchase value and is valid for seven years after the start of the mortgage. 

So far, so good. But does it really offer the lifeline the government promises? 

Yes

Let’s start with the positives. On a very simplistic level, yes, the scheme does offer something to buyers. It could make what Americans call ‘starter homes’ much more affordable for first-time purchasers.

Think of it this way. A young and aspiring twenty-something couple with a deposit of £10,000 could, in theory, purchase a property with a value of £200,000. In parts of the North East, North West, East Midlands, Yorkshire and Wales that’s enough to buy you a decent home. Even in the far pricier south, a £20,000 deposit would be enough for a £400,000 property.

Both of these figures would still require years of gruelling saving, help from mum and dad, or some form of inheritance for most first-time buyers. However, it is much more achievable than the traditional 10 or 15% new homebuyers are used to being quoted. 

For lenders and the conveyancing industry, the scheme has virtually no downsides. Lenders can appeal to a segment of the market they’ve long struggled to attract – with all the risks covered by the state. And, conveyancers, get an influx of new instructions from the bottom end of the market to complement those at the top end purchasing due to the SDLT break.

But is the scheme all it seems? 

No

Unfortunately, as regular readers of this blog will have anticipated, there is a catch. While the scheme is commendable in its intent, it also has a few glaring flaws.

The first and most obvious problem concerns housing stock, or the lack thereof. Offering affordable homes to first-time buyers is a nice idea.  However, without the housing stock to back it up, it remains just that. Government estimates put the number of new homes needed in England at up to 345,000 per year. The total number built last year was 244,000 – a 1% increase from the year before, but still a huge shortfall. 

That leads us on nicely to our next point, another problem with the scheme is house prices themselves. As we’ve already mentioned, a 5% deposit is much more attainable than 10 or 15%, however, that largely depends on where you live. As of January 2021, the average house price in inner London is £514,000. That requires a 5% deposit of £25,000 – still a huge sum for many twenty and thirty-somethings already paying out a large portion of their salaries in rent. 

And then we come to the issue of ‘value not price’. Borrowers should be aware that when a lender offers a 95% mortgage, they are doing so on the lender’s valuation, not the price. To give an example, a borrower could purchase a house for £250,000 but, if the lender’s survey values the property at £240,000, it’s down to the buyer to find the extra £10,000. Admittedly, the scheme hasn’t been running long enough for us to assess how common these disparities are, but it could pose a tricky barrier to entry for new buyers. 

The last major problem with the scheme is that it isn’t recession-proof, as the government won’t cover lenders or buyers should the property slip into negative equity. That might sound pessimistic given the current buoyancy of the market, but it doesn’t hurt to guard against any eventuality. This is particularly true when it comes to first time buyers, many of whom won’t have the capital to weather another economic downturn. 

The Scheme Must Go Further 

What conclusion can we draw? Is the scheme a rip-roaring success or floundering dud? 

Well, it’s a little of both. On the one hand, any support for first-time buyers is welcome. It’s too early to assess how many buyers will take up the offer, but it should help some at least. What’s more, for those living outside of high-value areas it does represent a decent leg-up into property ownership.

On the other hand, the scheme is unlikely to help anyone living in expensive cities like London. And, until the lack of housing stock is addressed, this isn’t going to change. At the moment the scheme feels a little like a sticking plaster applied to a gaping wound; it’ll doing something to help but not nearly enough. 

So what needs to be done? 

Schemes like the 95% mortgage must be rolled out in conjunction with building more homes to be truly effective. At the same time, something needs to be done about spiralling living costs and stagnant real wages in the UK. As it stands, the bar simply isn’t low enough for many people under the age of 40 to even consider owning their own home. And until these problems are addressed the affordable housing crisis will continue, no matter how generous the mortgages on offer. 

Is the ease in lockdown restrictions just the tonic the property market ordered? On the face of it, it looks like the answer is a resounding yes. At the time of writing, new vendors have surged to 67% above the April average, 242% higher than during lockdown last year and 56% up on 2019. 

But is something else at play? Could the sudden swell in transactions be down to the UK government’s extension of the stamp duty land tax (SDLT) holiday? Or, is it down to a very auspicious combination of the two? 

Lockdown easing 

Things are beginning to feel like something approaching ‘normal’, aren’t they? Whether it’s being able to see your family after months apart, engaging in some retail therapy, or just the simple pleasure of a swift pint at your local, many of the little things we call ‘everyday life’ are on their way back.

The same appears to be true for the property market. According to the latest data from the Yomdel Property Sentiment Tracker, the week directly after the Easter break saw a glut of new vendors pile into the market in anticipation of the ease in lockdown restrictions across the UK. 

Online activity has been unusually high, with Yomdel recording the numbers of people visiting estate agents websites at 184% higher than the second week of lockdown in 2020, and 34% higher than the equivalent week in 2019. At the same time, new vendor enquiries leapt up some 40% and buyer enquiries rose 17% to their highest level since late July last year. 

The simple explanation for these numbers is that after biding their time through months of uncertainty, both buyer and seller confidence is returning to the market. People feel safe not only visiting properties or allowing prospective buyers into their home but also in starting the lengthy process of a housing transaction. 

However, the property market is rarely simple and there’s another factor we need to consider. 

SDLT holiday 

Last month saw a bout of ‘March madness’ as many homebuyers desperately scrambled to meet the SDLT holiday deadline on March 31st. Data released by HMRC last week reveals that
March 2021 had more than double the number of transactions of the same time last year for England, and almost the same for Wales.

In England, transaction figures hit 155,080, compared to the 74,490 in March 2020. For Wales, the total for March reached 8,170, close to double the figure for 2020.

We’re yet to see figures for April, but we’ll likely see more of the same. Chancellor Rishi Sunak has extended the stamp duty holiday until the end of June 2021, with plans to taper its eventual wind down until the end of September. Many vendors and homebuyers who would have put transactions on ice for fear of missing the March deadline are now likely to pick up where they left off, potentially driving figures higher still throughout April and May. 

A combination of the two?

So which is it? Is the property market’s current purple patch being driven by the SDLT holiday or easing restrictions?

The truth is, it’s probably a little of both. The SDLT holiday has undoubtedly turbocharged the market as buyers clamour for the best possible deal. However, none of this would have been possible if people didn’t feel safe, both financially and physically, engaging in a transaction.

It’s probably best to see the current moment in the conveyancing industry as something of a perfect storm. Two equally important factors have coalesced at just the right time to create very favourable market conditions. 

But like any storm, present trends do have the power to be destructive…

A note of caution 

For all the optimism about the market, it wouldn’t be this blog if we didn’t conclude on a cautious note. And unfortunately, there are a few things to be cautious about.

First, is what happens when the SDLT holiday does finally come to an end. From late May onwards, transaction volumes could begin to dwindle as the impact of the holiday on demand slows. Current activity is predominantly driven by buyers with high levels of housing equity, most of whom will have taken advantage of the SDLT holiday by the end of May. 

Meanwhile, for the average buyer, and those just entering the market, June will come far too soon for them to take advantage of the higher threshold. This could lead to many buyers holding fire on making a purchase. Add to this that the UK has a chronic shortage of housing stock and ongoing uncertainty caused by the pandemic, and it’s not hard to foresee a scenario in which the last few months’ activity turns out to be little more than a mini-bubble. 

It’s to be hoped that what we’re seeing are the green shoots of a full-scale recovery. However, as long as economic uncertainty prevails it’s worth approaching even the most fantastic transaction figures with caution. 

A local authority search is the most common search required when purchasing a property. It provides a cross-section of all the information held by the local council about your property, including:

• Local Land Charges Registrations (LLC1)
• Any planning permission granted, refused or pending

• Building control regulations
• Public use of the property’s land
• Highways information
• Road schemes near the property
• Rail schemes near the property
• Radon gas 
• Whether the property is part of a conservation area
• Contaminated land

If your purchase is funded by a mortgage then, in most cases, you’ll need to get a local authority search as a condition of lending. In the same way that you wouldn’t be thrilled to discover your new home has subsidence problems, lenders need to know about anything that could impact the future value of the property.

There’s currently no obligation for cash buyers to get a local authority search done. However, it’s strongly recommended you order a search regardless of how you’re funding the purchase. After all, no one wants to move into a new home only to discover there’s a public right of way through the garden or the property is built on contaminated land. 

What’s the Difference between Regulated and Official Searches?

An official regulated search or OLAS is compiled by the local land charges department at the council. A regulated search uses the same data but is compiled by a search agent or company (like PIC). The information contained in a local authority search is public record so, in theory, anyone could compile one but you need to know what you’re looking for and where to look.

The Case for Official Local Authority Searches 

It was once the case that OLAS were the preferred version of local authority search for most mortgage lenders. And, although most now accept or even prefer a regulated search, there are still some lenders who insist upon buyers purchasing an official search. 

The reasons for this go back a long way. Up until the early twenty-first century, there was a perception that regulated searches were unreliable or somehow ‘less valid’ than a search carried out by the council. The price also has something to do with this. OLAS are typically more expensive than regulated searches, so it was easy for many to assume that higher cost meant higher quality. 

Alongside this, some felt OLAS offered greater protection should anything go wrong. The local authority is held liable for any losses incurred as a result of a search being completed incorrectly.  And this led to the assumption that it would be far simpler to make a claim in the event of an error. 

Thankfully, this mindset has changed and, as we’ll see, there are plenty of reasons why purchasing a regulated search may be the best fit for you. 

The Case for Regulated 

The rise of regulated searches can be traced back to one thing: local authority turnaround times. Regulated or (as they were formally known) personal searches first appeared on the scene back in the 1980s. At the time, some local authorities were taking weeks or even months to return a search, causing hundreds of aborted transactions. 

Regulated searches have always been faster and more cost-effective, due to the smaller workloads managed by search agents and the fact they can focus on just compiling searches. However, in the past, they weren’t always as reliable as they could have been.

That’s no longer the case. The regulated search industry has its own trade association and regulatory body, COPSO. As a result, any report carrying the COPSO watermark comes with assurances that it’s of equal, if not higher, quality than any official search. 

But it’s not just the quality of regulated searches that has improved. Most search companies now offer PI insurance as a standard bolt-on for every regulated search. For example, at PIC, all our regulated local authority search reports carry £5 million of insurance coverage. There’s no need for a protracted court case with the local authority or a battle to prove liability. Instead, you know you and your property are covered.

As we mentioned earlier, regulated searches also tend to be quicker than OLAS. Search agents aren’t trying to do several jobs at once and we can offer flexibility and prioritise urgent jobs in a way that councils can’t. What’s more, with a smaller workload and, in many cases, better resources a search agent can take the time to answer any questions you have and keep you updated every step of the way. 

And then, there’s the cost. Depending on where you are in the country, your local authority could charge anywhere between 2 and 3 times as much as a search company. It’s worth pointing out that this is still exactly the same search, it just costs more money. Search agents, on the other hand, will usually charge a flat fee no matter where you are in the country, so there’s no financial penalty for living in an expensive local authority. 

To draw some sort of conclusion, the search you choose will likely come down to your lender, but there are plenty of reasons to go regulated. If you do, always look to work with a reputable agent and keep an eye out for companies that are COPSO affiliated and offer insurance with each search. 

If you’d like to know more about conveyancing searches, please get in touch, we’d love to hear from you. 

Regardless of your political loyalties, it’s hard to deny that the UK has a housing shortage. A 2019 report from the National Housing Federation estimates that Britain needs 340,000 new homes every year, including 145,000 social homes, to meet the housing demand.

However, underpinning the UK’s housing crisis is a seldom-covered secret. While new houses are needed, Britain currently contains hundreds of thousands of unused residential and commercial properties – a trend that’s only been accelerated by the COVID-19 pandemic.

How has this happened? And what will happen to Britain’s ghostly cityscapes of empty high streets and residential developments?

Residential property 

The huge number of empty residential properties in the UK is surprising. After all, we’re often told we’re in the midst of a housing crisis and this conjures up mental images of a residential sector bulging at the seams. 

However, as of September 2020, 268,385 properties in England have been left empty for more than six months according to government research. If we dig a little deeper into this figure, we turn up some truly mind-boggling statistics. For example, in the London Borough of Camden, 

9,595 homes remain out of regular use, accounting for one in 12 properties in the borough. What’s more, the latest figures represent a 20% increase on 2019 with over 40,000 more homes being left empty.

So why is this happening?

Well, while it might seem like madness to many of us, there are several reasons why a residential property may not be rented or sold. 

Let’s start with the simplest. One of the most common reasons a property is empty is because the owner can’t raise the capital to do the property up to let it out or sell. Many of Britain’s empty homes are in varying states of disrepair and, for the owner, renovating may outweigh the returns they’re likely to receive in rent or by selling the property. 

Take, for example, properties in former industrial heartlands and coastal towns. Towns and cities like Portsmouth, Middlesborough and Hartlepool consistently rank among the highest for empty homes. The equation is simple; renovation costs are high, while house prices and rents are low in comparison with other parts of the country. This offers little incentive for landlords to do the work needed to make the properties habitable.

The same is true of council-provided social housing. The public sector has spent much of the last 15 years battling one form of austerity or another. And slashed budgets have made it difficult for local authorities to allocate the funds needed to renovate dilapidated post-war social housing. This means that the properties either stand empty, decaying further each year, or the land is sold off to private developers who then use it to build new complexes with minimal social housing. 

These problems in social housing and rental properties are coupled with issues at the 

top end of the market. Take a look at the skyline in any major city and you’ll see plenty of gleaming new-build apartments. From luxury flats in converted offices to bijou maisonettes in former industrial buildings, redevelopment has become the watchword in our biggest cities. The only drawback is that many of them are empty. 

There are a few reasons for this. Many of these ‘investment’ properties are simply too expensive for locals to buy or rent. And those who can afford to buy will often pay a premium for an unused apartment, so it makes sense to leave the property empty until the ‘right’ buyer can be found. Even if an investor is interested in letting it out, the costs involved such as wear and tear and administration can outweigh any money made in rent. 

Another reason for empty properties is the nature of many of the investors behind the developments. For some time now, property in Britain’s major cities (London in particular) has been seen as a risk-free investment for foreign capital. For these investors who live outside the UK, simply owning a chunk of London real estate is the ultimate aim. The social utility of the property doesn’t come into it. 

Commercial property 

While it’s happened much more quickly than on the residential side, the commercial sector is going through its own ‘empty buildings’ crisis. 

The High Street is in terminal decline, leading to a glut of empty retail space in our towns and cities. For instance, the collapse of retail giants Debenhams and Arcadia (Topman, Topshop and Dorothy Perkins) alone has led to 15m square feet of space appearing in the commercial rental market. And with many brands moving operations online, it’s not clear where tenants or buyers will come from. 

At the same time, COVID-19’s impact is being felt well beyond the high street. Many businesses were forced to adopt remote working last March and, for some, it’s sparked the realisation that they can do away with some or all of their physical office space without impacting productivity. Of course, we’re unlikely to see businesses stop using commercial spaces completely – meeting spaces will still be needed – but things have changed. 

This leaves commercial landlords with a big problem. What to do with the sudden surplus of office space, when it’s likely demand will never return to pre-pandemic levels?

What should be done? 

Perhaps not surprisingly, the answer to solving the UK’s empty property crisis is as complex as the problem itself. 

For residential properties, something needs to be done to incentivise owners and investors to bring empty units onto the market. Solutions could include grants for renovation, tax cuts, or, at the other end of the scale, state-led requisition and compensation schemes to bring the stock into public ownership. However, these solutions depend on proactive government intervention on both a national and local level – something that has long been lacking. 

Alongside this, legislative action needs to be taken to ensure that properties in high-demand areas are purchased as homes and not, as Boris Johnson once termed them ‘blocks of bullion in the sky’. Such a scheme could include buy-to-let properties. What’s important is not the ownership of the property per se (although, making housing more affordable should be part of the goal) but that someone actually lives in it. 

Similar action also needs to be taken in the commercial sector. The high street as we know it is gone and so too is the traditional office. So it’s time to consider alternatives. Former retail property could be transformed into community spaces or incubators for small businesses. Office space could be given over to charities, food production or residential units. 

A great example of this in practice is the ‘Preston model’. The experiment in ‘community wealth building’ saw Preston council work alongside local businesses to transform a dilapidated city centre into a place voted ‘the best place to live in the North West’ in five short years. 

It might sound idealistic, but initiatives like the Preston model are exactly what we need if we’re to end the UK’s crisis of empty homes and high streets. Change won’t be easy or fast. But, the alternative is to ignore the problem and hope forlornly that the supply of new homes can one day catch up with demand. 

We already have enough empty properties to home thousands of people, let’s use them. 

One of the few silver linings of the last year has been the resilience of the housing market. Despite predictions of a major slow down or even a crash, the sector has rebounded with a speed that’s surprised us all. 

What consultancy Oxford Economics has called ‘a very peculiar housing boom’ has so far relied on a perfect storm of favourable factors. These include typical home buyers (often middle-aged and financially secure) being less likely to lose their jobs, foreign capital continuing to flow, pent-up demand following the first lockdown, and the stamp duty holiday unveiled by Chancellor Rishi Sunak back in July 2020. 

This has allowed the UK housing market to remained relatively insulated from the travails of the wider economy. And even post some frankly astonishing figures, such as the Nationwide building society’s October report which revealed an annual price growth rate of 5.8% – the highest in six years. 

However, a central plank of the market’s recovery is set to be removed in just over a month. March will see the end of the stamp duty holiday and, as yet, there are no plans to continue it. So, what does this mean for the market? Can we expect it to remain buoyant? Or are we set for another fall? 

The Case for a Crash 

Unfortunately, we have to start by looking at the worst-case scenario. The sudden removal of a policy that has provided a fuel injection to a flagging market could spark a collapse in house prices.

The problem is that, although the end of stamp duty alone probably isn’t enough to cause a full-scale crash, when combined with other factors it might. The UK has rising unemployment, economic uncertainty, and a falling population in London. And all of these things are also likely to reduce the number of potential homebuyers and put the squeeze on demand.

In particular, the 700,000 people to have left London since the outbreak of the pandemic is a real worry. Many of these people are young, EU nationals who – due to Brexit – aren’t necessarily going to return once COVID-19 is brought under control. These people along with their British-born counterparts (who due to the normalisation of remote working also have less incentive to return) are crucial to London’s rental market. 

Without them, we could see a glut of former buy-to-let properties being put on the market as the renting loses its allure for landlords. This, in turn, would drive prices down across the board.

When you combine this with unemployment and the end of the stamp duty holiday, it suddenly looks like another perfect storm gathering – only this one could crash the market instead of saving it. 

Reasons to be cheerful 

Now, for some reasons to remain upbeat. First, the current Conservative administration has a penchant for last-minute decisions on crucial fiscal policy, especially when there’s public pressure involved. For evidence just look at the U-turns on extending the furlough scheme or free school meals. Even if at the moment an extension of stamp duty exemptions looks unlikely, that might not be the case come March.

Alongside this, although we’re almost going to see some drop-off, many, many things have to go wrong for a full-scale crash. For the market to really be in trouble, we’d need to see home buyers facing severe difficulties paying their mortgages. This typically happens for two reasons: an increase in interest rates or large-scale job losses amongst the middle-aged and middle class. 

With interest rates at record lows, the former is very unlikely. As for unemployment, it is true the UK is facing a crisis. However, thus far, job losses have mostly been confined to hospitality and service sectors, both areas of the economy that typically employ young and disadvantaged people who aren’t likely to purchase a house any time soon. Whatever this says about our society (and it is damning), it at least provides some hope that homebuyers, who typically have excess capital such as savings, might emerge relatively unscathed. 

Finally, while it might not look like pretty right now, would a slowdown leading to a drop in prices be the worst thing for the market long-term? It could offer a way into the lower end of the market for first time buyers and, in time, push demand back upwards a little more fairly. Perhaps a slowdown in 2021, painful though it might be, is the correction the market needs to return to better health in 2022.

For now, we wait to see what the Ides of March bring. 

Depending on where you live in the UK, the last few days have either been a long-awaited chance to see loved ones, eat in a restaurant, and engage in some retail therapy or the beginning of another long period inside. 

But while we’re all aware of the social and personal costs of the government’s new COVID-19 tier system, there’s been less written on its impact on individual sectors of the economy (outside of retail and hospitality). And you’ll find even less information on what it means for conveyancers.

We’ve discussed COVID-19’s likely effect on house prices and market activity in previous blogs. This is largely because it’s far easier to find data at the macro level of the market. A simple Google will tell you most of what you need to know. 

However, conveyancing has always been a business dependent on speed So, this week, we’re looking at the possible effect of the new tier system on turnaround times. And, because this can either mean the time local authorities and search providers take or transaction times themselves, we’ll take each in turn. 

Local Authority Turnaround Times

The speed local authorities can turn around official searches has always been highly variable. For example, if you’re moving within Boston Borough Council’s catchment, your local search can take up to 34 working days, whereas if you’re moving to York it’ll take just one day. 

Even within a single city, lead times can fluctuate wildly. If you’re moving to Hackney, it’ll take on average 141 working days to get a completed search. But if you’re heading west to Hammersmith it’ll take less than a tenth of the time.

While it might be frustrating for homebuyers and anyone involved in the conveyancing process, it’s sadly a natural part of working alongside public sector bodies. Local authorities have different levels of funding, workloads and staff numbers. Hackney Council could be dramatically slower than Hammersmith for any number of reasons. But it’s due in part to it being one of the largest London boroughs and the site of rapid redevelopment – stretching the staff at the local land charges. 

COVID-19 simply exacerbates the inequality between local authorities, many of whom will have had to furlough staff or adopt remote working, not ideal working conditions for any organisation. And things are even harder for those councils in tier 3 areas who are subject to tighter restrictions. 

Local authorities such as Liverpool, Leicester and West Lancashire that currently complete searches reasonable quickly are likely to see a slowdown while under restrictions. Again, this could be for several reasons. For instance: staff shortages due to furlough and sickness or attempting to fulfil their search obligations remotely with all the technical problems that entails.  

Personal or regulated search businesses may be able to pick up some of the slack. We’ve long been lauded for our ability to pull rabbits from hats and turn searches around faster than local authorities. What’s more, at least some of the information is held digitally by the Land Registry, removing some of the need to go to the local authority. 

Nevertheless, without proper access to local authorities’ CON29 data, it’s tricky. So, expect delays in some areas to worsen until early 2021. 

Search Providers

What about all the other searches that go into the conveyancing process? Water? Coal? Subsidence? 

Well, although we won’t name names, much like local authorities some of the businesses who produce these searches are struggling. Some are in areas with stricter lockdown measures preventing staff attending the office. Others have staff shortages due to furlough schemes or, in the worst cases, redundancies. 

Naturally, these conditions lead to slower services and delays. We’ve yet to encounter delays on the scale seen at local authorities, but it’s clear some businesses are having a tough time of it. 

Transaction Times

Finally, let’s take a look at overall transaction times. 

Interestingly, transaction times have been providing conveyancers with some all-too-rare good news during the pandemic. Lead times have slowed, Investec, HSBC and Santander have all reported delays. And, as a spokesperson for the Building Societies Association (BSA) told Today’s Conveyancer: 

“Clearly resource management amongst all parts of the chain has been key – particularly as everyone has been impacted by the number of staff who need either to self-isolate or who are unwell because of the virus. Buyers and sellers contracting the virus or needing to self-isolate have also been a factor.”

However, delays have been small, usually in the region of 1-4 days on average and the outlook is getting brighter by the day. Many of the same banks and building societies we mentioned earlier are now reporting improvements, with some even stating lead times are within the normal range. 

There are understandable concerns about the impact of the new tier system on lead times. Conveyancing has always been a bit of a postcode lottery, with the time it takes to complete heavily influenced by where you’re moving to. And the pandemic has indeed worsened some of the industry’s existing problems. 

But despite this, the industry has managed a once-in-a-generation disruption far better than many would have predicted. So, with a vaccine just around the corner, perhaps we should view the tier system as one last hurdle to clear before normality can resume. Of course, delays are inevitable and it may well take some local authorities until summer 2021 to clear their backlog, but the future suddenly looks much more hopeful.

Are you feeling a sense of Déjà vu yet? 

As England returns to a nationwide lockdown, many of us are returning to our hastily prepared desks in the spare room and heading back in time to March 2020. But, rather than a temporary inconvenience, is our current situation a foretaste of what’s to come? Could remote working be the future of conveyancing?

The Case for Remote Working 

Let’s start by asking another question. How much of the conveyancing process really needs to be conducted in an office? 

Since midway through the last decade, the industry has been slowly – and at times painfully – been moving towards a digital future. On the lawyers’ side, the first electronic mortgage was completed back in 2018. And, while digital mortgages aren’t due to become compulsory anytime soon, it’s not hard to imagine them being used more widely in the future.

What’s more, despite concerns about compliance, electronic signatures are well on the way to being commonly used. Transfers of land and charges must be made by deed. In other words, they need to be signed, witnessed and attested. So, naturally, many conveyancers worry about how they can be compliant with the legal requirements for execution remotely. 

However, this hurdle can be cleared using the government’s ‘Verify’ service – an online application that checks identity. It’s the service you used if you’ve ever applied for a driving licence or passport online. It works by an individual signing up to an account with a government identity provider before having their identity verified against credit agency or mobile phone provider data, a process that takes 5-10 minutes. 

Services like Verify remove the need for conveyancers to meet clients and witnesses in person, without the compliance risk this would usually entail. 

But it’s not just conveyancers who are benefitting from new technology. The Land Registry began its process of digitising and centralising the LLC1 back in 2018. And, although the process has been fraught with difficulty, eventually, search agents will be able to access instantaneously LLC data online – removing at least some of the need to visit local authorities in person. 

What Needs to Happen to Get Us There? 

So, if much of the infrastructure for remote conveyancing is already there, why is the industry much the same in 2020 as it was in 2010? Well, unfortunately, there are still a few vital missing pieces.

Digitise the CON29 

This one’s pretty glaring. From a search agent’s perspective getting LLC1 data digitally from the Land Registry while still having to source CON29 data from a local authority, actually makes the process more difficult. Admittedly, some councils offer the CON29 digitally, but many more don’t. For search agents to work from home permanently, all data needs to be accessible digitally and preferably from one central source. 

Improve Trust 

For all its strengths, the legal sector has never been one for rapid innovation or embracing change quickly. So while digitised processes like electronic mortgages and signatures are now a reality, until there is widespread trust in them they’ll never be fully adopted. More needs to be done to demonstrate to the industry as a whole that tools like Verify are not only safe and reliable but also convenient.

Alongside this, there’s an urgent need for government legislation to clarify the legality of many of these tools. Doing so would be a major step towards the whole industry embracing remote working.

More Technology

Although progress has been made, the tools required for real digital conveyancing are still in their infancy. If one of the greatest concerns about electronic conveyancing is security, then it stands to reason that’s it’s this area which will need to see the most rapid developments. We’ll need tools like biometric or retinal scanning and a whole host of anti-fraud measures if electronic conveyancing is to take off. 

Get Buyers Onside  

In much the same way as the legal industry, buyers will need to fully trust the process before they use it. After all, no one wants to risk the biggest investment of their life on processes and technology that’s still in its beta phase.

 It’s a bit of a chicken and egg scenario. Conveyancers can’t iron out the wrinkles in digital processes without real transactions to test them on, but buyers won’t use the technology until they’re confident it’s safe. As with conveyancers, the key to building confidence among buyers is a strong, clear signal from the government, most likely in the form of legislation or a campaign.

Meeting these requirements could take a couple of years or a decade. Fully digital conveyancing is probably inevitable, but it’s a question of appetite for change – does the industry have it? And will the government stand behind new technology to build trust? If not, could COVID-19 and the sudden need to do things differently provide the catalyst? 

We’re about to find out. 

We’ve talked a lot recently about the UK housing market’s seemingly miraculous immunity to COVID-19. But in case you’re unfamiliar with what’s going on, the story is as follows. Unlike the wider economy, which is currently in the throes of a potential double-dip recession, the housing market is flourishing. 

Data from the Royal Institute of Chartered Surveyors (RICS) shows buyer enquiries recovering strongly in July which, due to transaction times, is positively influencing sale prices in September and early October. Meanwhile, Google search data reveals that as recently as early September, buyer interest remains well above pre-pandemic levels. 

This has led many commentators, including the Bank of England, to label the phenomenon a ‘V-shaped’ recovery. But can the recovery last? Or are will the housing market eventually succumb in the same way the labour market and wider economy has? Let’s look at the case for continuing recovery and the case against.   

Yes 

Perhaps the best indicator that the recovery could be here to stay is that current activity isn’t being driven by backlogs. It was easy to put the initial bounce in activity we saw in the summer down to the pile-up of incomplete transactions from earlier in the year. However, even the most sluggish of transactions in the backlog would have completed by early August. After all, the housing market reopened in May. 

Yet, the housing market continues to surprise. The building society, Nationwide, reports that UK house prices hit an all-time high in August. What’s more, Zoopla announced that the number of sales agreed in August were 76% above their five-year average. This, coupled with the Google search data we mentioned earlier, appears to point to a positive outlook for the rest of the year. 

There could be several things driving these impressive numbers. It could be lockdown-induced itchy feet from buyers in smaller properties. Or maybe it’s down to middle-class urbanites taking the chance to move out of major cities as the switch to remote working continues (as we covered recently ). Perhaps it’s simply a case of those with capital seeking to invest in property – always seen as a safe option in a downturn. 

Or maybe, just maybe, we’re headed for a fall. 

No

Sadly, it’s time for some gloom. We know you’ve probably had enough to last a lifetime but, for the sake of balance, we need to cover why the V-shaped recovery could turn out to be a W.

In a w-shaped scenario, the peaks we’ve seen throughout the summer begin to gradually decline as we hit mid-to-late autumn. The theory goes like this. As pent-up demand for housing begins to subside, the housing market will begin to rely on ‘underlying’ demand. Or, to put it another way, the demand that isn’t being driven by delayed existing transactions from earlier in the year. 

Most commentators think this underlying demand remains weak. Add this to conditions that include a weakened economy, tight credit conditions, mortgage lenders nervous about the future, and the end of stamp duty, and you have all the conditions for price stagnation in 2021. And this is before we even consider the dreaded ‘B-word’ and its potential effects on the housing market. 

Some housing market experts have been predicting this for a while. JLL, the American commercial real estate services company, has long suggested that the UK could see an 8% drop in house prices by the end of 2020. Business management consultants, Capital Economics, go even further – predicting a year of stagnation in 2021. 

Nevertheless, there is an upside to all this. The more eagle-eyed among you may have realised that for market activity to form a W, we need an upward trajectory once the decline and/or stagnation ends. 

If we zoom out for a moment and look at the bigger picture, one of the longer-term effects of the COVID-19 has been to transform the way we all think of the workplace. It’s also very likely that these changes will be permanent. In short, many of us are going to be working from home (at least some of the time) from now on. 

As we’ve already seen on a smaller scale with wantaway Londoners, this has the potential to trigger a structural increase in housing demand. Many people will be looking at the four walls they’ve spent much of the last year within and decide it’s time for a change – whether that’s buying a first home, moving out of the city or just moving somewhere a little bigger.

Of course, for this to really take off, confidence in the economy, labour market and housing will have to return. This will take time, and could mean a tough year for conveyancers, but the green shoots of a potential recovery are already there.

So, conveyancers take heart. A W might not be quite as promising as V, and things might have to get worse before they get better, but both lead to a recovery in the end. 

A recent poll conducted by the London Assembly Housing Committee reveals that one in seven Londoners (14%) want to leave due to the COVID-19 crisis. Could we see an exodus of buyers to the home counties and beyond? And, if so, what does this mean for house prices and the market?

Let’s picture a scenario. 

It’s a normal Monday afternoon, sometime in 2026. You’re heading home from the office after a long day. A COVID-19 vaccine was found a couple of years back so, although you’ve never returned to the office fulltime, you head in once or twice a week.

On your way into the station, you pick up a copy of The Evening Standard. The front page screams ‘London property prices fall for the fourth year in a row’. You’re headed back to your newly purchased home in one of London’s trendier boroughs, let’s say Hackney or Southwark.

Just a few years ago, purchasing a house in this part of town was an improbable dream for all but the wealthy and those fortunate enough to have inherited money. But that’s all changed. 

Your area is now full of new homeowners. Young professionals. Families. Lifelong Londoners. The bad old days of ordinary Londoners being forced into decades of precarious renting have passed. The city is one again a place where people can settle and put down roots.

As a result, local communities are thriving. Your neighbours recognise you on sight. People smile at you in the street. 

Commentators put London’s transformation down to two things. First, the exodus of middle-class professionals to Kent, Hampshire, Essex and beyond in the wake of COVID-19. Second, the falling demand for housing this caused and the corresponding drop in prices, making housing more affordable for those that stayed. 

Sounds fanciful, right? However, if the last few years have taught us anything, it’s that what seemed impossible a decade ago is today’s reality. So, could it happen?

The Case for Falling Prices 

The case for falling house prices is a simple one. The COVID-19 crisis has caused the UK economy to contract 20.4% in the second quarter of 2020. This followed a 2.2% contraction in the first quarter. And, where the economy leads, the housing market isn’t far behind. 

JLL, the corporate real estate services company, has predicted an 8% fall in property prices for 2020. Meanwhile, according to the Royal Institute of Chartered Surveyors (RICS) London house prices continued trending downwards, even during the easing of lockdown measures between July and September. This makes London the only region across the UK to still experience price falls. 

At the same time, there’s been a near-universal shift to remote working in white-collar jobs. This has led to many middle-class professionals (who make up a large proportion of London’s homebuyers) considering whether they need to live in London at all. After all, why live in London when you could do your job anywhere and get considerably more for your money elsewhere?

The number of job seekers wanting to leave the capital more than doubled in June,  according to the Escape the City careers advisory service. This has been mirrored by a doubling in the number of buyers registering outside of the capital throughout the summer. 

The theory goes that economic contraction and an exodus of the middle classes work in tandem to create a fall in demand for houses, particularly at the lower end of the market. In turn, this leads to a drop in house prices, making housing more affordable for first-time buyers. Eventually, you end up with a scenario like the one we explored earlier.

It’s a crude theory, but certainly not impossible. What about the case against? 

The Case Against

Although the idea of London becoming an affordable city to live in might be a nice one, it’s also very possible this lull in growth is temporary. 

Many analysts are predicting a strong recovery in the London housing market as early as 2021. Estate agents, Knight Frank, forecasts that London house prices will jump 6% next year. Meanwhile, their competitor, Chestertons, predicts growth for inner London between 3% and 4%. There are a few reasons why this could provide a more realistic picture. Let’s take each in turn. 

Firstly, the sheen might have worn off living in London during COVID-19, but the city remains one of the most desirable in the world. Were a vaccine to be found for COVID-19, London would quickly return to its role as the cultural and financial epicentre of the UK. With London back in business, pre-COVID demand and prices would quickly follow.

Second, we may not yet have seen the full effect of either the Stamp Duy Holiday (which doesn’t expire until March 2021) or conveyancers clearing their backlogs in the capital. 

Lastly, the role of foreign capital in inflating London prices can’t be ignored. Middle-class homebuyers are only part of the story, just as important are overseas investors who are largely responsible for spiralling prices over the last decade. 

Brexit’s fast-approaching conclusion will play a part in this. Should the UK crash out with no deal, investing in London property could become very appealing for buyers from nations with stronger currencies, leading to a mini-boom and higher prices for domestic homebuyers. 

Of course, both the possibilities we’ve discussed rest on what happens in the rest of 2020. Are we about to enter a second nationwide lockdown? Can a vaccine be found? Will the double-dip recession many are predicting come to pass? And what will the outcome of Brexit be? 

Without an answer to these questions predicting the future of London’s housing market is tricky. However, one thing’s for certain: whatever happens in the next six months will shape the city’s future for decades to come.