Is Digital Conveyancing the Future of Property Transactions?
- February 8, 2024
The paths of residential and commercial property transactions in the UK are at a moment of divergence. While residential transactions are declining, commercial property transactions seem stable, even on the rise. Yet property lawyers are reporting shrinking caseloads, with some firms handling 25% fewer cases in 2023. Improving the conveyancing process, particularly through the implementation of digital conveyancing could create a better, faster conveyancing market that encourages buyers and sellers to take the plunge.
The Current State of Real Estate in the UK
Figures from HMRC show that December 2023 saw the fourth consecutive month-on-month drop in the number of residential transactions, marking a 20% decline from December the previous year. Yet at the same time, commercial property transactions are increasing, albeit slowly.
Many commentators are predicting a smoother, less fractious property market in 2024 that won’t be marked by the mini boom and bust cycles we’ve seen since 2020. However, what’s stopping the market from taking off is the continued sluggishness of property transactions. The average time for conveyancing on a residential property is around 22 weeks and for commercial property can be slower – a long way from the ideal transaction time of 8-12 weeks.
These long conveyancing times are a major contributor to the national fall through rate on property purchases of 34%.
Is Digital Conveyancing the Solution?
Property transactions, far more than property prices, are a great indicator of the health of the market. Making property transactions faster and easier has the potential to encourage both sellers and buyers and creating a more stable property market in the long-term. So, how can we achieve better and faster conveyancing and a system that works for both buyers and sellers?
One oft cited solution is digital conveyancing. Digital conveyancing involves implementing electronic transactions for the transfer of legal documents and funds and making land search details such as tenure, title, and lease length accessible instantly. Digitalisation would:
- Make the current conveyancing system more streamlined and transparent
- Go a long way to achieving faster conveyancing times
- Reduce the likelihood of error and the need for extensive checks and land searches
- Make the system more accessible and make long-distance transactions easier
Countries such as Norway have achieved great success with digital conveyancing systems, in some cases reducing transaction times to a matter of days. However, making such a system possible in England could prove more difficult. Bringing conveyancing solicitors, the land registry and real estate agents into alignment would require robust data security measures, compliance regulation and technology implementation. It is also likely to be costly.
It seems unlikely that the government will agree to the high-level conveyancing rule changes that would make wholesale digitalisation of the system possible. Meaning that without industry-wide desire for reform the technology is likely to be implemented patchily, with some sectors such as commercial real estate more reluctant to embrace change.
Another possible solution is providing buyers with more upfront information regarding property, in the form of a return to home information packs (HIPs), Scotland’s home reports or even Buying and Selling Property Information (BASPI) questionnaires. Transaction times when HIPs were introduced were around 12 weeks and Scotland has seen a 60% reduction in fall throughs since adopting home reports. And, consumers are happy to pay for this information, with 65% willing to pay £300 for information that would speed up their transaction times.
What Should You Be Doing to Prepare for Digital Conveyancing?
As we’ve heard recently, a stable market means many conveyancing firms are looking to drive recruitment. But how can you make sure your latest recruitment drive considers the future of conveyancing?
- Attracting the right talent:
Your hiring strategy should be focused on building and maintaining a talent pipeline that sustains your business long term. Focus on developing a strong, online employer brand that appeals to candidates, improving the candidate experience to make applying for roles smooth and seamless, and creating job descriptions that reflect the attributes and skills you need.
- Hiring for digital skills:
Speaking of skills, when evaluating candidates be sure to consider their digital skills and abilities alongside their other competencies. Digital literacy will be increasingly important for the legal profession with or without the digitalisation of conveyancing. Skills-based hiring can also be used to pinpoint other key competencies like communication which are key in creating better and faster conveyancing.
- Retaining critical knowledge:
Embracing the future of conveyancing will be impossible if business critical knowledge is lost. Improving employee retention not only keeps that knowledge in-house but allows you to pass that on to new employees though mentorship and professional development schemes.
Clayton Legal has over 20 years’ experience helping clients attract and retain legal talent across practice areas that include Property, Personal Injury, Family, Criminal, and Costs law as well as Legal IT and Civil and Commercial Litigation.
If you are building your legal team, we can help. Call us on 01772 259 121 or email us here.