In its report looking at the need for improvements in the home buying process, the government outlined three key areas of concern. Firstly, the quality of the consumer experience, secondly the length of time a transaction takes and thirdly the number of purchases that fall through.
Technology should offer improvements in all of these areas and it is particularly true of the consumer experience problem. Buyers and sellers want better communication and clarity in the transaction, something that can be offered via online portals explaining what needs to happen next.
In respect of the time taken, automation will reduce the amount of repetitive data entry type work and should free up conveyancers to focus on trickier transactions and to be more available to clients who need them.
We asked a panel of experts for their thoughts on progress so far in the 18 months since publication of the government’s request for improvement and where they believe focus should be over the next 18 months. Their responses include concerns that conveyancing is now too cheap for lawyers to properly manage large caseloads and doubts that any of the suggested solutions relate to the main causes of delay in the process.
On the positive side, the importance of proptech companies in creating new systems such as improved client portals is noted, as well as the likelihood that soon far more information will be provided to clients up front. A powerful new tool for conveyancers in finding new business in the rise of the online review site is also discussed.
Kathryn Taylor, Managing Partner, Gordon Brown Law Firm LLP
Clients’ expectations are changing rapidly
From a conveyancing solicitor perspective, how the files are handled day to day and the timescales involved have not really changed in the last 18 months. Transactions do still fall through and if anything I am seeing more hesitancy in the market given the uncertain economic climate.
What has become even more evident over of the last 18 months is that clients’ expectations are changing rapidly. As a society we are all used buying products in a certain way, we want quick delivery, on a day we want, at a price we want and we want to track progress at any given time. Clients are moving into the realms of wanting to buy legal services in the same way. The conveyancing landscape is really changing and practitioners do struggle to keep up with the pace.
Completion days are still fraught with risk
The government’s call for evidence identified conveyancing completion days as being an issue for the industry. I would say nothing has changed at all on that front and completion days are still fraught with risk; only two weeks ago a transaction we were involved in did not complete in a chain of six where the mortgage monies at the top of the chain were delayed. For me this aspect of the industry really needs to change. There is nothing worse for a conveyancer than dealing with a client and their family and telling them they aren’t going to get their keys on the day of completion.
I was pleased to see that in the summer the government set out what it intends to do on leasehold reform. I was extremely pleased to see that a maximum fee of £200 plus VAT will now apply to the LPE1 pack; I have seen great concern from clients and professionals over the years regarding the high costs that can be involved. I feel it is the leasehold sector in particular that is going to benefit most in the shorter term.
For me there is still a long way to go, but I look forward to the changes that are yet to come.
Suman Dally, Partner, Shoosmiths
Proptech companies have risen to the challenge
The Call for Evidence has brought Residential Conveyancing to the fore and created a determination to improve the home buying process. Proptech companies have risen to the challenge, recognising law reform will be slow, but that much can be done in terms of technical support to improve process. They provide case management systems; facilities to order searches online; simplified SDLT returns online; integration with HMLR to enable online land registry applications; chain visibility (MIO); client portals with online form filling and ability for clients to view all their paperwork in one secure platform; and systems to validate client identity through facial recognition and source of funds through open banking. They have created standalone systems, enabling conveyancers to have access to the latest tech without the complexities and cost of integration with case management systems.
Driving automated efficiencies will continue to remain key
However, against the backdrop of improved systems the legal profession continues to be thwarted with new challenges. The rather unsatisfactory outcome of the Dreamvar case placed risk firmly with conveyancers. Pricing pressures for conveyancers to do more for less, skills shortages, ground rents / rent reviews, estate rent charges and increase in cybercrime and fraud all create more work and, added to slow reform, the ‘legals’ offset any gain made through the use of technology.
Prioritising next steps, tech will continue to reign
I hope to see further enhancements to ‘Client Portals’ offering a secure medium of communication to counteract the rise in cybercrime and speed up client on boarding. Online/APP communication will become the norm, enabling clients to communicate with their lawyers, make payments, access their reports, tasks and milestones, surfeiting the clients’ appetite for upfront information and instant updates, all in one space. AI that can read documents and create reports already exists. Searches need to be simplified so relevant data can be condensed on a summary page. AI generating reports and sale contracts for example will be more commonplace.
Lenders and surveyors need to get on board and review their expectations of conveyancers, often duplicating verification of matters on which they are already satisfied. Integration with lender portals would be of benefit.
Discussions around reservation agreements, property log books, crypto currency, electronic signatures, Alexa and chatbots will no doubt continue.
The technological revolution will continue to evolve, but the law and the lawyers need to continue to keep pace. In the words of Charles Darwin, ‘It is not the strongest… nor the most intelligent that survives. It is the one that is most adaptable to change’.
Eduardo Reyes, Commissioning and Features Editor at The Law Society Gazette:
The plan of action was timid by any measure
While the ministers at the Ministry of Housing, Communities and Local Government were right to assert that there was no ‘silver bullet’, the range of measures identified for reducing time from offer to completion, and reducing failed transactions did not present as a coherent package.
The plan of action was timid by any measure. These included improving continuing professional development for estate agents and considering a professional qualification for agents. Developing ‘how to buy’ and ‘how to sell’ guides was another idea. And there was to be a consultation with removal firms and lenders around the way funds were released and travelled up the chain.
None of the solutions identified seemed to relate the causes of the long and drawn out experiences I have had of the conveyancing process, or those that others relate to me when I write on this topic.
Chief among the causes of delay is that no-one in an average transaction chain is willing to identify and act on buyers’ appetite for risk. This means lengthy to-and-fro over minor queries, involving much repetition, and the proliferation of indemnity polices whose cost seems unrelated to the actual risk.
Conveyancing is also too cheap
With low margins, conveyancers and solicitors often have too many matters on, and under such stress proper project management seems to be deprioritised.
The growth of online-only estate agents, for whom post-offer services (essentially ‘progressing’) are not part of what they do, are also reportedly a problem.
A heavy hand is probably needed in tackling unfair practices in the leasehold market, where strict regulation is needed to restore faith in the model used by many new developments in particular. I see no progress there.
On transactions failing, the use of ‘reservation agreements’ was an interesting idea, but a clear steer from a pilot is needed ahead of them becoming a standardised part of the process.
It feels as though the conveyancing system is still muddling along, paying the price for undervaluing professional services and a failure by the parties to own the concept of ‘risk’. Meanwhile, the time from offer to completion has lengthened.
Rob Hailstone, CEO and founder of the Bold Legal Group
Over the last 18 months a lot has been done to progress the Call for Evidence both by MHCLG and by the industry
Within 18 months, the government has produced and the industry approved the new Buying and Selling Guides (https://www.gov.uk/government/collections/housing-how-to-guides).
It has worked with National Trading Standards to introduce guidance requiring estate agents disclose referral fees.
Leasehold is getting a makeover to achieve making buying and selling ‘quicker and cheaper’ in the not too distant future with leasehold packs having to be delivered within 15 days, pack prices limited to £200 and, for new build leases, ground rents to be £0.
And, although most searches are delivered within days, some local authorities are taking weeks and even months, but the government has given a clear directive to deliver them within 10 days and the latest data shows that 87.5% of authorities are delivering on this.
New build house buyers who can currently struggle to secure help from developers to fix problems once they have moved in, are going to be able to secure free help in the future from the launch of the New Build Ombudsman.
And the government is about to conduct research into the introduction of reservation agreements and the role of upfront information to test if these would make a real difference to the process.
All this work has been done in conjunction with the industry, specifically the Home Buying and Selling Group (HBSG), headed up by Kate Faulkner, which encourages representatives from numerous stakeholder groups including property lawyers, estate agents, surveyors, lenders, insurers, and removers, who meet and support the government’s initiatives.
Obtaining more information up front
I have attended all of these meetings and along with others given my time, free of charge, to ensure we introduce new ideas and procedures that will help improve the home buying and selling process. The HBSG is not just a talking shop. If it was, I would not be involved, life is too short!
My personal belief, and without my HBSG hat on, is that we will be obtaining more information up-front so that:
•Potential property buyers can make a more informed decision before making an offer for a property;
•Property lawyers will be instructed, by sellers, before an offer for a property has been accepted;
•In many cases, some form of seller’s pack will be compiled;
•Property Logbooks will become commonplace;
•Reservation Agreements will be available for those that wish to enter into them.
There will be the usual naysayers who will criticise every effort being made by the MHCLG and the HBSG who will suggest that other solutions are the best way forward. They will also quite rightly point out that the above initiatives will not resolve all of the current home buying and selling problems. I agree that mortgage offer issues, search delays, poor client communication etc will still need to be looked at. But you need to start somewhere.
I began my legal career back in the mid 70s, when we had unregistered land, snail mail and personal completions. Yet, somehow, the process (although more technically complicated) was on the whole, quicker and less stressful for all involved.
The home buying and selling process has gone backwards and not forwards over the last 40 plus years, and that has to be addressed. HMLR’s Chain Matrix didn’t get off the ground, HIPs came and went in a flash and, then there was Veyo.
This time, we will get it right, well some of it at least, but we will need the help, support and buy in of those at the ‘coal face’ to get it 100% right over the coming years. Work with us, not against us.
Richard Hinton, Pitsford Consulting
Delivering a better consumer experience when choosing a conveyancer
You can lead the proverbial horse to water – but how on earth do you make it drink?
Especially when the legal profession just isn’t thirsty for improvements to the consumer experience. Implementing the MHCLG’s and the CMA’s plans for more transparent pricing, performance data, standard metrics, kite marks and quality standards hasn’t in my view, gone well.
The evidence to date is that mandatory price transparency has encouraged either bare minimum compliance (with little improvement of the consumer experience) or, given the lack of effective enforcement, in many cases no action whatsoever.
Efforts to introduce new comparable metrics haven’t yet broken through to the market (including my own) so there aren’t any new operational standards to act as a benchmark for consumers and at the same time kite marks and quality standards haven’t shed their historical baggage.
So, where is the catalyst that’s going to kick start meaningful change in an industry whose nature and composition makes it such a difficult ship to turn?
I think the answer is twofold: data and consumers
I say twofold – in fact both themes are closely interrelated. Data around conveyancing performance has always been at best sparse and at worst non-existent. Similarly, consumers have always been relatively powerless as they are largely ignorant of the conveyancing process and infrequent users of it.
In this becalmed market for innovation, the bombshell that has landed is the new world of client reviews – and this is where I think change will be driven. Companies like Trustpilot are now using data to give an aggregated voice to consumers that has never been heard before and which is proving immensely powerful in all walks of life including legal services.
In fact, the conveyancing market could have been designed specifically to maximise the impact of client reviews. Conveyancing is an intangible service that is poorly understood, infrequently used and opaque at the point of engagement. Set against that, 92% of consumers read reviews and 90% trust a site more with Trustpilot reviews. The company has 55 million reviews and adds 1 million every month. This is the new force that conveyancers will not be able resist as consumers share their experiences of conveyancing.
Without doubt, client reviews will be the catalyst for real change and innovation in how conveyancers encourage consumers to choose them. There is more that could, should and will follow from this, but because Trustpilot unlocks the power of consumers, it has the unique ability to make conveyancers thirsty.
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