It’s a challenging time for many industries and sectors, and those operating in the property market are finding it harder to make their targets. A slowing of the market has led to one of the UK’s biggest conveyancing firms announcing that they would potentially need to make a number of employees redundant as a result. And this could just be the tip of the iceberg, following warnings from the industry’s regulatory body.
A Downturn Is Expected
A recent message from the Council for Licensed Conveyancers (CLC) warned members that the current economic outlook here in the UK is likely to lead to a significant downturn in the volume of work such professionals should expect. The signs are already there, as CLC-regulated firms have already reported a decrease in workloads. The statement from the CLC also sought to reassure their colleagues that this difficult period will hopefully be short-lived, citing a similar downturn in business during the 2008 global financial crisis, which largely recovered a year later. This should provide some optimism for conveyancing firms, because although the 2008 crash saw a 40% reduction in conveyancing workloads, which represented a 27% decrease in turnover for the firms involved, in the fourteen years since, the industry has gone from strength to strength.
The full statement by the CLC can be read online and it outlines both the economic outlook for the industry and how affected firms might best prepare for it.
A Stricken Housing Market
The news that conveyancers will be affected by the economic downturn may indeed come as a surprise to many, as the UK housing market has been robust for many years. Even the effects of the recent pandemic did not appear to halt the market for long. Yet this week, news that house prices are dropping rapidly  indicates that a change is well and truly underway. The government expects that average house prices will drop by almost 10% over the course of the next two years, which is an indicator of the issues of affordability, which were compounded by the financial damage done by October’s mini budget and subsequent suspension of many mortgage products. Whilst this could certainly put cash buyers in a stronger position, and many buy to let purchases are predicted for the coming year, it is generally expected that people will move home only where it is essential, meaning the overall result is that conveyancers will see a marked drop in business.
Focus On Alternatives, Such As Form LL Restriction Work
The CLC is clear in its advice for conveyancing firms, stating that focusing on resilience will be key to their survival. After all, conveyancers can provide a variety of services, including probate and Form LL restriction work. Other options suggested by the CLC include charging a higher fee for their services, thereby increasing their profit margins, or turning to company reserves in order to stay afloat. Cutting operational costs, perhaps including redundancies, is also advised.
The expectation is that the UK should end this period of recession by mid summer next year, and that, as before, conveyancing workloads will rapidly bounce back to their previous level. Until then, firms feeling the pinch must act now to prepare for the decrease in revenue.