The Council for Licensed Conveyancers (CLC) has told the firms it regulates to prepare for a significant fall in work volumes.
The trade body has issued an advisor note urging conveyancers to stress test their business and prepare for changes in the economy.
The note stated: “It will not come as news to you that the economic outlook for the UK is uncertain. The global economy is challenging and the pressures on UK businesses and citizens are well known.
“The 2007-08 Global Financial Crisis saw a more than 40% drop in conveyancing transactions from one year to the next. The turnover of CLC-regulated firms fell by 27% before largely recovering the following year.”
The trade body said that the total turnover of CLC-regulated firms in 2009/10 was £85m, having recovered from the crisis. By 2020 it was £277m – a more than three-fold increase.
The year to April 2021 was of course exceptional, not least because of the SDLT holiday deadlines, and saw an astonishing further 26% growth in turnover to £349m.
But while it has been an extraordinary decade and a half, the CLC warns that “we are now entering a very different world”.
CLC offered advice to help firms ‘take steps to prepare’ their business.
The note continued: “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. That might be expected anyway given the very high volumes in 2021.
“However, increasing interest rates, the Bank of England’s stated expectation that the UK economy will be in recession until summer 2023, the falling availability of mortgage products and the tightening supply of properties for sale will all contribute to falling transaction numbers.
“Against this background, all law firms should consider how they would respond to a significant downturn in the economy.
“Those that are focused significantly or entirely on conveyancing would be wise to prepare a contingency plan that sets out steps they would take to protect the business in the event of a fall in transaction volumes similar to that seen in 2007-08 – a 40% decrease.”
According to CLC, that plan might include cost savings, increasing the profit margin on services, the potential for growing income from probate services (which are less affected by the economic cycle), falling back on reserves or other steps that the managers and owners believe necessary and effective.
The note added: “Preparing for the worst is vital for the resilience of the legal services sector and for the sustainable provision of conveyancing and probate services to the public.
“The CLC will be asking its regulated community about preparations that they have made when it issues its Regulatory Return questionnaire in November 2022.”
“The CLC will be asking its regulated community about preparations that they have made when it issues its Regulatory Return questionnaire in November 2022.”
Number of possible (tongue in cheek?) answers below.
We will increase our fees to a fair level
We will reduce our fees and start yet another race to the bottom
There is barely any profit in conveyancing now so we will pack up and go home
We will invest in more tech
We will streamline our systems and reduce staff numbers
We will work more closely and constructively with our local estate agents
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zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
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And in tomorrow’s press release the CLC will be urgently stressing to turkeys the dangers of being out late at night at this time of year since Xmas is approaching. Be extra vigilant.
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Well from what I can tell conveyancers are currently too busy for their own good so perhaps a significant fall in work volumes will mean they can get a conveyancing job done in less than 5 months…which would be nice!
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If you can sort out lender issues, HMLR and managment company delays etc ResiMan that would help.
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“Getting lots of reports about long waiting times holding for Barclays and glitches with COTs being submitted. Seems to be an ongoing problem with Barclays in the last few days – do you have any idea what might be going on? (Someone held for over 2 hours to get through to them yesterday).
Getting a similar message from some other lenders too that they are taking ages to pick up the phone and/or won’t communicate digitally (and insist on sending redemption statements in the post!).” BLG Member 25 – 10 – 2022
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