Property transactions hit a five-year high in the third quarter of the year, putting pressure on law firms and leading to longer conveyancing completion times, data from Search Acumen shows.
Completed property transactions were up 8% in the period compared to the previous quarter — excluding the first quarter of the year when the administrative backlog from the pandemic was at its height — says the data firm’s Conveyancing Market Tracker.
The number of transactions in the third quarter also jumped by 32% from the same period before the health crisis in 2019.
The study says: “This meant the average conveyancing firms’ quarterly caseload has risen from 70 in the third quarter of 2021, to 80 in the same period this year, equating to a significant 15% increase.”
It adds: “This comes at a time when the market has seen a marginal increase in the number of active firms, rising by just 0.7% in the same period, suggesting that already busy property solicitors are now even busier.”
The tracker points out that the volume of active firms in the market is yet to recover to “anywhere near” the peak of 4,191 in 2017, compared to 4,051 now, and remains 11% down from a decade ago.
The top 50 firms have increased transactions by 41% from pre-pandemic levels, despite the very biggest firms growing more slowly than the market average.
The study adds: “Overall, the largest increases in caseloads are coming from the ‘squeezed middle’ of the conveyancing market, with the largest and smallest firms trailing behind.”
Search Acumen director Andy Sommerville says: “We know from this data that the size of the conveyancing sector has not kept pace with transactional growth, which inevitably means frustrating delays for consumers and stakeholders alike, especially when you consider the digital switch happening at Land Registry which comes with its own teething issues.
“Mortgage fall-throughs are a big concern as buyers try to beat the tide on increasing interest rates, whilst the three G’s are back in force: gazundering, gazumping, and gazanging.
“Around 20% of all residential transactions fall through pre-completion on a normal basis, but the industry is generally accepting that this figure will rise sharply in line with increased market uncertainty.
“It’s already taking buyers over double the time to get to completion than it did pre-pandemic, and the longer this time is stretched out, the more vulnerable the entire property market is as recession beds in.”
He adds: “This comes at a time when the Autumn Statement has confirmed austerity 2.0, where a new focus on public sector efficiency is likely to translate to cutbacks.
“Less room for investment in key departments that support the real estate markets could see our protracted transactions times get longer.
“There are significant delays already in processing property transactions and it is hard to see how a cost efficiency drive won’t exacerbate the problem, especially at Land Registry where staff are planning strike action, and for over-stretched local councils.
“This might seem abstract, but delays and transaction failures cause significant blockages, costing businesses, buyers, and sellers huge sums of money at a time when they can least afford it.
“While the government may be able to support the industry by tackling inflation and stabilising interest rates, this will be negated if the market grinds to a halt beneath the surface.”
