Supply and Demand
As we enter 2014, the property market is looking its healthiest for years. Persistently low interest rates, falling unemployment and the Government’s ‘Help to Buy’ scheme have unleashed a generation of pent-up first-time-buyers on the market and HMRC are reporting that transaction volumes are at their highest since 2007 (graph below) whilst the Bank of England’s forward guidance sees interest rates remaining at record lows.
On Christmas Eve, figures from the British Bankers’ Association showed that gross home loan borrowing in November stood at £10.3bn, a 37% jump on the same month in 2012 and, according to the latest market index from Haart estate agents, the number of first time buyers increased 4.5% from October to November and 78.4% from November 2012.
And this isn’t just a London-centric recovery either. The latest report from Hometrack, published on the 30th December, shows widespread price rises in England and Wales.
Burst the Bubble?
However, some experts are concerned about the possibility of a housing bubble with house prices rising artificially and exponentially. The second phase of Help to Buy, launched earlier than planned in October 2013, should help with balancing out the property market by assisting first time sellers in their bid to move up the ladder.
But with it being open to all buyers up to £600,000 it is feared that it could add unnecessary fuel to the fire and Capital Economics have said that the measure should be ‘watered down or scrapped’ amid the revelation that house prices have climbed consecutively for the last 10 months.
Meanwhile, last month, Council of Mortgage Lenders Director General Paul Smee called for ‘Help to Buy’ to be tapered gradually to help avoid a “cliff-edge” scenario when the scheme ends.
With many commentators calling for ‘Help to Buy’ to be scaled back, time is of the essence for conveyancers who should make hay while the sun shines and capitalise upon the increased demand within the property market.
Certainly, not everyone will be around to see 2015. Professional Indemnity Insurance, or the lack of it, means potential closure for more than 100 firms as of the 29th December.
Conveyancing work bears the highest risk for a solicitor with around two-thirds of all claims either being residential or commercial. Drill a bit deeper and nearly half of all residential claims are driven by the lender and a fifth by the content of a search result.
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If you are still trading in 2014, perhaps it is the year not only to benefit from the upturn in business but also to make sure that those areas that are the riskiest and pose the greatest threat are reduced.
Maybe this might be a good New Year’s Resolution to keep?
About the Author: Nick Dyoss has more than 15 years’ experience working in the legal service industry. Having held a variety of different sales roles at TM, Nick is currently Business Development Director with responsibility for new products and services as well as managing TM’s legal service partners. Prior to joining TM, Nick held various posts at Landmark Information Group and Lexis Nexis.