The residential property market has been buoyant for the last decade and there will be many of us who wish we had bought properties in the mid 1990s – and, no doubt, some who are delighted that they did. However, the economy and housing market are now looking less sure and, with the high level of borrowing, the future is uncertain.
Conveyancing has gone through some huge changes over the last 20 years and the pace of change is not abating.
SEARCHES
Gone are the days when one had only to post the local search to the local Council and possibly a Coal Authority and Commons Land search. Now there are a myriad of searches one could carry out – local, drainage, planning, environmental and a chancel check search. Alternatively, one may take out an indemnity policy rather than carrying out certain searches.
Whilst one can take a view on whether all these searches are necessary, not carrying out a search is running the risk of a potential claim. Given the widespread flooding of the summer, checking whether the property is in a flood plain is becoming more important and it is foreseeable that failure to do so may lead to a negligence claim. Chancel Repair and contaminated land are other areas where not all firms are doing searches but with potentially expensive consequences.
HIPS
The implementation of Home Information Packs should speed up the conveyancing process subject to a few provisos. In the late 1980s, when the Law Society’s Transaction scheme was started, the downturn in the market caused problems as local searches were out of date before properties were sold. Whilst the local search generally need not be renewed in the HIP, if the market does slow the clients may very well be faced with paying for a search on their sale and for one on their purchase.
So far, buyers do not seem to have paid much attention to HIPs and the main relevance has been to obtain the HIP so that another local and drainage search is not required. Energy Performance Certificates are interesting but so far clients do not appear to have been particularly influenced by one. Likewise, few clients have been great advocates for HIPs but rather have accepted them as something one has to do.
MONEY LAUNDERING
The new regulations mean that money laundering is an even bigger concern than before, especially if one does not see one’s client. Conveyancers are going to have to be even more vigilant at checking identity, the source of funds and the actual beneficial owner of properties rather than just the identity of the legal owner. It may become increasingly difficult to act for clients who we do not meet. I am thankful that I am not the firm’s Money Laundering Officer.
TESCO LAW
Tesco, The Co-Op, the RAC and others may all enter into the conveyancing and other legal markets. No doubt some will contract the work out to existing “volume conveyancers” or even buy them out and others will recruit and establish their own departments. There is a potential threat to all lawyers but, as a firm we have gone down the route of providing personal service rather than selling ourselves on price. Increased competition may put further pressure on prices but there does come a point at which it is not worth doing the work given the risks involved.
TRANSFERS AT UNDERVALUE AND GIFTS
Most matrimonial lawyers and conveyancers who deal with transfers pursuant to divorce proceedings will be conscious of the recent Court of Appeal decision that trustees in bankruptcy cannot effectively override a matrimonial settlement. We will, no doubt, all be waiting for the decision of the House of Lords.
E – CONVEYANCING
Increasingly Official Copies and searches are being done on line. Certain actions can be done online via Land Registry Direct and lenders discharge mortgages by Electronic Notification of Discharge or Electronic Discharge. One can do Stamp Duty Land Tax returns on line and make the SDLT payments by BACS. More of the registration process will be done on line and the Land Registry will hopefully sort out the problem of electronic signatures so that, in the not too distant future, the whole process will be done on line. At some stage, there will be a matrix that all lawyers in a chain will be able to view to see who and what the chain is waiting for, for documents to be approved in advance and the Land Registry to show what the Title Registers will look like on completion and for the Register to be changed immediately on completion of the transaction. It could be that the completion monies in the chain will all be dealt with as part of the system as well so that there will be no delays waiting for money on the completion date – just waiting for the removers to empty the properties.
THE MARKET
We are seeing the market dwindling – whether this is the seasonal lull or whether it is indicative of the market as a whole is not yet clear. There are fewer Buy-to- Let purchases. Prices are high and it looks likely that they will begin to fall soon, if they are not already falling. Over the next year, many fixed rate mortgages will come to an end. Given the current uncertainty, more properties may come on the market or there may be more repossessions. Having said that, there seems to be a huge demand for certain types of rental properties and, if interest rates for savers fall, and the stock market becomes increasingly uncertain, it may be that those with available funds will buy-to-let which may help to slow any fall in the market.
CONCLUSION
We have had a rising market for at least a decade but the future looks uncertain. We will have to continue providing the best service we can whilst taking full advantage of I.T. The next year could be interesting!
By Mike Sheldon, partner and head of residential property at Raworths LLP
