How can law firms successfully price conveyancing services?

17 May 2022

The cost of conveyancing services has often been a source of both contention and controversy, especially as there is such a huge range in terms of fees quoted and variation in the way law firms price their services.  Must conveyancing firms simply lower their prices in order to be more competitive as the market slows down? In this article we look at  how conveyancing is priced, some of the most common issues around pricing and how these issues can be overcome.

 

What costs are involved in conveyancing?

Typically the costs involved can be divided into the legal fees paid to conveyancing solicitors and disbursements which are costs incurred by the solicitor from third party sources (legally, solicitors must not add a “mark-up” to any of these disbursements). The typical disbursements or supplementary fees owing might typically include:*

Anti-money laundering (AML) checks.

These legal checks will verify the identity of the client and are likely to be done online. (Although many legal practices still offer clients the option to do this in person). The cost of anti-money laundering checks is £6-£20 and are applicable for each individual owner. Extra costs may apply for clients living abroad as well as foreign nationals.

Title deeds.

The Title Register (Deed) contains essential details of the property as well as confirming ownership, restrictions, notices and legal charges against the property.

Searches.

Buyers need local authority searches, such as a drainage search and an environmental search, and a planning search if they need to find out about any development planned for nearby. Typically, the costs of Local authority searches range in cost from £250-£450.

Property fraud checks

Sometimes, especially if a company is involved in the sale, it’s wise to check that it’s legitimate. Property fraud checks are £10.

Bankruptcy checks

Similar to checking if the buyer/seller is a corporate entity, you may need to undertake bankruptcy checks to confirm that there’s nothing untoward. Typically they cost around £4

Transfer of ownership

There’s a fee payable to HM Land Registry upon the property’s transfer from the seller to the buyer. This is a variable cost based on the value of the  property and whether it’s a new build, but would typically be £200-300.

Telegraphic transfer or bank transfer fee.

Prior to exchange of contracts, the buyer will need to transfer deposit funds (or the full purchase price of it’s a cash purchase).To get this done in one go (rather than separate sums), there will usually be a CHAPS (Clearing House Automated Payment System) fee. With mortgaged purchases, there will be further transfer fees for funds going from the lender to the solicitor’s accounts and then on to the seller’s account. Bank transfer fees are typically £20-£30.

Stamp Duty Land Tax.

Properties worth more than £125,000 are liable for Stamp Duty, which is charged on a sliding scale.

Supplementary fees

There are lots of additional considerations and possible supplementary fees which may be due including:

• Gifted deposits
• Lifetime or Help to Buy Supplements.
• Additional Leasehold Supplements – including Leasehold Sale Packs, Deed of Covenant etc
• New Build property supplements

 

*where costs have been included, these are typical average fees according to the Home Owners Alliance.

 

What’s the average cost of conveyancing?

In our recent webinar, where we looked at  How law firms can make conveyancing more profitable, Rob Hailstone, Founder of the Bold Legal group set out the average costs of conveyancing (looking at just the legal fee part)

• Freehold sale conveyancing costs average at £1090
• Leasehold sale average cost is £1077.
• Freehold purchase costs average at £1092
• Leasehold purchase costs average at £975

Although these costs represent a 21% increase on the figures for 2021 (Source, Property Solvers  Conveyancing costs report) arguably, given the work involved they should be much higher. The same  survey , conducted in January 2022 compared the quotations from 100 law firms, including for a  freehold sale – with the lowest quote being £588 and the highest £2160, excluding disbursements. Although there are likely to be regional variations this is a huge range. Remortgage conveyancing fees ranged from £246  right up to £1,434 (inclusive of VAT). The way the service is delivered (online only vs access to physical office/ personnel) as well as who delivers the service (licensed conveyancers or conveyancing solicitors, for example) will have an impact on the price quoted.

 

What are the main conveyancing pricing issues?

 

Pricing is set out differently

As well as the regional and online vs location specific services differentials, not all firms set out their quotes in the same manner, which means that potential clients must comb through the fine print to make valid price comparisons.  Even some price comparison sites don’t measure like for like. Despite  the SRA rules on conveyancing disbursements issued in November 2020, which make it clear which elements of the conveyancing fees should be included as disbursements, the way they are approached in quotes to clients does still vary. In a recent LinkedIn survey by Legal Bricks, conveyancers were asked how they price their AML checks.  34% of respondents include the cost in their initial quotes, 48% outline these as separate additional charges and 18% do not pass on these specific costs.

Increased competition may lead to prices being lowered.

The market is still buoyant Post SDLT holiday but once it starts to slow  there’s likely to be  a temptation for firms to start lowering their fees again. With increased competition, particularly from online only residential  conveyancing service providers, conveyancing solicitors are being squeezed in terms of price so that they remain competitive in the market.

Fixed fee pricing and time cost

Conveyancing is one of the few legal services where charging clients based on an hourly rate is not the norm. Rather, firms may offer a fixed fee so that their clients have a reasonable idea of all the costs involved up front. Fixed fees, however, may not prove cost effective for firms as there are so many variables involved during the conveyancing process. What looks like a straightforward transaction could end up being delayed or complications may arise with the property, individuals or the chain along the way meaning that more time and resources are spent on the case. In some cases a more flexible fee arrangement would mean that firms are still able to make a sensible profit margin on the work completed.

 

How can these pricing issues be overcome?

Define your target market:

It’s a good idea for firms to set out what sort of clients they want to attract– they don’t have to be all things to all people. For example, offering a standard basic low price fixed fee may be suitable if you have a large team and the capacity to take on a higher volume of lower priced work, and the housing market in your geography lends itself to this. If may be that you’d rather specialise in the lower volume, higher priced market and have smaller, highly experienced team to accommodate this.  Whatever the case, set out your marketing and your pricing to reflect the team and the resources you have available.

A recent case in the courts  (March 2022) involved a homeowner filing a professional negligence claim against her conveyancing solicitors after they failed to report that a link road was due to be built near her new home. In this case the judge found in favour of the solicitors as their fixed fee of £695 offered a straightforward conveyancing service with no extras. In addition, the time pressure to complete the transaction (the homeowner was being incentivised by the developer to complete within 28 days) meant that there was no scope for additional searches to be carried out. The case demonstrates that essentially, you get what you pay for. (see full details on the case here: The key is to be specific with your pricing, what is covers and what time pressures may do to the scope of the service you’re able to offer.

 

Demonstrate value and know your worth

Being more expensive than your competitors is fine as long as you can demonstrate your worth. Be clear on what your differentiators are (maybe you can offer your clients the latest conveyancing technology so that they complete their onboarding remotely). Your fee earners may be local experts who can advise on issues relevant to the locality, which are unlikely to be replicated by online-only providers. Another key way to demonstrate your worth is to ask clients for reviews and feedback which you can use to show that your service is tried, tested and trusted. For some more ideas on demonstrating value and getting more referrals, have a listen to our webinar on the subject here.

 

Tackle pricing head on and be transparent on fees

Being totally transparent with your fees will help your clients make an informed choice when they are looking for a conveyancing solicitor. Legal fees, disbursements and a summary of extras which might be needed. As long as clients know what’s what and you are not apologetic about what you are charging, clients will pay what you are asking. Being kept informed throughout the transaction, on key milestones as well as any additional expenses and fees is key to keeping clients happy at what can be a stressful time for them. It’s also a good idea to keep up to date with what your local and online competitors are charging and knowing how you can outperform them in terms of service delivery. It could be that you offer clients a secure messaging service like the one offered by Legal Bricks which helps to speed up transaction times and reduces endless chase-up phone calls.

 

Use a quotation tool.

One of the key elements when it comes to pricing your conveyancing services is to be consistent with your offering – so the use of an online quotation tool could be key. You  can use a quotation tool to offer your prospective clients a breakdown of your pricing for legal fees and disbursements tailored to their particular situation.  It will help to formalise the process and give them a price they can then compare with other providers. Using an effective quotation tool will also help you measure your success rate / conversions and refine your offering accordingly. To find out more about the quotation tool offered by Legal Bricks, please see: here or watch this video.

 

So in summary, prices for conveyancing work vary immensely but there are things which conveyancing law firms can do to keep fees and margins at a reasonable level without resorting to simply dropping their fees. For more information on how Legal Bricks can support your firm with conveyancing technology see: www.legalbricks.co.uk and for an idea of how the quotation tool specifically works in practice, see our case study with Jarmans Solicitors here.