The performance of the UK property market since the onset of the Covid-19 pandemic has been remarkable. While initially brought to a standstill during the first lockdown, the reopening of the property market in May 2020, and subsequent introduction of the Stamp Duty Land Tax (SDLT) holiday in July 2020, has resulted in renewed buyer demand.
According to Nationwide’s House Price Index for March 2021, the annual rate of house price growth is sitting at 5.7%. This is an impressive statistic and clearly something the Government is keen to sustain as the country transitions out of lockdown. The three-month extension of the SDLT holiday until 30 June means that there is still a window of opportunity for buyers to take advantage of this tax relief.
Positive though they are, is important not to let these broad market trends overshadow the intricate workings of those involved in the property market. Estate agencies, for instance, have had to become creative in overcoming the challenges posed by social distancing restrictions, embracing technological solutions such as virtual viewings.
Perhaps more notably, the surge of activity within the property market has placed a strain on conveyancing firms, which have been under significant pressure to progress transactions ahead of the SDLT holiday ending. Yes, the extension of the holiday deadline by three months does deliver much needed reprieve, but it ultimately does not address the inevitable bottleneck of sales that conveyancers will have to manage before the end of June. The risk of sales not being completed by this deadline is growing, which means the success of the SDLT holiday will be limited.
An in-depth analysis of public data by GetAgent.co.uk revealed that the total average time taken to sell a property – from the initial listing to the completion as recorded by the Land Registry – currently stands at 295 days. That is the best part of ten months, and my concern is that the figure could rise further in the face of such significant demand.
Simply put, the conveyancing industry has reached breaking point and this summer is set to be its most challenging period yet. However, based on how the industry has adapted to the uncertainty posed by COVID-19, I am confident in its ability to tackle these problems head on.
Adopting more efficient practices and processes
Throughout the pandemic, new digital solutions have emerged that creatively streamline processes and create greater transparency during the transaction process. For example, eSignatures and automated communication can shave days off a transaction. Client onboarding, which typically takes around two weeks, can now be completed in as little as 40 minutes by embracing technology.
For an industry that has been slow to embrace the full advantages of technology, the pandemic has highlighted the need for conveyancers to digitise their processes. Not only does it reduce the chances for human error and reduce the time it takes to process a sale; it also ensures the industry is keeping up with the changing the demands of its clients. Indeed, the proliferation of next generation technology and devices has been heightened as a consequence of the pandemic, with people now expecting transparent and responsive online services.
Let’s be clear – while digitalisation of existing processes will serve to benefit conveyancing firms, it still does not change the fact that conveyancers are under immense pressure. Yes, technology does lead to more efficient and transparent processes, but we must also ensure we are recognising the needs of the industry’s professionals.
Providing support for conveyancers
In one respect, conveyancers will be working around the clock to ensure as many sales can be completed before the holiday ends. The risk is that some buyers could miss out on this initial holiday if they do not act soon. What’s more, we must also understand the pressure faced by conveyancers will not end soon as the holiday expires.
While the current SDLT holiday deadline is 30 June, the 0% SDLT threshold will temporarily rise to £250,000 until the end of September, before dropping to the standard threshold of £125,000. In short, this means the workloads of conveyancers is likely to remain high.
From a policy standpoint, the Government does have options. It could decide that instead of a hard holiday deadline, any property sales that have been agreed to in principle still qualify for the holiday even if the sale is not completed by the deadline. More radically, the Government could extend the holiday for another three to six months until buyer momentum begins to slow down. Only time will tell whether these policy reforms are considered.
For now, conveyancing firms must ensure they are doing everything they can to improve their overall efficiency. They can do this by looking to existing technological solutions. Importantly, they also need to set realistic timeframes and help clients see that certain deadlines simply cannot be fulfilled. This will reduce the strain they are currently under and lead to a better standard of service.
Scott Bozinis is the CEO of InfoTrack UK.