Conveyancers register fewest transactions since 2013 as market lulls

Search Acumen Conveyancing Market Tracker – Q2 2017 edition

 UK conveyancing market activity dips in Q2 2017, as average monthly case load per firm drops by 13% compared to Q1 2017

  • Search Acumen’s analysis of Land Registry data reveals the number of conveyancing firms operating in the market dropped again to the lowest number on record
  • The stagnant market sets firms back three years in terms of average monthly business volumes
  • Top five firms on transaction volumes have been the most insulated from market lull over the past two years while those outside the top 1,000 suffered the most.

Activity in the UK conveyancing market dipped significantly over Q2 2017, as stagnant housing supply and restricted home moving activity pushed total conveyancing volumes down 14% to 210,964 from 245,738 in Q1 2017: the fewest cases in a single quarter since mid-2013.

Fewer conveyancing businesses are active in the market than was the case four years ago, but the latest Conveyancing Market Tracker from conveyancing search provider Search Acumen shows that the slowdown has nevertheless put firms back to the average monthly business volumes they last experienced three years ago.

Throughout the quarter, the average monthly caseload per firm dropped by 13% from 59 in Q1 to 51 cases in Q2 – the lowest quarterly figure since Q2 2014.

Low transaction volumes were accompanied with another drop in the number of active conveyancing firms during Q2 2017. Using Land Registry data to examine competitive pressures in the conveyancing market, the Tracker shows that the average number of firms active in the three months to June 2017 dropped 1% from 4,198 in Q1 to 4,143. This is the lowest figure on record since tracking began in 2011.

 Graph 1: Active conveyancing firms vs average monthly transactions per firm

Those firms that average between 100 and 200 transactions per month witnessed the largest quarterly decrease in number during Q2 2017. The number of firms in this category dropped by a third over the quarter (from 88 to 59) and 45% annually (from 106 in Q2 2016).

 Top five firms are weathering the market lull

 Search Acumen’s analysis shows the top five ranked firms according to transaction volumes have been most insulated from the lull in the UK property market, while occasional conveyancers appear to be suffering the most.

While the top five firms saw the biggest drop in activity year-on-year, this comparison is skewed by the unusually high volume of transactions registered in Q2 2016. This was a result of the rush to complete purchases at the end of Q1 that year ahead of changes to the stamp duty rules for landlords and second homebuyers.

Over the past two years, the top five ranking firms have experienced minimal change in total quarterly transactions processed: from 12,481 in Q2 2015 (2,496 cases per firm) to 12,538 in the same period this year (2,507 cases per firm). In contrast, those firms ranking outside of the top 1,000 have witnessed a 14% decline in business: from 65,342 in Q2 2016 (20 cases per firm) to 56,462 in Q2 2017 (18 cases per firm).

 Graph 2: Quarterly, one year and two year drops in transaction volumes by firm ranking

Comparing different types of transactions, Transfer of Part transactions saw the largest decrease in volumes, dropping by 27% from Q1. First Registration transactions witnessed the smallest decrease, dropping 10% from the previous quarter but up 5% year-on-year. In the same three month period, Dealings and Dispositionary First Lease transactions were down 12% and 20% respectively.

Commenting on market trends, Andrew Lloyd, Managing Director of Search Acumen, said:

“The dip in conveyancing activity should come as no surprise to those closely watching the UK property market, but it poses a significant challenge for conveyancing firms that want to survive and grow. We see from our latest statistics on productivity that the conveyancing industry is an increasingly well-oiled machine, but it can only process the transactions the market feeds it.

 “The turbulence in the UK’s political system is far from settling as we follow our Brexit path, and it is essential that the property market is safeguarded from continued uncertainty with clear and effective policy decisions. Last time the market was this quiet for conveyancers, we saw major interventions through Help to Buy to support first-time buyers. The fact that second-steppers are now finding life hard suggests there is still much to do to effectively balance the UK housing market – not least addressing the shortage of homes to go round.

 “Meanwhile, with fewer customers to play for, competitive pressures are heightening and conveyancing firms face more of a challenge to attract new business. No-one wants to get left behind in the second half of the year and if growth returns after the summer, the biggest winners will be those firms that are ready to leap out of the starting blocks.”

Kindly shared by Search Acumen