Conveyancing: Polarisation returns
Small firms in the north-east of England are most likely to do better in the residential conveyancing market than other regions as the dominance of the large firms has re-established itself, according to new figures.
The research, The Conveyancing Landscape, by legal technology consultants Access Legal, also confirmed that the combination of stamp duty land tax reforms introduced in September, rising inflation and interest rates would likely lead to a slowdown in conveyancing.
The polarisation of the conveyancing market – with a small number of large firms taking an ever-greater overall share of the market – is a longstanding phenomenon.
Though this was marginally reversed during Covid – other research has shown how firms returned to the market to help with the spike in work caused by the SDLT holiday – the report said it returned in 2021: a mere 3% of firms did 51% of all conveyancing, while 74% of firms do just 8% of the national total.
The overwhelming majority of firms completed fewer than 250 transactions a year (84%) and 59% fewer than 100.
For the first time since 2007, there were more than a million residential purchases in 2021.
The in-depth analysis of Land Registry data found that small firms “thrive best” in the north-east – some 82% of active conveyancing firms in the region were small, defined by the research as completing fewer than 10 purchase cases a year.
By contrast, larger firms were most dominant in Yorkshire and Humberside, while the West Midlands was “arguably the most competitive region”.
Out of the more than 4,800 firms active in the market that year, just five firms handled more than 5,000 transactions and only one more than 11,000.
That firm, which has by far the largest market share everywhere except London, was My Home Move. The biggest conveyancer in London was law firm Taylor Rose MW, which doubled its share in the capital in 2021 after combining with McMillan Williams.
Nationally, My Home Move had a market share of around 2.8%, while O’Neill Patient and Taylor Rose MW are the only others with more than 1% (1.4% each). My Home Move is part of the Simplify Group, whose various other brands has another 2% or so share.
Expert contributors to the report were somewhat divided over the future of the property market, given the current economic headwinds.
Mike Connelly, founder of online conveyancing provider Legal Bricks, part of Access Legal, said he expected supply and demand for houses would ensure prices were impacted less than some analysts were predicting. At the same time, increasing base rates were leading transaction fall-through rates to rise.
He continued: “Over the past two years, we’ve seen a huge shift in the way law firms have had to operate and service clients.
“Many of the larger law firms are likely to be able to embrace new technology, enabling them to work more agile, and move to a hybrid way of working quicker than many of the smaller law practices.
“It’s notoriously difficult for sole practitioners, limited partner firms, and generally smaller law firms to be accepted by some lender panels, which leaves them with limited options outside of appointing additional partners, should they wish to grow.
Meanwhile, Mohammed Chaudhri, chief economist at credit reporting agency Experian, pointed out that consumers were facing strains that made borrowing challenging.
However, his company had identified around 10 million Britons with good credit – double the number in the summer – who alone had the means to keep the housing market afloat.
Last week, the bosses of both Simplify and O’Neill Patient indicated that they were looking to grow organically rather than by acquisition.
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