Preparing for the worst is vital for resilience, the regulator says
The Council for Licensed Conveyancers (CLC) has urged property firms to stress test their businesses for resilience as recent economic pressures threaten to bring “a significant fall in work volumes.”
The regulator warned that increasing interest rates, the falling availability of mortgage products, and the tightening supply of properties for sale could soon lead to a decline in transactions similar to what was seen during the 2007-2008 global financial crash, when conveyancing transactions dropped more than 40% year-on-year.
The turnover of CLC-regulated firms also fell by 27% at the time of the 2008 crisis, recovering the following year with a total of £85 million. This total increased by more than a threefold in 2020, landing at £277 million. By April 2021, the total turnover grew 26% further to £349 million.
“It has been an extraordinary decade and a half,” the CLC said in a note published on its website. “We are now entering a very different world, though.”
The CLC instructed firms to take necessary steps to prepare their businesses for “a significant downturn in the economy.” Firms were told to prepare a contingency plan that includes cost savings, increasing the profit margin on services, the potential for growing income from probate services, and falling back on reserves.
“Preparing for the worst is vital for the resilience of the legal services sector and for the sustainable provision of conveyancing and probate services to the public,” the CLC added.
