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Feature: Free-for-all? The conveyancing debate

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The speed and efficiency with which conveyancers and solicitors work have long been a bugbear for both home-
buyers and mortgage brokers.

A property transaction proceeds at the pace of the slowest link in the chain — and that’s often the legal work.

Broker complaints about conveyancers relate typically to delays and communication problems. These issues are more common on ‘free legals’ cases, which tend to be remortgage products, but are rarer on purchases.

Some brokers have nothing good to say about free-legals deals, with Shaw Financial Services founder Lewis Shaw warning they should be avoided like the plague.

The process is ripe for disruption and a lot of delays could be solved using technology

“They’re an absolute travesty and in most cases are a disbenefit because their service is awful and communication non-existent, while sitting in ivory towers ignoring customers’ concerns,” he says.

The case for free legals

Where a remortgage deal offers free legals, the mortgage lender appoints a solicitor to act on the buyer’s behalf. It’s easy to see what’s in it for lenders: more business. By removing one of the cost barriers to switching mortgage product, lenders can sell more mortgages.

For borrowers, free legals mean there is no need to shop around for a solicitor, saving them both time and money. Borrowers might also, quite reasonably, assume the lender would have carried out due diligence on the conveyancing firm appointed.

Many firms are creating training academies in order to bring in new blood

Arguably, there’s a lot less conveyancing work involved with a remortgage than with a house purchase. For a remortgage, the conveyancer’s tasks are basically transferring an interest in a property from one lender to another after completing various checks and searches.

The service received by borrowers depends greatly on which conveyancing firm is allocated to them. Brokers report some good experiences, but also many shocking ones where they have had to do extra work to get cases across the line.

Carl Summers Financial Services financial adviser Scott Taylor-Barr says: “Free legals are a great idea in theory: convenient, and one less thing for a client to think about. But in practice they are generally very poor for anything other than a straightforward like-for-like remortgage on a standard property.

“This has been a long-running problem for brokers, who are generally the people who have to do the extra legwork to make up for the poor quality of the free legals and get the deal done.”

There is still a real appetite to join the profession and have what can be an interesting and rewarding career

Many conveyancing issues relate to conveyancers being overworked and taking on too many cases at once. Such high volumes inevitably lead to delays, additional costs and, ultimately, transactions falling through. The problem of overworked conveyancers is magnified when it comes to bulk deals with lenders.

Free-legals cases are routinely dished out in batches to ‘conveyancing factories’ aiming to complete high volumes of work for low per-case fees, with tasks often carried out by junior staff. According to a blog post published by Coreco earlier this year, lenders pay as little as £20 per case. At this fee level, a conveyancing firm would need to be operating at bulk volumes to survive.

Edinburgh Mortgage Advice founder Mark Dyson cites several cases where his team has taken deliberate action to build in extra time for legal work, only for the cases to still get delayed.

On one deal, the mortgage was offered at the end of January with a planned completion date of 1 May when the client’s existing mortgage ended. Dyson says the client completed an online questionnaire in February, only for the legal firm to close the transaction in mid-March due to ‘no contact’. The legal firm in question claimed it had tried to contact the client by phone and email, but the client maintained that no one had got in touch. The deal eventually completed two weeks late.

Is this just a passing phase where the volume of cases stabilises in the next few months?

Another common issue is long call waiting times when brokers phone conveyancing firms.

“A typical example is being on hold for hours and the lines are cut at 5pm,” says Dyson. “If you don’t call at 9am there is very little point. On one case we spent over 14 hours in one week waiting for them to answer the phone.”

Delays with legal work aren’t just frustrating — they can cost borrowers money. On a house purchase, hold-ups can mean a transaction falls through or a chain collapses. On a remortgage, it may mean the borrower has to pay their lender’s standard variable rate for longer than necessary. This extra cost could wipe out any savings from opting for a mortgage with free-legals work.

Complications

Although free legals are suitable for straightforward deals, problems may arise with more complicated transactions, such as joint mortgage, sole proprietor; leasehold; or changing the name on property deeds. Clients paying for their own legal fees normally pay at least £300 on a remortgage. But in return they get a much higher standard of service — so it could be a cost worth paying.

Brokers are generally the people who have to do the extra legwork to make up for the poor quality of the free legals

Mortgages for Business sales director Jeni Browne says: “There does seem to be a notable difference in the service clients receive, between their own paid-for solicitors and those that are appointed by a lender, either as a free-legals offering or as a separate legal representation requirement.

“For the latter, solicitors often leave picking up the file until a few days before completion, which means completion becomes incredibly stressful or, worse, the date is missed altogether. For free legals, we sometimes find that getting any contact at all is nigh on impossible, with clients reporting not receiving any contact, despite chasing, for weeks.”

London Money mortgage and protection adviser Jiten Varsani says many people suggest the solution is for the conveyancing industry to recruit more staff, but this is easier said than done.

On one case we spent over 14 hours in one week waiting for them to answer the phone

“First, is this just a passing phase where the volume of cases stabilises in the next few months? Second, attracting good-quality staff at short notice is not easy,” he says.

“Many conveyancers I speak with complain about the number of hours they spend with advisers, estate agents and clients who are chasing for daily updates; thus distracting them from being able to complete the actual conveyancing. We need to respect this and provide some breathing space.”

Making improvements

How can the conveyancing process be improved, for both free-legals and paid-for cases? One idea is for lenders to expand their panel of firms to offer more capacity to manage these trans-actions in a timely fashion. Another is for a thorough examination of the accountability of some legal firms in terms of service-level agreements with their lender partners.

“The bigger picture is that the conveyancing process is ripe for disruption and a lot of delays could be solved using technology. However, as this is reliant on numerous parties all being on board, it won’t be an overnight fix,” says Browne.

Council for Licensed Conveyancers director of strategy Stephen Ward says: “There is a huge amount of work under way in the sector to modernise the conveyancing process, from the provision of better upfront information for buyers to the rollout of new technology to improve identity checking, and HM Land Registry’s innovation to enable the use of digital signatures and accelerate the move to digital conveyancing.

New starters take time to come on board, take time to train and take time to begin working on cases

“Conveyancing can be a demanding job, but we know from the newly qualifieds we see coming through that there is still a real appetite to join the profession and have what can be an interesting and rewarding career.”

Feedback from members of the Conveyancing Association (CA) suggests there is a lot of work around at the moment. First, the market was anticipating a slowdown in purchase activity, but this has not materialised. Second, rate rises mean conveyancers are seeing an increase in the number of remortgage transactions.

CA director of delivery Beth Rudolf says: “There’s no doubt that firms have to manage this increased workload, particularly the high-volume conveyancers. But there’s also no getting away from the fact that an increase in human resources in order to deal with this isn’t going to happen overnight.

“Firms are working towards increasing their capacity, but obviously new starters take time to come on board, take time to train and take time to begin working on cases.

A typical example is being on hold for hours and the phone lines are cut at 5pm

“It’s why we are seeing conveyancers having to manage their pipelines against their service levels, and it also means they are having to be strictly focused on not taking on too much work that ends up damaging that service.

“As greater levels of resource come on board, that will allow firms to expand the work they take on; in that sense, the problem should begin to ease later in the year.”

As with many sectors, the conveyancing industry has experienced a growing number of vacancies at a time when demand remains strong; against the backdrop of the pandemic, a lot of conveyancers left the sector.

“This was recently discussed at our CA meetings and many firms are creating training academies in order to bring in new blood,” says Rudolf.

“However, these new conveyancers will take time to filter into case-handling roles and therefore there will be a need for patience right across the property market.”

This article featured in the June edition of MS.

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Finopulse

Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by Finopulse.
Publisher: Emma Lunn

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