Sommerville: Larger firms adapted more quickly
The number of active conveyancing firms has begun to shrink again after last year’s boom, with the biggest practices increasing their market share, new research has found.
The latest market tracker from property data company Search Acumen also showed that there is plenty of work around for all, with law firms’ average property caseloads up 34% on pre-pandemic levels.
The typical firm registered 76 transactions in the second quarter of 2022, compared with 57 in the same period in 2019.
It said gains were concentrated at the top end of the market, as the 500 biggest conveyancing firms by transaction volumes accounted for nearly three in five (59%) completed transactions between April and June this year.
This was the highest level seen since the early months of the Covid-19 pandemic and surpasses any quarter from 2011 to 2019.
The top 200 conveyancers processed 40% of deals, up from 38% a year earlier, and the top 50 firms alone handled 21% of transactions, the highest figure seen outside of lockdown since records began in 2011.
The last tracker report, which analyses HM Land Registry data, said that hundreds of firms, often classed as ‘dabblers’, returned to the market given the volume of transactions caused by the stamp duty holidays.
An average of 4,058 firms were active each quarter during 2021/22, up from 3,483 in year one of the pandemic. It was the first time in nine years where the average number of active firms per quarter did not fall year-on-year.
But the number dipped back under 4,000 in the second quarter, with 159 fewer firms registering transactions than in the previous three months.
This is despite a busy market. More than 300,000 completed property transactions were registered for a third successive quarter.
“This is likely to be influenced by the continuing backlog of activity from the height of the pandemic, although the Q2 figure – despite being up 4% annually – was down 22% from Q1 as the backlog eases,” the tracker said.
Search Acumen director Andy Sommerville said: “It is the larger firms that have been able to adapt more quickly to a challenging market and monumental workloads, processing more transactions at a higher rate than seen previously.
“These are firms which have the scale and budget to embrace technology to ensure they are on the front foot, giving them a competitive advantage. However, the barriers to modernisation and digitisation have fallen as technology has become adopted more widely, and no firm can afford to leave this stone unturned.”
A major milestone in the digitisation push will come in November, from when HM Land Register will only accept digital AP1s – PDFs will be rejected.
Mr Sommerville suggested too that market activity might not slow despite the economic conditions: “Although the cost-of-living crisis is set to slow the market further, we might also see a slew of properties come to market in the autumn as sellers look to take advantage before prices drop too far.
“At the same time, as interest rates go up, homeowners may be at increasing risk of overextending themselves financially having purchased a larger home since the pandemic, adding more potential sellers to the market.
“As more supply should balance out house prices, this may not translate to fewer transactions, as greater choice allows for more potential buyers to enter the market. It is entirely possible that we see an extended period of strong transactional activity despite economic headwinds.”
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