Many outside the housing market are continually looking for signs of an improving market and last month delivered a fairly sizeable hint that the market is on the up. The CML’s gross mortgage lending figures showed a 21% month-on-month increase in May compared to April, up to £14.7bn from £12.2bn. This was also up on May 2012 (£12.6bn) and in fact was the largest gross mortgage lending figure since October 2008 – a point in time which signalled the true extent of the Credit Crunch and set us in motion for the subsequent recession which was to follow.
For those of us working within this industry the CML figures merely confirmed what (I hope) most will have known already – activity levels in this marketplace have kicked on particularly in the last three months. In fact, anecdotally at least, we are talking to many colleagues in a variety of sectors and they are also of the opinion that the second quarter of 2013 has been busy and there is a definite feeling we have pushed firmly off the bottom of the market.
All well and good you might say and indeed you’d be correct. The housing/mortgage markets has waited a good many years to see an upturn and there is much to be positive about as we look at potential activity levels for the rest of the year. However, there is one fly in the ointment that is likely to be troubling everyone and that is the fact that the increase in volume we have seen recently is already beginning to impact on the industry’s ability to complete business.
The first inkling of the struggles the housing transaction machine was having came with stories about valuation delays and a shortage of surveyors to carry out such work. This is perhaps not truly a surprise – yes we probably have enough surveyors to do the job when the market is not firing on all cylinders however up the ante and it seems the system is found wanting. We are all aware of the many thousands of surveyors who have left the marketplace over the past five years and, to be honest, I’m not surprised that most have no intention of ever returning. Which means that new blood has to come in and it appears it is not entering the sector with any force.
Our work is conveyancing and we have seen the solicitors on our panel increasing their resource levels over the past six months in order to deal with the rise in cases. It is fortunate that they have as, even with this added resource and being large enough to cope, they are continually having to reassess their ability to deal with the greater volume.
However the major problem for our panel firms is the fact they have to deal with other solicitors who are not in the same boat – these are the local high-street firms who are effectively running on empty. It’s an oft-used picture cliché where the busy solicitor is sat in their office, head in hands, while a mountain of case files rises above them, but in many cases this is not too far from the truth. A slow conveyancing solicitor in a chain is bound to have an impact and the result is that, as pipelines continue to grow, transaction completions get further away. In such an environment getting answers to enquiries from these firms is nigh-on impossible. One of our panel told me last week that after repeated calls and emails to one such solicitor they were told that the only person dealing with conveyancing was on holiday for two weeks – no-one else is working on their caseload during that period and so the delays get longer.
I also sense a certain amount of uncertainty from some other solicitor firms (not on our panel I might add) about the nature of this increase in business. ‘Will it be a flash in the pan?’ they ask. ‘Can it be sustained?’ they wonder. The reason is that if it’s a here today, gone tomorrow improvement then they have no intention of ‘resourcing up’ as they know they’ll have to make personnel culls when the market draws back. The problems of this approach in the short-term is obvious but I do have to admit it’s a fair question to ask given the stimulation the market is receiving through measures such as Funding for Lending and Help to Buy – what will happen when these are withdrawn?
At present however there appears to be a sense that many are muddling through. However throw more cases into the pipeline – and that’s certainly the way the market appears to be heading over the summer – and we could see further (and longer) delays. Brokers can of course do themselves – and their clients – a favour by recommending those larger conveyancing specialists who can cope and steering them away from the local firms who do not have the resource to do the case justice. Brokers can also help with information gathering in order to give the case as good a chance as any to get to completion within a fair timescale. Clients will certainly appreciate this at a time when many will be left playing the waiting game.
Harpal Singh is managing director of Broker Conveyancing