Conveyancing; the Unseen Pressure in a Chaotic Market!
This blog explores the effect of the pandemic and the Stamp Duty holiday on the housing market and solicitors working in conveyancing. It offers thanks for the hard work in difficult conditions they have put in and the challenges still to be faced.
I decided to write this blogpost after posting a short status on LinkedIn. The status read:
Just wanted to say how much respect and admiration I have for conveyancers at the moment. You are working in a housing market that went nuts and are having to meet a Stamp Duty deadline that we don’t know whether will be extended or altered at the start of March, with clients calling relentlessly and applying pressure. All this and having to work from home amidst a pandemic! Just wanted to say to all my conveyancer contacts, thank you!
I wasn’t expecting any particular reaction, but after 2600+ views, 135 likes, 6 comments plus shares I thought maybe I should elaborate on my thoughts in a blog post.
At The Law Factory, we get an inside track into what life is like for conveyancers as we handle the accounts department functions from top to bottom for a lot of firms. It means we get an opportunity to liaise continuously with conveyancers regarding their transactions and the pressures that they are facing. The word “pressure” itself doesn’t feel like a strong enough term to describe what is actually going on, nor does it indicate why we should all be grateful to these unsung heroes.
Starting with the housing market itself. At the beginning of the pandemic, there was a slump in the market as we were all in a full lockdown and that included buying and selling properties. High street practices were having to make the decision of whether to furlough and make long term affordability decisions in a very short space of time. Many conveyancers put on the furlough scheme were unsure if they would have a job to go back to after the first lockdown. Some practices even closed their doors for good, meaning many conveyancers were then looking for work.
The housing market began to pick back up at the end of May and into June as restrictions were eased and on 8th July 2020 Chancellor Rishi Sunak announced that there would be a Stamp Duty holiday on all homes under £500K saving a maximum of £15K in tax for homebuyers running until 31st March 2021. This caused a huge increase in new transactions where the house price index spiked from -1.21% in April to +1.40% in August!
As you can imagine, this caused immense turbulence for the conveyancers having to handle the new surge of transactions. The stress of going from a furloughed position not working to one of unsurmountable volume and pressure was quite staggering. Also, there were many firms where, by the end of the first lockdown, staff had been made redundant and not replaced. Thus, the increase in property transactions caused even more work to be handed to the conveyancers who remained.
Six months, one Christmas and two lockdowns later, the housing market is still running very high and we are starting to see the pressure mount even further on conveyancers. The Stamp Duty Holiday deadline is looming and there is un-precedented pressure on conveyancers to complete on properties before the deadline hits on 31st March. There is also an added level of uncertainty because there have been cross-party calls for the holiday to be extended or altered to allow present transactions to continue without the tax addition if they are far enough along. A “tapered” approach. The issue here is that the Chancellor has stated that he will not announce any changes until the budget on 3rd March. The problem with this approach is that it only leaves 20 working days between the announcement and the deadline. This means added stress for the conveyancers. Their clients will either be waiting for the announcement, banking on an extension with the possibility of pushing for completion before 31st March if there isn’t one, or they will be pushing for completion before 31st March if there isn’t one regardless!
Let’s also not forget that if there is an extension to the Stamp Duty Holiday as a whole (“un-tapered”) that could cause its own issues. Some call it “moving the cliff edge”. This exacerbates the current problem because conveyancers will face the same issues we are seeing now, just at a later date. This will therefore prolong the stress and uncertainty. I also think it is important to highlight the uncertainties of what could happen with clients whose properties do not meet the 31st March deadline simply due to the volume of transactions. Conveyancers are having to advise their clients even now, in mid-February that it may not be possible to complete before the deadline and that they could face a significant tax bill. This risks the transaction falling through and the practice not recovering the full fee for a completed conveyance. It also risks further complications where if the transaction is to continue, the buyer is looking for a reduction in final purchase price as they had not budgeted for the Stamp Duty at the time of offering.
As you can see, we need to spare a few thoughts for our conveyancers at this turbulent time. Many have come back from the uncertainty of furlough into a huge property market spike with a surge of new clients and instructions where the future is unclear. They are having to work from home, take care of families and home school all amidst a global pandemic!
Thank you conveyancers, for all your hard work amidst un-precedented pressure!
Alex Simons MAAT ILFM
New Business & Outsourced Accounts Manager
The Law Factory LLP
16/02/2021
