Property market beset by delays as conveyancer queries vary by an ‘alarming’ 8,176%
The scale of inefficiency in the property market was laid bare today by new analysis that reveals some conveyancers receive 83 times as many Land Registry queries as others.
The number of requests sent to conveyancers to progress cases varied by an “alarming” 8,176%, ranging from 2.9 per 100 applications to 237, new analysis of official data by technology consultancy Novus Strategy has shown.
The industry average for all businesses filing register updates is 11.7 per 100 applications.
‘Requests for Information’ (formerly known as ‘Requisitions’) are issued when the Land Registry can’t progress an update to the register because information is wrong, missing or incomplete.
Each time HMLR issues a request, it can delay a transaction by three weeks and the body has already warned that avoidable requests cost the industry up to £19.1m every year. So it’s in the interests of everyone, including estate agents, consumers, lenders, conveyancers and developers, that these are kept to a minimum.
Novus Strategy, the technology consultancy for the home buying and selling industry, took an average for the 10 residential conveyancers with the largest and lowest proportion of requests linked to register updates over the last 12 months.
Of 5,742 organisations of all kinds submitting update applications, 135 firms (2.4%) received more requests for information than they sent applications. Meanwhile, 393 organisations (6.8%) received no requests for information at all, though this will include many cases where no property changed hands, for example remortgages.
Conveyancers aren’t necessarily at fault when HMLR raises requests for information. They can be raised in error, third-parties may have failed to provide them the right information in time and HMLR can also request more information under rule 17 of the Land Registration Rules 2003.
Lenders have limited influence over which solicitor or conveyancer a borrower uses so they have no control over how efficiently each transaction is brought to completion.
This matters to lenders because longer pipeline-to-completion times tie up capital which isn’t producing a return. Cost of funds comes under pressure because unpredictable capital requirements make it harder to plan for the arbitrage between wholesale drawdown and the pricing of rates on savings products. Delays also raise the risk of fall-throughs which exacerbate these problems and weigh on net interest margins.
Meanwhile, the same delays damage the efficiency, cash flow and profitability of everyone else involved in a transaction, namely estate agents, brokers and developers. When interest rates are rising, consumers can be left counting the cost too as offers expire and borrowing becomes more expensive.
The range of conveyancing work that firms carry out will vary but the findings illustrate the extent of the efficiency challenges the industry is currently trying to solve. Last month, the Land Registry unveiled its new digital registration service ahead of its launch in October. It will introduce automatic checks that prevent filings from being made when they’re invalid or incorrect.
Initiatives like this come amid a wider technological push towards interoperability in the homebuying industry that promises to deliver exactly the sort of efficiencies that should drastically reduce Land Registry requests. This shift is what’s become known as Horizontal Digital Integration (HDI) a framework developed by Novus Strategy that embodies the move from purely internal digitisation to a world where open networks and data standards unlock transparency and information sharing across all businesses involved in a transaction.
Identity is a key area where HDI will have significant impact, with Land Registry revealing recently that identity and name variations were responsible for 195,000 avoidable requests each year3.
Chris Williams, founder of Novus Strategy, the technology consultancy for the home buying and selling industry, said:
“While the particular circumstances of these transactions and the exact mix of conveyancing business attended to by these firms are unknown, this clearly illustrates the scale of the opportunity that presents itself. The cost and duration of transactions can and should be slashed by the amount of innovation we see moving into the homebuying industry at the moment. That’s very welcome after years of slow progress caused by an absence of interoperability.
“So while these figures are quite alarming, transformation is on the horizon now thanks to the adoption of HDI strategies, where these sorts of queries should largely evaporate if the sector can create seamless data handoffs in the property transaction process.
“A level of digital maturity has been reached across the home buying and selling ecosystem, and we’re seeing lots of innovations coming forward, not least Land Registry’s own digital registration service and its move to accept qualified electronic signatures.
“It means shared verifications, permissions, open networks and common data standards will consign manual rekeying of information and endless delays to history, with higher margins, scalable capacity and a better customer experience to boot.”
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