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Cilex Journal – Novemebr 2012

Competition is increasing among search providers - even before the hotly-anticipated arrival of the Land Registry in the market. Mark Smulian reports

There is one inescapable factor that will decide whether the conveyancing and property searches market prospers over the next few years.

The Land Registry's possible entry into the market is creating uncertainty, as are lenders' pruning of their conveyancing panels and the idea of alternative business structure (ABS) firms growing their own search arms. But none equals the parlous state of the housing market in importance.

September saw a raft of government announcements on relaxed planning regulations, borrowing guarantees for new affordable housing and support for building in the growing private rent sector.

It remains to be seen whether this will change a market that has been obstinately stagnant since the banking crisis of 2008. The fundamental problem remains potential buyers' lack of opportunities to borrow, rather than housebuilders' lack of opportunities to build, and few searches firms are likely to expand - never mind enter the market - while housing is so sluggish.

Nationwide's August house price index showed the price of a typical UK house rose by 1.3% that month, but was still 0.7% below August 2011. Halifax's August index found house prices "continue to tread water", with no significant change expected.

Precious little there to get search firms excited, but opinions differ on how bad prospects are.

Andrew Stenning, managing director of Searches UK, says: "There is no doubt that it has been a difficult few years for the housing market generally, which naturally has a knock-on effect for any business involved in the conveyancing process. "That said, the market is moving and things do appear to be improving, slowly but surely. Low interest rates mean it is still a good time to buy and invest in property."

John Pickford, searches manager at Thames Water Property Searches, notes: "Thames Water covers the region where the property market is doing best, but our experience is that that is driven by London, which is a very different market to the rest of the country. If you look at the Halifax or Nationwide surveys, there is little overall movement."

CILEx Associate member Martyn Dumble, of Jordans Conveyancing Support Services, has been in searches for 12 years and also sees only a slow recovery. "The moribund state of the housing market has led to a significant reduction in transactions which, in turn, has meant a decreased demand for conveyancing searches," he says.

Mr Dumble expects no dramatic recovery so long as buyers are concerned about job security, meaning they are less likely to risk buying a new property until they feel more financially secure.

Andrea Glover, managing director of Property Searches Group (PSG) Franchising, says that since 2008 "many companies have cut their cloth accordingly. It has also meant that competition between search companies has intensified, and there's no doubt it's a tough sector at present.

"However, this has brought benefits to conveyancers and their clients as it has never been more important to provide excellent service and value for money."

Richard Hinton, business development director at SearchFlow, is more optimistic. "We are definitely seeing the early signs of recovery and market activity in 2012 looks like it will be higher year on year," he says.

Council of Property Search Organisations (CoPSO) chief executive Mike Ockenden says the residential sales market "has been very depressed for three to four years and it's hard to see any change given the state of the economy and of the banks".

After earlier recessions, funds for mortgage borrowers were available from building societies, which dominated this market and lent on little else.

"Now loans come from banks, and mortgages are not what they do for a living," he says. "All the money is going to prop up their capital ratios instead and I can't see the recent government announcements making much difference."

The quiet market is one reason why Jan Boothroyd, chief executive of Land Data, thinks the National Land Information Service, which it regulates, still boasts a mere two user channels. These are SearchFlow and Thames Water Property Searches, although Australia's Global X, which owns UK firm 7 Side, intends to operate a channel.

NLIS allows official providers to send in electronic data, and it acts as a 'wholesaler' of land and property information. Mr Pickford says: "NLIS gives Thames Water a great platform to talk to clients with official data. It is a government-backed scheme so people can be confident about the source." Mr Hinton says SearchFlow has valued the relationship from its outset,

Ms Boothroyd says: "We usually see two or three approaches a year to join and I think it would be quite attractive to any search company to become a channel since we have invested to build this platform and it is supplied electronically by local authorities." She adds that the market's flatness "is one of the problems in developing new NLIS channels".