Property specialists are predicting a ‘significant’ fall in the number of conveyancing firms in 2011, as regulatory pressures on the profession rise and transaction volumes drop.
Eddie Goldsmith, chair of the Conveyancing Association and a partner at London firm Goldsmith Williams, predicted that two-thirds of firms could be forced to leave the market as solicitors head into a ‘perfect storm’ created by low transaction volumes, and proposed changes to professional indemnity insurance (PII).
‘Everything is heading towards a significant reduction in the number of conveyancing firms,’ he said.
Goldsmith said the Solicitors Regulation Authority’s plan to remove claims by lenders from the minimum terms of PII cover will cause an ‘immediate departure from the market’ of those firms that do conveyancing on an occasional basis.
Law Society property spokesman Paul Marsh commented: ‘For many firms relying on residential conveyancing, 2011 is going to be a very challenging year. If the SRA presses ahead with its fatally flawed plans for PII, lots of firms will be looking into a black hole.’
He said the number of firms likely to exit the market would vary across the regions.
Marsh predicted that transaction volumes would stay depressed for the next two to three years, but said it was not just the decline in work that was the problem, but the way the work is shared around.
He said referral fees would continue to ‘tighten their grip’ and serve to contract the market, along with the continued shrinkage in the number of firms on lenders’ panels.
David Kempster, strategic marketing director of search company SearchFlow, added that the legal services reforms which will allow new entrants into the market from October will represent a ‘watershed’ for lawyers, and add to the challenges faced by conveyancing firms.