Bawa: Significant step forward for PEXA in the UK
Property Exchange Australia (PEXA), which processes 80% of conveyancing completions in Australia, is to acquire specialist property law firm Optima Legal from listed company Capita.
The deal was announced the day after the launch of PEXA’s remortgage platform in England and Wales, having entered the market earlier this year to support the digitisation of property transactions.
A transformed sale and purchase process due for release in 2024.
Capita bought Optima Legal in 2014 after being granted an alternative business structure (ABS) licence. The Leeds-based firm specialises in fees-assisted remortgage and equity release work – it works directly with six of the UK’s top eight mortgage lenders, equating to approximately 22% share of the remortgage market.
Optima’s most recently filed accounts, for 2021, showed turnover up 5% to £10.3m and an operating loss of £29,000, down from £1.9m in 2020.
This improvement reflected “a partial recovery of remortgage client instructions in 2021 and the impact of cost reduction activities undertaken in 2020”. It had 278 staff at the end of 2021, 36 fewer than a year earlier.
The acquisition will be funded from PEXA’s existing cash reserves and is expected to complete by the end of the year.
PEXA is an entirely online property exchange network which completed its first transaction in the state of Victoria in 2013 and since then has handled more than 11m transactions across Australia.
It was listed on the Australian Stock Exchange last year and currently has a market capitalisation of A$2.8bn (£1.6bn).
The PEXA platform provides an automated solution integrated with the Land Registry and Bank of England to enable “frictionless remortgages and faster settlements”, it said.
“By integrating PEXA’s platform, Optima Legal will be able to demonstrate the benefits of digital completions to its lender and customer base, starting with PEXA’s remortgage offering.
“For consumers, this means increased speed and certainty, greater transparency of the post-offer process, and better loan deals created by ease of switching, while lenders stand to benefit from reduced processing costs, decreased time to settlement, and increased remortgage capacity.
“Additionally, it provides conveyancers with a streamlined platform, delivering, among other things, a higher quality of service for customers.”
In Australia, remortgaging times have dropped from an average of 42 to 15 days, with some remortgages even completing in one day.
Lenders can use PEXA’s technology directly, via Optima Legal, or through any conveyancing firm that integrates with the platform.
A spokeswoman told Legal Futures that PEXA did not believe the acquisition would discourage firms from doing so.
“The acquisition of Optima Legal was an opportunity to allow us to reach more potential customers with our remortgage platform more quickly, while also showcasing the benefits of digitisation – from improved accuracy and efficiency to reduced costs – to other conveyancers.
“We remain committed to working with all partners and industry participants to make PEXA’s platform available to all.
“Importantly, Optima Legal and other conveyancers will be offered access to the PEXA platform on equivalent terms.”
James Bawa, chief executive of PEXA UK, said: “The acquisition of Optima Legal marks a significant step forward for PEXA in the UK and demonstrates the strength of our commitment to delivering transformational change that will benefit consumers, conveyancers and lenders alike.”
He said that, starting with remortgaging, “we aim to streamline a conveyancing system that has been under significant pressure”.
A PEXA survey earlier this year suggested that as many as 20% of borrowers looking to remortgage in the last 24 months have battled so much with application issues that they abandoned it altogether. A further 28% chose to persevere, but experienced severe delays.
As a result, 76% of the 1,000 respondents felt the remortgage process is not fit-for-purpose.
On Wednesday, PEXA confirmed that Hinckley & Rugby Building Society and Shawbrook Bank would be the first lenders to start processing remortgage cases through its platform, with the former being being onboarded this month. It said it expected to bring on further lenders in “subsequent waves”.
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