The UK Residential Conveyancing Market and The Impact of COVID-19
Small and medium sized conveyancing practices and law firms in the residential markets are under tremendous pressures as file transactions have all but dried up. The lockdown on society brought about through government policies of “shelter in place” have effectively prevented families from moving houses.
There are some re-mortgages moving through, but the buy and sell sides of the market are in stasis and will likely continue as such until the lockdown orders are lifted.
The New Normal:
When the markets do begin to open up, the volumes of transactions will not immediately return to prior levels. We estimate that it will take months for these to begin to stabilise to anything like the pre-COVID-19 market.
For practices that were fully occupied with staff that were fully utilised, this new normal presents a very challenging business conundrum.
“How do I grow my business back to where it was pre-lockdown as quick as possible, and how can prior staff count and overheads be covered with a limited but growing number of file transactions coming through the front door over a 6 or 12-month period?"
The numbers simply do not stack up and that reality is being faced by a very large swathe of the UK conveyancing market’s service providers. Smaller teams will be needed to handle few files, and that means less staff doing much more work than before.
The UK conveyancing market has been consolidating and contracting in the pure number of providers for many years now. Smaller practices being swallowed up by larger ones. 40% of the entire annual file transaction volumes are now handled by the largest 5 firms in the UK. Centralised services, robust technology, and process optimisation. A form of digital transformation to the process has also lead to a shrinking number of providers and acceleration of the consolidation movement.
This change in the landscape has also been fueled by outsourcing a lot of the lesser tasks to offshore firms in places like India and the Philippines. India, in particular, has a growing number of conveyancing service providers to the UK market.
By outsourcing many tasks to a lower cost base operating unit, the overall cost of file handling is much reduced. Margins are then protected or indeed improved. All of the larger firms in the UK use some form of outsourcing unit.
Digging Out Of The COVID-19 Hole:
With growing concerns over files transaction volumes taking time to recover, along with the financial pressures of supporting the pre-COVID-19 status of the firm, business owners will be faced with making stark choices and decisions about their future prospects.
Outsourcing a meaningful proportion of tasks and therein reducing costs and overheads is an excellent option to survive the economic impacts of the pandemic lockdown, and to buy time to grow back the business and beyond over the course of the coming 12-18 months.
This is not a quick fix and business owners should shop around for conveyancing outsourcing firms that have a track record in the industry. Firms with a UK presence or representation is also a good measure of their commitment to the industry and clients.
Finally, those with a number of client referrals and references offer those considering going down the outsourcing route a level of comfort over the quality of service and cost effectiveness of the model.
Outsourcing is not for everyone, but it is now a mature industry.
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