High street faces its Waterloo
2 January 1999
7 July 1998
2 March 1998
2 March 1998
1 November 1999
8 June 1996
If war breaks out between solicitors, estate agents and mortgage lenders, who will be left standing when the smoke clears? Fenella Quinn reports from the front line.
Competition in the domestic conveyancing market has never been tougher, prompting an all-out war between solicitors, estate agents and mortgage lenders.
Countrywide Conveyancing Direct (CCD) - formerly Hambro Countrywide Conveyancing (HCC) - the estate agent-turned conveyancing operation, is well on the march to domination. It is set to handle 30,000 conveyances in 1999 and, as chief executive and managing director of Countrywide Assured Group, Harry Hill revealed to The Lawyer this week, now has a target of 300,000 per year.
Massing its ranks in another corner of the field are Solicitors Property Centres (SPCs), a band of 700 firms nationwide that hopes to wrest business out of the estate agents' grasp and offer consumers a lawyer-controlled, all-in-one service.
Meanwhile, in the distance, loom the volume conveyancers - most notably the 15-firm Direct Conveyancing Association (DCA), which seeks to provide low-cost volume conveyancing, and - some would say - to wipe the floor with high street conveyancers.
Lurking somewhere out of sight is the Council of Mortgage Lenders (CML), which is talking to the Government about reviving the authorised conveyancing practitioners scheme and wrangling with the Law Society over its conflict-of-interest practice rule change.
Add to this melee maverick firms such as The Beaumont Partnership in Wakefield and Ward & Co in Kent, which have struck their own deals with estate agents, and the field starts to look pretty messy.
This battle is being played out against the backdrop of a DTI consultation paper entitled The Key to Easier Home Buying and Selling, aimed at taking the pain out of house buying, responses for which are due in March. The
Law Society's own Transaction 2000 was launched in October last year with the same purpose in mind.
If all these factions manage to offer high-tech, easy and quick house sales, who will win the day? Many believe it will not be the high street conveyancers, whom they now see as facing their Waterloo.
Tony Bogan, director of Solicitor Property Centres Network Services (SPCNS) - the service company set up to implement SPCs - is adamant that, given a choice, the public will plump for lawyers.
"BDO Stoy Hayward carried out research last year which concluded that the public was totally dissatisfied with the service they were getting from estate agents," he says.
"The only reason people go to them is because there is nothing else available."
He believes bulk conveyancing will be "potentially very damaging to the high street conveyancer". But he also thinks it is not in consumers' interests "because you lose that local point of contact with the solicitor".
Launched in summer 1997 by Bogan and Richard Berenson, chairman of the National Solicitors Network, SPCs were intended to be a network of one-stop, solicitor-controlled property shops.
"We took the view that estate agents or conveyancers would take over completely, and we set out to get there first," Bogan says.
CCD - whose stable of estate agents includes Bairstow Eves, Mann & Co and Faron Sutaria in London, Bridgefords in the North West, Taylors in the Midlands and Abbots in East Anglia - launched soon afterwards. Bogan claims: "It just gave us added impetus and the conviction that what we were doing was right."
Since then, however, the beleaguered SPCs have hit several stumbling blocks. A planned Isle of Wight branch was "put on the back burner" last summer when two of the major local firms involved merged. A further opening, the location of which Bogan declines to reveal, fell flat at the start of this month when SPCNS was gazumped on a property it was about to secure.
"There's been lot of back-biting and politics behind the scenes, and finding premises which are large enough and have the right planning use has been very difficult," admits Bogan. Despite remaining tight-lipped about current plans, he promises: "I'm confident that by spring we will have a number of centres."
Since CCD and SPCs revealed their intentions, the threat to high street conveyancers has become tangible. Several estate agents have done bulk deals with larger law firms to provide a one-stop conveyancing package. Lending institutions are also moving in on the market, particularly since the Law Society is tightening its practice Rule 6 (3) to put an end to mortgage lenders using buyers' solicitors as unpaid private investigators.
CML senior legal adviser Fiona Hoyle confirms the CML is in discussion with the Lord Chancellor's Department over re-activating the authorised conveyancers scheme. "Some lenders have shown interest," she says, "but the key bit is finalising Rule 6 and the lenders handbook [a standardised set of instructions that comply with Rule 6]."
CCD business development manager Richard Sawtell does not envisage estate agents taking over the market completely and was surprised by his managing director's ambitious target of 300,000 annual conveyances.
Sawtell despairs of "solicitors who try to set up estate agencies, but still offer their customers the same old shoddy service". As for high-street practitioners, he says: "Solicitors who stick their heads in the sand will lose out."
Hill takes a similar view. Even with his revised target, and with competition as yet non-existent, he claims: "That still leaves an enormous gap which the large or even smaller high-street operators will continue to fill."
But to hypothesise over who is to gain market dominance could prove academic as technology encroaches irrevocably on the fusty world of home buying.
Brian Marson, senior partner of Kent firm Marsons, points out that technology can radically speed up the whole conveyancing process, whoever is in charge. He claims his firm can easily complete a re-mortgage instruction from a major lender in five days, as opposed to the usual three months.
Marson explains that out of 17 million registered titles in the UK, 16 million are computerised. The remainder are expected to be computerised by the end of this year.
This direct access system allows a check on title, lease terms and all other pertinent information on a property within minutes and yet, according to Marson, only around 500 firms are signed up to it.
He points to schemes such as the National Land Registration System (NLRS) in Bristol, and companies compiling databases of surveys, values and other important information as examples of technology's benefits. Under the NLRS, interested parties can electronically call up Land Registry information, Ordnance Survey maps, full environmental details and a local authority search on any property.
In the meantime, Marson believes that if anyone is to gain overall dominance it should not be lawyers. "I wish SPCs the best of luck, but I don't see the benefit for consumers in solicitor-led property centres," he says. "Most of the problems in house buying are created by the legal system, and those problems are added to by lenders. All of that would be resolved if we had a pre-package situation."
As a vocal exponent of the title insurance being provided by the seller and mortgage guarantee insurance being paid for by the buyer, Marson is a devotee of the US way of house buying and its open approach to data.
"In the US you can complete the deal and move in almost the same day, and you could do that here too. I think the big lenders such as the Halifax may go down that route," he predicts.
Welcoming the DTI consultation, Marson believes its proposed "sellers pack", containing draft contracts, local authority searches and basic legal information, should also include a survey and finance for the buyer. "A survey backed by title insurance would overcome the privity-of-contract problem between the buyer and surveyor," he suggests.
However, not everyone shares his vision. DCA spokesman Richard Hinton believes title insurance is "the answer to yesterday's problems". Now with 15 large firms - including Eversheds, Dibb Lupton Alsop, Hammond Suddards, Addleshaw Booth & Co - under its aegis, the DCA says its aim is to "improve the public's experience of house moving by putting the customer at the centre of the process", rather than to obliterate high-street conveyancing firms.
Hinton pinpoints speed of conveyancing, communication, accessibility and financial clarity as the four main areas in need of improvement.
Asserting that DCA member firms do not get together to set prices and terms, which would be anti-competitive, Hinton explains the DCA's purpose is twofold: to facilitate a consistent, recognised standard of service between firms - and to talk to lenders, the Law Society and government with the purpose of reforming the conveyancing process.
The DCA's vision of the future is clear. "Let's face it - the high street is in disarray and unable to understand what's happening to it, and the SPCs haven't cut it," Hinton says.
"We are an internal force from within the [legal] profession and I think, realistically, that we are the only solution."