Sunday, February 1, 2009

Government could do more to help Conveyancers

The slow-down in the housing market has claimed yet more victims in the conveyancing sector this week, which is struggling to overcome the overall drop in house sales. There were signs of good news though, with figures from HM Revenue & Customs suggesting a slight rise in sales over the last month.
According to the figures from the government department, the number of sales in December reached 61,000 which is up 9,000 from November. Sadly though, when looked at over the year numbers were still dramatically reduced. During the first quarter of the year there were 305,000 sales as opposed to only 182,000 in the final quarter of the year. Sales were also down a total of 42% year-on-year.

Bradford firm feels the pinch The downturn was too much for one conveyancing firm this week, with news that the Bradford based Hammonds Direct had gone into pre-packaged administration. The company, which employs around 250 people, will cease trading after carrying out its current contracts.

According to a senior figure within the company, they had lost 80% of their re-mortgaging work due to the housing slump. John Heller, the chief executive, said that he expected a some staff to keep their jobs beyond this week but that eventually all staff would be made redundant. He added that he was "absolutely, hugely disappointed" in the outcome but the lack of business had made it impossible to continue.

The failure of Hammonds Direct will also cause a shortfall in revenue for the law firm Hammonds, which rented offices to the company. Hammonds direct had been de-merged from Hammonds around eight years ago.

"It's been an entirely separate business for over eight years. There are a number of options and we don't have clarity where the business is going." Said Hammonds executive Peter Crossley.

Kick-start market by reducing Stamp Duty With all this bad news, Conveyancers are looking for the government to step-up and help the industry. One major firm has introduced a three-point plan that they say, if followed, would get the sector back on track.

The Convey Group said that Stamp Duty on houses up to Ј250,001 should be scrapped for the time being and that the Duty on properties above this mark should be reduced to 1%.

The current Stamp Duty rates are 1% for houses worth between Ј175,001 and Ј250,000. 3% for houses valued between Ј250,001 and Ј500,000 and 4% for all properties above Ј500,001. Houses valued below Ј175,001 are currently the only exempt group.

"The banks seem to have taken the Ј37bn in government money but maintained a fatally cautious position. Extending the Stamp Duty holiday would free up cash from home buyers, improve LTV rates and open up additional mortgage products," said Lloyd Davies from the Convey Group.

He also recommended that the government start to reintroduce mortgage deals via the now nationalised Northern Rock.

"The government could take direct action to stabilise the hosing market by introducing new Northern Rock mortgages. At least by using their own bank the government will know that it will lend in accordance with their requirements, and they may make some money in the process as well," he added.

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