“It will not come as news to you that the economic outlook for the UK is uncertain,” the trade body told its members in an advisory note. “The global economy is challenging and the pressures on UK businesses and citizens are well known.”  

The association says that the 2007-08 global financial crisis saw a more than 40% drop in conveyancing transactions from one year to the next. However, it points out that the turnover of its regulated firms fell by 27% in comparison “before largely recovering the following year”.  

The warning comes as transactions of UK residential properties last month fell 32% to 112,370 on a non-seasonally adjusted basis, according to HM Revenue and Customs data released last week.  

However, this fall was due to the spike caused by the stamp duty holiday that ended last year, with September house sales above usual pre-pandemic levels.  

But a number of analysts point out that the Bank of England lifting the interest rate by 50 basis points to 2.25% last month for the seventh rise in a row since last December, will hit transactions next year.  

The Bank also forecasts that it expects the UK economy will be in recession until next summer.  

Estate agent Hamptons says transactions will fall 12% to 1.1 million in 2023, from an estimated 1.25m transactions this year, as rising rates make mortgages “noticeably more expensive”.  

The conveyancing body says: “There is a growing consensus that property transaction volumes look set to fall and some of you are telling us that there is already evidence of that.”  

It adds: “Against this background, all law firms should consider how they would respond to a significant downturn in the economy.”  

The association says firms should consider plans that include making cost savings, increasing the profit margin on services, and growing income from probate services, which it says “are less affected by the economic cycle”.   

The body points out that the total turnover of its regulated firms in 2009/10 was £85m, having recovered from the financial crisis.   

By 2020 it was £277m – a more than three-fold increase. It says the year to April 2021 was exceptional, not least because of the stamp duty holiday deadlines, and saw a further 26% growth in turnover to £349m.  

The association says: “It has been an extraordinary decade and a half. We are now entering a very different world, though.”  

The body adds that it plans to ask regulated firms about downturn preparations when it issues its regulatory return questionnaire in November.