With the increased use of automated valuation models (AVMs), which provide instant valuations on residential properties, and lenders clambering to offer instant mortgages, which will result in mortgages being offered at point-of-sale, the mortgage industry is shaking up the homebuying process. But how is conveyancing – which is frequently blamed for delays in the process – being pulled into the 21st century?
Becoming the default
It is widely accepted that the introduction of Home Information Packs (HIPs) will speed up the home-buying process but its success is reliant on all stages being streamlined. E-conveyancing, as well as faster application methods, is fundamental.
The government has been striving to improve and speed up the home-buying system by enabling conveyancers to access information on searches and exchange contracts online, and already the uptake of online conveyancing has increased substantially, with currently around 75 per cent of conveyancing law firms using some form of online property search at some point. Ultimately, however, the goal is for e-conveyancing to become the default method for all purchasers.
Kickstarting the system
The National Land Information Service (NLIS) which is managed by C-NLIS and government-backed, was set up in 2001 to kick start an effective system of e-conveyancing. It provides online access to all the official sources of land and property information across England and Wales.
Via three licensed channels; leading electronic conveyancing search services including Searchflow, TM Property and MDA Transaction Online, users can access electronic information through the NLIS hub from a range of data providers. These include 410 local authorities, national parks, the Land Registry, the Coal Authority, the Environment Agency and water companies. NLIS manages the technical infrastructure, which enables authoritative property and land information to be accessed online from one single access point.
Instead of submitting numerous requests in writing, which is labour intensive, time-consuming and expensive, conveyancers can now purchase searches online which can be completed and returned in minutes.
Ensuring the success
To ensure the online process to access electronic searches is successful, NLIS has been working with local authorities to help them switch from manual to electronic provision of searches. 98 per cent of local authorities have already moved online and there has recently been a marked increase in the pace of modernisation. By the time HIPs are introduced, we expect all local authorities to operate online.
The Land Registry has also been working in conjunction with local authorities to establish an e-conveyancing system. Its aim is to develop a common electronic system that links conveyancing and land registration more closely, reducing the time taken between the ‘handshake’ and the completion of a transaction.
The Land Registry is developing a general banking facility, Electronic Funds Transfer (EFT), which will allow advancement of funds and the redemption of mortgage to occur simultaneously. An effective EFT will be crucial to the success of e-conveyancing as it is often the transfer of cash that slows the house buying process. All financial payments including Stamp Duty and Land Registry fees, as well as payments between buyers, sellers, lenders and conveyancers, will be settled through the EFT service. The Land Registry has also begun a project to determine an effective e-signature solution to enable automatic contract exchange.
As well as speeding up the process by moving to electronic contracts, conveyancers will also be able to record on the system the stage reached on each transaction by adding data to a ‘chain matrix’. This is available from the Land Registry’s central service and is currently being trialled in some areas of the UK.
Into the 21st century
With the whole of the conveyancing process being overhauled, the transformation is already well underway to bring the legal system in line with the technological advancements of the 21st century.
However, there is increased pressure for solicitors to adopt e-conveyancing practice, with the Legal Services Bill expected to pass in 2007. The Bill will allow non-traditional legal professions, such as banks and supermarkets to carry out legal services. Companies such as Tesco, which has already stated that it will offer legal services, is undoubtedly going to launch its service using the most up-to-date systems.
The homebuying process is undergoing a rapid change at the moment and irrespective of the introduction of HIPs, the process is set to be streamlined and improved as homeowners benefit from the technology of the future. Those organisations that fail to adapt quickly will almost certainly struggle to survive.
