Sunday, 23 July 2017

No Smiles for Conveyancers if Cheshire is Right

Are we about to see a significant dip in house prices in London in the near future?

Bloomberg News recently asked seven market commentators to predict what they see happening next in London’s 1.6 trillion-pound housing market.

Paul Cheshire, professor of economic geography at The London School of Economics and Political Science:

“The turning point is just being reached. Housing prices have continued to rise relative to incomes and the affordability ratio is now at an all-time low. Real incomes are falling as the weakness in the pound feeds through to higher inflation. The ability to raise wages isn’t there and Brexit is making everything more uncertain and worse. London is the epicenter of the U.K. housing market and changes in prices there tend to ripple out. I’m expecting a sharp correction in housing, more on the level of the 1990 crash. I don’t expect negative equity to be as big of a problem as it was then, and interest rates may rise but will still remain low by the standards of the early 1990s.”

NOTE: House prices fell about 32% in London from 1989 through 1992, according to data compiled by Nationwide Building Society.

Friday, 30 June 2017

CML Lenders’ Handbook to be Renamed on 1st July

From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance.

It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services.

The new organisation will take on activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

The CML Lenders’ Handbook will continue, but it will be renamed the "UK Finance Mortgage Lenders’ Handbook" (‘the Handbook’). 

The CML will rename the Handbook from 1 July 2017.

Associated documents (for example, the Disclosure of Incentives Form) on the CML website in due course.

Website urls and bookmarked links relating to the Handbook will continue to work as normal.

From 1 July, all references to the CML Lenders’ Handbook shall be deemed to mean the UK Finance Mortgage Lenders’ Handbook.

Any associated documents which refer to the CML shall be deemed to mean UK Finance.

A set of FAQs and responses has been prepared by the CML to assist users of the Handbook during the transition from the Council of Mortgage Lenders to UK Finance.

Monday, 19 June 2017

Is Your Firm Updating Their Pre-Completion Checklist ?

Technology, lender compliance and fraud prevention within the context of a pre-competition checklist are some of the main focus points at the next Webinar by Lexsure on 24th and 25th July.  

Almost all firms have a pre-completion checklist that they use, either on the side of the file or a paper checklist. But how often does a firm update that checklist and how comprehensive? Lexusre’s webinar focuses on what a firm’s pre-completion checklist should look like and how the latest technologies can help reduce mistakes and insurance premiums.

The free webinar will pay particular attention on the following areas:

  • What questions should your checklist have to highlight potential frauds (what can we learn from the Mishcon, Perunsing and P&P cases)
  • Help to Buy - Example Questions/Tasks/Workflows
  • The European Union’s Fourth Anti-Money Laundering Directive
  • Lender Compliance - How can a checklist ensure that you are up to date with the latest requirements
  • How a pre-completion checklist  can build your post completion workflow.


The webinar will demonstrate example checklists within the COMPLELTIONmonitor system

Bookings to the webinar are available here but please as will previous webinars only 800 spaces are available.

Monday, 29 May 2017

Amendments To CML Lenders’ Handbook - 19 June 2017

The following amendments will be made to the Lenders Handbook for England and Wales, Scotland and Northern Ireland on 19 June 2017:

England and Wales

  • A minor amendment to reflect that the FASI and MASI professional qualifications are no longer offered.

Scotland

  • Updating the Handbook to reflect the closure of the Register of Sasines to new standard securities
  • Removing reference to obsolete Law Society guidance in relation to coal mining
  • Aligning the Handbook instruction with England and Wales in respect of warranties for new build properties
  • Updating the handbook to reflect the use of digital discharges
  • A minor amendment to reflect that the FASI and MASI professional qualifications are no longer offered.

Northern Ireland

  • A minor amendment to reflect that the FASI and MASI professional qualifications are no longer offered.
  • Aligning the Handbook instruction with England and Wales in respect of warranties for new build properties

The CML will for an updated summary of amendments will be published alongside the changes, as usual.



How Can Conveyancers Avoid a "Kodak Moment"

A director of VC company recently advised me that ‘there are only two types of industry left..those that have been disrupted and those that are ripe for disruption’.  

The legal industry will, sooner or later, witness significant change regardless of how loud the naysayers are. Concluding that because disruption hasn’t happened yet, that it will never happen is a high risk approach.

Simply repeating the statement “It won’t happen to us” again and again did not prevent disruption to newspaper publishers, telephone utilities, stockbrokers, record companies, bookstores, travel agencies and the retailers.

The reason Kodak failed, was not due a lack of corporate strategy (the top brass saw digitisation coming), and nothing to do with poor technology (in 1975 Kodak built one of the first digital cameras and held more patents than it’s competitors). Kodak failed because it was a chemical company and a bureaucracy, filled with people eager to do what they did yesterday.

Like Kodak many of the owners of law firms that I talk to recognise that change will happen but want to hold on to existing processes for as long as possible.

It would be wrong to assume that law firm managers  don't care about doing things better. But overseeing and paying for change for the benefit of the next generation of lawyers  isn't what they signed up for.

Law firms must make sure they are not falling into the same trap as Kodak. There are a number of potentially disruptive developments occurring at present which may have similar effects on firms as digital photography had on Kodak. Rocket Lawyer and other online legal services are just a couple of examples. Since most owners of firms are lacking experience of how to detect and manage disruption they will have to be especially vigilant and prepared to go through one or two false alarms on their way to developing relevant experience.



Tuesday, 23 May 2017

Will Poor Conveyancing Quality be Exposed?

If you are not going to be a good conveyancer then you better be a lucky one and hope that events don't conspire to expose errors. I don't fancy your odds in the long term though if you continue to make mistakes.  

Conveyancing errors often are allowed to happen for one of two reasons:

You're in a huge hurry and you can't process all the incoming information properly. But more common...

Our heads our turned in order to focus on short term thinking. The ‘lifting of the carpet’ may happen for months or years and possibly never. You would be amazed to learn how many lawyers tell me ‘I have not been sued in 20 years of practice and therefore clearly I do not make mistakes’.

Similar thinking is the reason why most of us don't save for retirement, don't pay attention to long-term environmental issues, continue to smoke and, tragically, tolerate (or fall prey to) irrational rants about things like vaccines.

Poor decisions and errors happen not only due to lack of knowledge. Often poor decisions happen because a firm can be swayed by short-term comfort and ignore long-term implications. A good example of this is when I was told by one conveyancing firm that they do not do environmental searches (even where their lender client requires it) because the costs made their conveyancing quotes less attractive than their competitors. A bad decision feels good in the short run, easy for someone to justify when the decision is driven by apparent immediate economic pressures. But there's a gap when we get to the long run. In my recent webinar ‘The Future of Legal Technology’ I talk about the concept of ‘Nowism’ as a blocker on innovation and risk management.

The job of the managing partner, HOLPs and COLPs is to elevate the long term risk management of the conveyancing process regardless how hard the marketing and tribal noise around us encourages to fall prey to instant comfort of pushing through transactions at volume and speed.

The future will ultimately ignore short term requirements.


HSBC Stops Lending on Leaseholds with Onerous Ground Rents

HSBC have become the latest lender to change their CML Handbook instructions to lawyers in relation to ground rents.

Section 5.14.9 of HSBCs CML Handbook Part 2 now reads

We will not provide residential or Buy to Let Mortgages in the following circumstances:

• The property is subject to an onerous Lease clause regarding an excessive or unreasonably escalating ground rent.

This change comes hot on the heels of the Nationwide Building Society change on the 11th May. Despite some mainstream and industry press pointing to the fact that Nationwide were the first lender to make such a change, this is not the case. A number of lenders were making changes introducing new requirements in relation to ground rent five weeks earlier.

Other Part 2 sections of CML Handbook for HSBC were also changed yesterday. Law firms wanting to be updated when lenders change their instructions can sign up to the LENDERmonitor Alert Service.