Continued Westminster wrangling over Brexit is plaguing the conveyancing market, it has been claimed, as official figures revealed the slowest quarter for activity in two years.
Search company Search Acumen, which analyses Land Registry data to track the market, said quarterly conveyancing volumes between April and June dropped below 230,000 cases for the first time in two years.
The company said the 228,994 transactions between April and June represented a 10% decrease since the start of the year, when the market appeared to be slowing down following a strong end to 2018. The latest figure also represents a 20% fall from the second quarter of 2016, when transaction numbers reached 286,485 before the EU referendum.
Andy Sommerville, director of Search Acumen, said: 'Our latest assessment of conveyancing activity has found that Brexit has truly begun to bite for the sector, even before it has truly arrived. After three years of increasing uncertainty, we’re finally seeing the result of the "wait and see" approach that many homeowners and prospective buyers in England and Wales are taking while Westminster continues to wrangle over the nature of our exit from Europe.
'This Brexit-fuelled market stasis is exacerbating the consolidation trend that has been underway over the last few years. Smaller conveyancing firms who were already struggling to compete are now facing tougher conditions, while those who have been able to gain a larger foothold are now taking a bigger slice of activity than ever before.'
Another factor not reported in the tracker, that may be affecting volumes, is the government's tax policy on buy-to-let mortgages. Since April 2017 the government has gradually been restricting the amount of income tax relief landlords can get on residential property finance costs, such as mortgage interest, to the basic tax rate.
In terms of market players, the latest data shows that the top 200 conveyancing firms control two-fifths of the market. Last year, between April and June, 4,144 firms were in business; this year, there are 3,961.
Sommerville said: 'We talk to many law firms on a daily basis about the challenge of doing more with less. They are always excited by the prospects of advancing technology to increase efficiencies and offer clients more - particularly in niche or specialist areas such as the new-build sector. But the jump from theory to practice is still too much for many firms and practitioners, who continue to work just as hard as they have for decades without the benefit of better outputs.'