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February 2021 | Equity Release

The right people for the right job

Stuart Wilson is CEO of Air Group   

We are now just a month and a half away from the end of the stamp duty holiday period, and it’s fair to say the market is working overtime in order to get as many cases completed so purchasers benefit from the savings available.

At the time of writing, while there have been calls for some kind of extension to the deadline, nothing has been announced as yet. Indeed, in responding to a petition calling for an extension, the government’s response was pretty unequivocal: there wouldn’t be one.

However, I’m also mindful of this government’s capacity to U-turn quickly, especially if the figures we’re seeing of potential aborted transactions are anywhere near correct.

It would be somewhat ironic for a government which has committed significant time and resources to improving the home purchase process over the past couple of years in order to help cut down on the number of transactions falling through, to be the same administration that presided over a situation where huge numbers had to be aborted.

For that reason, I don’t rule out a change of mind on this – one that might be potentially announced at next month’s budget.

In the meantime, of course, conveyancers in particular are under significant pressure. We have been here before – five years ago, when the government upped stamp duty for additional purchases, and many landlords bought before the deadline so they didn’t have to pay the extra 3%.

The conveyancing industry responded remarkably well to this increase in activity, but there was no pandemic, vast swathes of staff weren’t working from home, and they were not dealing with anything like the activity we’re now witnessing.

These issues are just as relevant for equity release and later life lending purchase clients – and their advisers – as they are for anyone else currently waiting for a completion. The pressures to complete before 31 March are the same, and over the past few months we’ve been asked to help or intervene on cases which may have been stuck at a particular stage.

While we haven’t been able to achieve miracles, there have been a number of cases where we’ve been able to help remove a blockage and get those stuck transactions on their way again. This is another benefit for advisers who are part of a wider organisation such as ours.

However, what we have seen time and time again – and I’m sure later life advisers will agree on this – is that later life and equity release cases often get stuck for a very good reason, specifically at the conveyancing stage. The reason being that the client has opted not to use a specialist solicitor, which has immediately resulted in the brakes being applied.

Nothing against those firms which don’t process significant amounts of business in this sector, but the differences compared with those specialist operators who know exactly what is going on, where the problems might be, and how they can remove them, is often stark.

Part of the Equity Release Council’s (ERC) rules are around the customer’s right to choose their own conveyancer, but there’s clearly nothing stopping advisers pointing them in the right direction. Particularly if the choice is going to be a family or high-street solicitor with little or no experience, who has to ‘learn’ the process, and who is going to take time doing it.

This option – especially in the current environment, and for purchase cases that need to complete by the end of March – will invariably be the wrong one. Our own data shows that in Q4 of last year, some lenders were reporting an average delay of 20 working days when using non-panel – in other words, non-specialist – solicitors.

You’d certainly want to save your clients a month in time to complete, wouldn’t you?

Then there is the cost element for the client. There might be a belief at the client level that ‘specialist’ means ‘increased cost’ – however, the exact opposite is true. As mentioned, those firms which rarely work in the equity release or later life space need time to get up to speed, and time costs money.

I’ve seen examples of case fees ranging between £1,500 and £2,500 because of this, when our specialist solicitors on panel will have an all-inclusive package at the outset which is much cheaper and far more effective. That also means no hidden costs which only appear as the work is carried out.

Having excellent service and quality from the solicitor is imperative at any time, but especially now. The positive news is that advisers are acutely aware of what constitutes this, and which solicitor firms can deliver it.

Plus, they’re able to save the client time and money, and get them through to completion.

In other words: take control of this part of the process, point the client in the right direction and ensure the case gets to its natural end point in a far quicker timescale. It truly is a no-brainer for all concerned.