Kumar: Profession in good shape
Alternative business structures (ABSs) are significantly more positive about their future than traditional practices, the Council for Licensed Conveyancers (CLC) has found.
It comes as separate research shows the number of conveyancing practices falling to its lowest level yet.
Some 60 of the 212 firms regulated by the CLC are ABSs – and are generally larger businesses. The results of its annual regulatory return showed that ABSs were nearly twice as likely to anticipate growth over the next 12 months – 62%, compared to 33% for non-ABSs.
Some 17% of ABSs thought this would be down to increased access to more of the marketplace, compared to 5% of non-ABSs, and they were also more likely to identify opportunities from greater use of IT (15%; non-ABSs 3%).
In line with this, ABSs were six times more likely to offer clients access to an online portal (29% of them did so, compared to 5% of non-ABSs), and four times more likely to make use of data from online review platforms such as Trustpilot or Feefo (24%).
Non-ABSs, by contrast, were more likely to perceive access to lender panels as a business risk, compared to firms with ABS status (non-ABS: 11%, ABS: 2%).
Other findings included that 41% of all CLC firms expected their volume of work to grow over the next 12 months, compared to 53% in last year’s return, with signs of concerns about the impact of Brexit on the property market;
A quarter (26%) said they had felt pressure to reduce the cost of their services during the year – although few did so – while 34% expected their fees to increase over the next 12 months;
CLC chief executive Sheila Kumar said: “At a time when we know firms are growing more concerned about the state of the property market, the results showed a profession in good shape.”
Meanwhile, the number of active conveyancing firms has fallen to the lowest figure since HM Land Registry began publishing its data in 2011, according to property data company Search Acumen.
Its quarterly tracker showed “a consolidation of activity at the top of the market as bigger conveyancers take more business at the expense of those at the bottom of the legal property ladder”.
The total number of conveyancing firms active in the market dropped 1% over the third quarter of 2018 (4,144 to 4,100) and by 2% year-on-year. Since the same period in 2011, the number of conveyancing firms active in the market has dropped by 15%, with 700 firms disappearing.
The tracker said: “Smaller conveyancers have been the greatest victim of market consolidation as over the last five years alone, the number of firms handling up to 25 transactions a month has fallen by 10% from 3,662 to 3,278.
“At the same time, larger players in the market – those handling more than 50 transactions per month – have increased by 31%, from 268 to 353.” The figures also showed the larger firms increasing their market share.
Average monthly work volumes have increased by a fifth (20%) in just five years, growing from 50 transactions on average in Q3 2013, to 60 in Q3 2018.
Search Acumen said economic uncertainty was weakening consumer confidence and seller appetite, leading to a 3% decline in transactions compared to the same period in 2017 – but overall conveyancing activity has grown 14% in five years.
Search Acumen managing director Andrew Lloyd said: “Over much of this decade, we have witnessed a clear consolidation of conveyancing business at the top end of the market.
“Technology has been a big driver in allowing smarter firms to steal a march on their rivals, which in turn means that the smaller, local conveyancers have struggled as market consolidation bites. They have seen their margins squeezed, local business networks shrink and opportunities to find new business diminished.
“In contrast, larger firms have been able to take advantage of market consolidation as more cases come their way. They have geared up their businesses and continued to grow over the last five years even as the market’s growth has slowed from the heady days of 2014-2016.
“Others have seized the opportunity to enter the fray for the first time with new propositions or aligned themselves with former rivals through mergers to stem the tide.”
Mr Lloyd predicted that consolidation in the market would continue. “The task ahead for the established leaders and aspirational ‘challenger’ firms is have a clear plan to prosper in the face of a potential weakening market,” he added.
“They cannot simply rely on transaction volumes increasing year-on-year, so will have to work smarter and deliver better, faster and more transparent services to give customers an incentive to pick them out of the crowd.”
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