As residential property solicitors, one of the most frequently asked questions we get asked is “why do property transactions take so long” And it’s a very good question.
Jon Turner, Head of Residential Conveyancing at Morr & Co, has over 20 years’ experience in property matters and specialises in country residences. In this article he explains the reasons why property transactions take so long.
Research as to average transaction times vary, but has been cited as at least 22 weeks plus, by the Conveyancing Association in their submissions to the Levelling Up, Housing and Communities Inquiry in May 2024.
Those in the industry anecdotally know how long deals are taking to get to exchange of contracts and it is often utterly tortuous.
So, why do property transactions take so long?
As you’d expect, there are many reasons, but to start with, let’s tackle a very common misconception which is that in the most part, the reason for transaction delays is because conveyancing lawyers are dilatory, overworked and lacking in any sense of urgency!
I daresay there are conveyancing lawyers out there who fit this description perfectly. Indeed I have come across many of them. They are not the majority though. The majority work very hard under immense pressures to give an excellent service to their clients.
Delaying transactions deliberately (or carelessly) is simply self-defeating as it leads to complaints, damage to reputation and also, critically, a delay in being paid. Cash flows for law firms are no different to any other industry and where a transaction is billed only on exchange or completion, what possible reason could there be for not trying to get to that point as soon as possible?
Indeed, most lawyers are given billing targets to meet which can be very difficult indeed if transactions are continually elongated and delayed.
If it’s not the ‘bl**dy lawyers’ then what is the reason?
In my view, one of the key ingredients as to why transaction times have increased so much is simply due to the property market and, specifically, the lack of housing stock coming to the market in recent years. There are signs of improvement now in certain areas, particularly some urban areas but for many areas (country houses in particular) stock remain low.
And how does low housing stock result in longer transaction time? Buyers are often looking for the right property for many, many months. Often for reasons of simple necessity, a buyer will ‘plump’ for a property – it’s not perfect, they don’t love it, but there is nothing else around so it will ‘have to do’.
That in itself creates a problematic dynamic, which can elongate transaction times for the following reasons:
1.
If a buyer doesn’t love a property, and therefore is not emotionally invested in it, they are unlikely to want to take any risks on it. Conveyancing lawyers and surveyors have to point out defects to a prospective buyer and, often, how a buyer reacts depends on how much they love the property. Those utterly in love will tend to say “OK, so what?” “Let’s just insure the risk and move on, I cannot lose this house”.
Those not in love will say “Oh dear, sounds serious. What does that mean? How can we fix it? I like the house but I don’t like it enough to inherit any issues”. The upshot of that is lawyers being instructed to get to the heart of an apparent issue by way of a lengthy investigation and enquiry process (rather than just putting in place indemnity insurance and moving on) which can add weeks to a deal.
It also often gives rise to painful and lengthy price re-negotiations – even more painful if a revised mortgage offer is then needed. All of this will also almost always ‘sour the deal’, putting sellers and buyers at odds with each other which, let’s face it, generally does nothing to speed things up.
2.
A buyer may always be looking over their shoulders even after having an offer accepted. Cosy evenings with a glass of wine and the Rightmove or Zoopla App open on their phones can turn heads, especially if a buyer doesn’t really love the property they’re buying. Other possibilities can result in delays whilst buyers consider what to do or, ultimately, them changing horses and the deal falling through.
3.
I remember a time when the market was very buoyant, when clients were often ‘in love’ and very keen to move quickly, that when I asked for instructions from a client on something I would get an almost immediate response, so keen were they to not lose any time or the property.
That is much less common now, especially where buyers are not in love with the property, it can actually take a lot of chasing for clients to come back to their lawyer to move things forward. That is likely to be down to a combination of the two points above, but also simply that there is not the requisite excitement needed to keep momentum up.
With all that said, many buyers do love the property they’re buying but the process can still take forever. It is also true to say that transactions were, at times, equally slow even with a very buoyant market. I’m not saying that the ‘love’ factor is the only factor, but it is one that is ever more prevalent.
When you add to that the following additional factors, you will start to understand why time does become a risk factor in killing a deal:
- Conveyancing lawyers’ ‘scope creep’. As years go by, successive Governments come and go and ills of the passed are addressed, the job a conveyancing lawyer has to do has increased massively, with many aspects being very high risk and needing a great deal of care. Examples include:
- Complex and time consuming ‘know your client’ checks and source of funds/source of wealth checks.
- Leasehold issues including escalating ground rents, Housing Act rent issues and the Building Safety Act (as a result of the enquiry following the Grenfell tragedy).
- Lenders’ increasingly nuanced and particular requirements, where the opportunity of a lawyer’s ‘sensible discretion’ has been removed.
- A Stamp Duty Land Tax (SDLT) regime that used to be really simple, but which now is so complex that it seems drafted to almost deliberately catch lawyers out – especially on elements of Higher Rates of SDLT on additional dwellings and the associated complexities.
- One of the more difficult things to control but a chain adds inevitable delay and complexity, especially if the calibre of the estate agents and lawyers involved is not up to scratch.
- Third parties. Generally, local authority searches tend to come back more quickly than historically as local authorities embrace the benefits of technology. However, some are still very slow and this is another delay that is beyond a buyer’s control. More to the point, managing agents (for leasehold blocks of freehold managed estates) are often a significant delaying factor. It is one thing getting a management pack from a managing agent in the first place (which in itself can take many weeks and cost a small fortune) but getting many managing agents to comprehensively and sensibly answer necessary follow-up questions really can drag out a transaction.
Reasons to be cheerful
One would hope that as the geopolitical climate settles a little, following a new Government and with inflation now seemingly under control, the property market will warm up again. More properties will come on the market meaning more choice for buyers and more love.
Recent technological advances in the conveyancing industry have also helped firms (those who have embraced them anyway) do their bit to ‘control the controllable’ in speeding deals up.
Tech such as electronic onboarding, enquiry-tracking software, electronic document signing, using AI for elements of document review and integrated search and post completion solutions with firm’s case management systems will, in time, bear fruit.
In addition, various sector associations, Government committees and other stakeholders seem to be doing what they can to speed things up. Some of the ideas that have been suggested or rolled out have had a limited or even negative impact, but the will seems to be there and at some point that will, perhaps on the back of a new Government, will surely improve things.
How can Morr & Co help?
At Morr & Co, we deal with many hundreds of residential conveyancing transactions every year and our expert team is perfectly placed to deal with any transaction, no matter how complicated, high value or time sensitive.
Whether it is first time buyer’s flat or a large sprawling country pad (a particular specialism of ours) buyers come back to us again and again due to the confidence that they have that we, at least, do our bit to achieve a timely and efficient outcome to a transaction.
We cannot promise a quick turnaround (anymore than any other firm can) due to the reasons stated above, but what we can promise is that, due to the fact that we limit the amount of work we take on, we can ensure that nothing sits on our desks – transactions are quickly and meaningfully processed at all stages. Essentially, if it can be quick it will be quick.
If you would like more information or help with your property purchase, please contact our Residential Conveyancing team on 01737 854500 or by emailing [email protected].