If your COVID-19 experience has been anything like ours, you’ll have spent the last few weeks self-isolating and trying to complete what work you can – easier said than done when many land charges departments are closed and most transactions have stalled. So it’s the perfect time to take stock and think about what the future of conveyancing might look like.
In the short term, how long are the UK’s partial lockdown and the current restrictions on the property industry likely to last? And, in the longer term, how will the industry adapt to what could be the worst recession in a century and a world in which remote working looks set to become the norm?
First, let’s look at the short term.
The obvious place to start is the lockdown and when it’s likely to end. But, before we go any further, we need to add a caveat. The COVID-19 crisis is a live event and continues to change hour by hour, confounding even the world’s top scientists, so anything we say could be out of date within a few hours or days.
Nevertheless, there will no doubt be some in the UK looking hopefully towards Denmark and Austria who have both announced a cautious easing of restrictions beginning in the week after Easter. Could we soon see something similar in the UK?
Well, it depends where you look. The scientific consensus seems to be that social restrictions will stay in place for at least four weeks following the virus’s peak in the UK. Some, such as Dr Jenny Harries, Deputy Chief Medical Officer for England, think cases peaked over the Easter weekend and will now begin to fall if the public follows social-distancing measures.
Meanwhile, Chief Scientific Advisor Sir Patrick Vallance has said deaths in the UK will continue to rise for a further fortnight after Easter. Some scientists have even suggested the peak could come as late as mid-June.
The problem is we just don’t know. The UK is woefully behind in its testing capabilities.
Although No.10 has repeatedly claimed it’s on course for its 100,000 tests per day target, the reality is that even now when tests are being scaled up, the actual number of tests carried out has never risen much above a fifth of that figure. Compare this to Germany, confirmed as carrying out around 50,000 tests per day since the beginning of the crisis (although it should be noted Britain isn’t alone in its poor testing performance, France and Spain also lag behind).
Nor is the UK at all comparable with Denmark or Austria. Both of these countries moved to adopt stringent social distancing measures such as shutting schools and businesses early in the crisis and, as a result, have confirmed cases in the low thousands at the time of writing. Locking down early and keeping social interactions to a minimum during the early stages of virus transmission has allowed both countries to come out of the containment phase earlier.
For the UK, it seems certain it’ll be at least another four to six weeks before we see any easing of social restrictions, with the most optimistic predictions placing an end to the current lockdown in mid-May. This means we’ll see virtually no new transactions for at least another month and slow movement on those still outstanding, as land charges departments, law firms, surveyors and estate agents remain unable to work or confined to what they can achieve from home.
So it’s perhaps no surprise UK house sales are expected to drop to their lowest level in 20 years. But while that might sound grim, it should be taken with a pinch of salt. Economic stasis means that the plan, or what seems to be the plan, to temporarily ‘freeze’ the economy by furloughing large sections of the workforce and suspending business is working.
The Long Term
What about the longer term?
Well, the first thing to note is that COVID-19 is likely to change the way we work forever. Many conveyancing businesses and local authorities will have been forced to embrace remote working. Those that have are likely to find employees questioning why they need to return to the office at all once the crisis is over.
At the same time, some of them are going to find that running a business remotely is not only possible but perhaps even preferable, to the current approach. If economic predictions are correct, then many businesses and local authorities are going to come out of this crisis in financial straits and looking to save costs. And, if you’ve spent much of the last quarter working remotely with few problems, the most logical OPEX cost to cut is office space. This will be particularly relevant to local land charges departments, who could face a fresh round of government-mandated austerity.
The outcome of this is a hypothetical future in which much of conveyancing is done remotely. We’ve already seen the beginnings of this with the Land Registry’s much-opposed takeover and centralisation of LLC1 data. But could we see a future where all local land charges data is supplied from an online, centralised source? Or perhaps land charges staff will work from home and retrieve the data needed via an online database?
Furthermore, do solicitors need to be in the office to process documentation? Do estate agents really need a high street base to work from? When you couple the fallout from COVID-19 with the problems presented by climate change and the fact the planet needs less of us to commute using cars, trains and buses, the answer is likely to be no.
It’s clear COVID-19 could be the catalyst for a change in the way our industry works, but what about its long-term health?
It’s obvious the industry faces a difficult year, things were beginning to look up with the housing market finally returning to pre-2008 levels, but we’re now potentially back at square one. How well conveyancing businesses deal with this will largely depend on two things: one, how well run or overleveraged and indebted they were pre-coronavirus, and two, what the government does to keep the industry afloat.
Schemes like providing 80% of wages to furloughed staff and the offer of business loans at competitive rates are welcome but the industry will need more. In particular, those firms in poor financial health going into the crisis – quite a few, given the slow recovery from the last crash – will need direct financial assistance rather than loans if we’re to keep thousands of jobs from disappearing.
However, it’s not all bad. We may see a slight decline in prices spurring those who were on the fence into the market, particularly the young. What’s more, there’s nothing like spending two months’ trapped indoors to help you decide you really do need a bigger home or more green space.
So the industry should rebound. However, the speed at which it happens and what it looks like is entirely dependent on whether the government succeeds in preventing a temporary shock turning into an economic tailspin.
Over to you, Mr Johnson.