The Conveyancing Association (CA), the leading trade body for the conveyancing industry, has today urged the Government to extend its furlough scheme past October and consider a range of measures to stimulate the housing market in the near future, or it could see the legal sector forced into making thousands of job losses due to the significant fall in work currently being experienced.
The call comes following Law Society research which suggested nearly three-quarters (71%) of small law firms – defined as those with four partners or fewer – said they may have to close their doors in the next six months as a result of the Coronavirus.
The CA said that conveyancing firms were being hit especially hard with the Law Society research also finding that the crisis had meant a 60% cut in conveyancing work.
It said that, with this situation likely to continue for some time and without a longer-term extension to the current furlough scheme, many conveyancing firms would have to make redundancies in 2020 and it would be inevitable that many legal practices would become insolvent.
It said that, while the vast majority of its membership were able to currently cope with the drop in work levels because of the Government support available, significant changes to the terms of the current furlough scheme – coupled with subdued work levels particularly in the house purchase sector – could be deeply damaging in terms of their ability to maintain their workforce and meet greater demands for conveyancing work when the market begins to return to normal in the months ahead.
The Association has also called for the Government to renew the measures it could put in place in order to help stimulate the UK housing market, although it suggests not introducing these in an immediate post-lockdown period for fear of creating a ‘bubble’ of activity which the legal profession would not have the capacity to cope with.
Instead, it wants to see structured and long-term measures introduced after a period of time which will help generate confidence in the UK housing market. These might include Government guarantees for mortgage lenders to help them overcome short-term funding issues and help grow the number of higher LTV products available; plus formal changes to stamp duty land tax cutting it to zero for those purchasing properties under £500k, rather than short-term stamp duty ‘holidays’ which it said often create a cliff-edge of heightened activity with subsequent issues for conveyancing firms to deal with.
Paul Smee, Chair of the Conveyancing Association, commented: “This is a critical moment for the entire legal profession, and especially the conveyancing sector.
“We fear that even with this welcome extension of furlough terms, assistance may still be needed in the Autumn and we hope that the Chancellor will remain open to that possibility.
“Without a further extension many firms may have to make significant redundancies while others would simply no longer be economically viable. This will create log-jams in the purchase and sale of houses. For a Government which will want to see a strong housing market driving a full economic recovery, this would have only negative consequences, and it’s therefore important this sector continues to receive support beyond the end of June.
“We anticipate that in the immediate aftermath of lockdown, there will be some pent-up demand; if that activity is to be sustained for the longer-term the Government should also be looking at ways to deliver higher LTV lending and potentially amendments to stamp duty in order to provide the necessary stimulus for consumers to enter the market.
“As for the sector, we will continue to focus on cutting down the time it takes to complete transactions. We want firms to survive and help the recovery of the UK housing market which will strengthen the economy as a whole.”