Conveyancing in London for FTBs on the increase

New data revealed by the CML shows a marked increase in London conveyancing for first time buyers. For the third quarter of 2013 there were 13,100 conveyancing transactions involving first-time buyers in London. This represented an increase of 24% on the previous quarter and a rise of 32% compared to the third quarter of 2012. 

Property price increases in London, and the knock on effect on the typical loan amount has resulted in stronger growth in the value of lending to first-time buyers.  In total, £2,960 million was advanced in the third quarter of 2013, a 25% increase compared to quarter two and up 42% compared to the same period in 2012.

Right to Buy Conveyancing - 2013 to 2014, Quarter 1

Key points from the latest statistical evidencing an increase in right-to-buy conveyancing are:

• in 2013 to 2014 quarter 1, local authorities sold an estimated 2,149 dwellings under the Right to Buy scheme; this is nearly 5 times the 443 sold in the same quarter of the previous year 
• there were approximately 300 fewer sales in 2013 to 2014 quarter 1 than in 2012 to 2013 quarter 4; this was the first quarter on quarter reduction in sales after 3 quarters of increases 
• local authorities in London accounted for 18% of sales in 2013 to 2014 quarter 1, this compares to a maximum of 21% in the previous 7 years 
• in 2013 to 2014 quarter 1, local authorities received approximately £129 million from Right to Buy sales, more than 5 times higher than the £24 million in the same quarter of 2012 to 2013 
• the average receipt per dwelling in 2013 to 2014 quarter 1 was £60,000, this compares to £54,000 in the same quarter of the previous year  
• there were 65 dwellings started on site or acquired in 2013 to 2014 quarter 1, this compares to 14 in the same quarter of the previous year

The reason Why Professional Indemnity insurers are Asking About 'Right to Buy' Transactions

Did you spot the following question on your Professional Indemnity Insurance renewal form for 2014?

In the last 10 years have you carried out any “right to buy” conveyancing transactions? If yes provide full details on page 10 including total number of transactions each year, number from referrals (e.g. brokers or marketing professionals and number of direct approaches).

Did you ask the question as to why it was there? 

Many firms will soon find out the reason why as solicitors face thousands of claims for professional negligence over their involvement in ‘right to buy’ work.

The Master of the Rolls has recently published a new Practice Direction supplementing the Civil Procedure Rules 1998 concerning Right to Buy claims. The new Direction provides for the transfer of existing and new claims to the Chancery Division and the appointment of a designed judge, Mr Justice Sales, for the purpose of further case management and trial or trial of issues arising from such claims. Read the Direction in full here (pdf).

Manchester law firm Tandem Law – which alone has around 6,000 cases on its books – is named in the practice direction as being responsible for maintaining a list of all claims.

These claims against the mortgage broker and/or solicitor will be for relatively small sums of a few thousand pounds. The larger claims against solicitors accuse them of failing to advise clients properly, both in terms of conveyancing and mortgage issues, with the close relationship between some mortgage providers and solicitors under particular scrutiny.  

On their website Tandem Law give some example of poor advice relating to council house purchases including:

• Overcharging for professional fees 
• A dereliction of duty of care towards the borrower, including not carrying out the required checks that are a standard part of the conveyancing process
• An adviser failing to explain the additional living costs, such as buildings insurance, associated with being a homeowner

Mike Fong, Head of Technical and Legal Practice at Tandem Law, says, "Thousands of people, right across the UK instructed their solicitors to help them achieve their dream of buying their own homes - and those solicitors failed their clients."

Leasehold service charges under attack at Westminster

A heated debate has recently taken place at Westminster Hall where it was argued that the current leasehold system favors property management companies. 

Jim Fitzpatrick MP has opened fire on “rip-offs” faced by leaseholders in a call for reform of unfair charges and a confusing legal system. 

Mr Fitzpatrick said: “Urgent action is needed to level the playing field between leaseholders and property management companies. 

He added: “The government needs to rein in predatory property management companies with legislation that gives leaseholders a fair say and the ability to challenge any and all charges.” 

New government legislation will make it easier for leaseholders to seek redress against the property management companies, which will have to sign up to a watchdog early next year. Agents will be forced to tell leaseholders what their fees and charges are before the lease is signed.

Accord Mortgages Conveyancing Panel - Five requirements for Sole Practitioners to be aware of

Whist Sole Practitioners are currently welcome apply to be on the Accord Mortgages conveyancing panel there are a number of conditions (as of today’s date) that you should be specifically aware of as a sole practitioner:

• All solicitor applicants located in England and Wales - regardless of whether they are sole practitioners-  who apply to join the Accord Conveyancing panel will require Conveyancing Quality Scheme (CQS) accreditation.
• If on a sale or remortgage you require title deeds or other documents from Accord in connection with a personal mortgage you can not request the deeds. Rather you must nominate a different firm on the Accord panel to request the deeds or documents and to handle the conveyancing.
• Your office(s) will be open during normal office hours in your locality. Accord Mortgages must be able to contact you between the hours of 9am to 5pm through Monday to Friday, 
• You must arrange for appropriate cover where necessary. Your locum must be a member of the Accord Conveyancing Panel (local arrangements are asked for on the application form)
• To notify Accord promptly in writing of any changes to the structure of your practice, including but not limited to a change from a sole practitioner to a partnership or, in any case, a change to a limited liability partnership, legal disciplinary partnership incorporated practice or alternative business structure.

Conveyancers to take note of study into residential property management

The Office of Fair Trading (OFT) has recently announced its intention to conduct a market study into residential property management services for leasehold homes in England and Wales. In time the findings may have implications for leasehold conveyancing.

The OFT is particularly interested in

• Whether leasehold owners feel that they have sufficient involvement in decisions taken about appointing managing agents, and if it is difficult to establish whether the property manager is providing value for money or a sufficient standard of service.
• Whether property managers and freeholders have the same interests as leaseholders in, for example, keeping down costs of maintenance work or buildings insurance.
• Whether there is effective competition, including evidence about how easy it is to switch between providers.
• Whether residents receive good value for money and reasonable quality of service.
• The time, effort and resources required to complain and seek redress.

Views can be submitted on the market study's proposed scope by writing to the OFT by 17 January 2014. Comments can be submitted by email to propertymanagers.study@oft.gsi.gov.uk or sent to:

Ever thought of specialising in Lease Extensions?

There are up to 1.43 million homes in the UK  are at risk from shortening leasehold terms – threatening borrowers and lenders with negative equity. This represents a significant amount of potential conveyancing work. 

As the leasehold tenure falls below eighty years, the value of the property begins to fall and value of the property plummets rapidly once the lease runs down to below 60 years. 

Apartments are particularly at risk given that most UK flats are leasehold rather than freehold. Of the 1.43 million leasehold properties in the UK, 817,000 are flats, while the remaining 612,000 are houses. This means inner city urban areas are disproportionately affected by the problem of shortening lease terms. 

Searches on Google have increased dramatically over the last five years surrounding key words around lease terms.The team at Lexsure have experience in building lease extension calculators for law firms. 

Interest-only mortgage borrowers are most at risk. If the borrower is just servicing the mortgage on a leasehold property, once the unexpired lease runs below 80 years the value of the property falls close to the outstanding balance off the mortgage and shortly afterwards can fall into negative equity.

A large block of interest-only borrowers are potentially at risk. Since 2002, there are estimated to have been 1.28 million interest-only loans granted for house purchase loans which have no repayment plan. This represents 14% of total house purchases over since the turn on the century. 

What are you doing to contact your existing clients about extending their leases or attracting new clients that may need a lease extension?

SRA and CML take opposing views on retention of conveyancing files

The CML has recently expressed concerns with the SRA’s proposals for shortening the retention period as they relate to property deeds and associated conveyancing files.  

In an effort to reduce expenses the SRA have proposed to put in place a retention period of purchase files for 7 years from date of file closure; or a period of 2 years from the date of intervention for registered deeds or documents.  

The CML are urging that the Solicitors Regulation Authority retain the current retention period of 7 years from the date of intervention. 

The CML have expressed concerns that reducing the time period for holding conveyancing files from the current requirements, would cause potential difficulty for claimants, including lender claimants, if they are unable to access historic conveyancing files required to pursue claims that are outside of typical limitation periods. This can occur where the claimant is relying on latent damage, Nykredit–type claims and claims where there has been dishonesty and concealment, which may require access to these files to assist in the case. 

Additionally, the CML point out that an intervened conveyancing firm, by its nature, is more likely to be subject to actions which may require access to historic files and documents. 

The CML have suggested the SRA to consider holding conveyancing files digitally to decrease costs rather than the proposed reform. Whilst acknowledging  there would be cost in converting the paper files to a digital format, this would allow for the extant retention period, but remove the physical storage costs, which the SRA note is a significant proportion of the overall expense.

Santander solicitor panel portal to launch in 2014

It looks as though CQS is facing a credibility challenge as the single conveyancing panel management facility supported by the CML. It appears that the CML as well as lenders such as RBS and Santander are supporting a new lender panel portal to be launched in 2014. The Lender Exchange formerly known as http://www.convey-panel.co.uk is a privately run entity through First Decision Limited.

The new panel management facility has two stated objectives – to minimise the costs and administrative burden on conveyancing solicitors responding to regular duplicate information requests from multiple lenders and to help lenders minimise fraud and negligence through robust due diligence (although it is not yet clear how this second element is to be achieved). 

The panel software will give conveyancing firms throughout the UK (not just England and wales) an easy way to submit and update information to lenders about their conveyancing practice through a, secure interface, saving them time and duplication of effort in meeting the terms of their lender panel membership.

Lenders such as Santander, in turn, will be able to access information to enable them to assess the continued suitability of a firm to be on their lender panel, depending on their own individual requirements.

BSA cause confusion on their mortgage instructions

LENDERmonitor has advised conveyancers via their update service about uncertainty relating to BSA mortgage instruction changes. 

The BSA introduced mortgage instructions (their version of the CML Handbook) for its members in January 2010. The BSA Mortgage Instructions are currently being used by 31 lenders.

As is the case with the CML Handbook, the BSA Mortgage Instructions comprise of two sections: a core set of mortgage instructions; and specific requirements setting out individual lenders’ requirements. 

The following warning was issued by LENDERmonitor: Please note that the BSA have recently made some wholesale changes to their website including the formatting of their Mortgage Instructions. We have identified a number of potential errors including important questions having been removed. We strongly recommend that before completing on any transaction with a BSA lender that you contact the lender directly to send you their updated mortgage instructions.

National -V- Local Conveyancing

If there's no really good reason for a conveyancing to be done locally, it will migrate to the web.

Conveyancing firms that migrate to often need economies of scale, but eventually those businesses quickly coalesce into just a limited number of winners. 

The winning strategy for the local conveyancing firm, then, is:

a. provide a conveyancing service that truly works better when it's local (e.g speedier or more personalized), and 

b. do it in a way that the conveyancing process works better when it's small, custom, connected and not in search of economies of scale.

Proposed London Airspace Consultation: implications for practitioners

The proposed new air traffic routes have significant  implications for practitioners working in residential conveyancing and commercial property.

The London Airspace Consultation (LAC) will run from 15 October 2013 to 21 January 2014 for stakeholders and the public to view and leave feedback that will help with the modernisation of the UK’s airspace structure.

This consultation is the first stage in a wider programme of proposed changes to deliver the UK’s Future Airspace Strategy (FAS), developed by the Civil Aviation Authority (CAA) with the support of the aviation industry. It will deliver significant benefits, including fuel savings for airlines, which will also mean fewer CO2 emissions, and less noise overall for people living below.

Practitioners need to be aware of the proposals and consider whether it is necessary to make enquiries to establish whether the property or land in question may be affected. While there is a possibility that the scheme will not go ahead, there is still the potential for blight. Lexsure is offering COMPLETIONmonitor clients the ability to conduct a postcode search designed to enable you to determine whether the proposal potentially affects an area in question and provides summary details of the potential effect.

Property or land may be temporarily affected by the new routing and the resultant noise pollution.

Owners of affected property may also find that their close proximity to the new route results in a reduction in the value of their property.