As we are all aware, the property market has rarely experienced so much frenzied activity as it has in recent months.
But even when interest rates are finally raised and the property market does cool down, it will still remain pretty buoyant as consumers continue to take advantage of competitive remortgaging deals and historically low interest rates.
It doesn't look as though this industry will return to 'normality' for a long time, if ever. So how is the industry coping with the extra workload? A recent survey of lenders' processing departments by xit2 shows that it isn't – 21% admit that they don't have enough staff to cope and 79% see the escalating volumes of applications as a “nightmare”.
Generally it seems that most players across the industry are throwing the same resource at the larger workload, which means application turnarounds are suffering. This clearly is not viable in the long-term.
Now that an average mortgage only lasts for four years, lenders must work harder to retain existing customers as well as attract new business. Brand reputation, customer service and valueadded service offerings will become increasingly influential. Lenders that take too long to make an offer in principle, let alone process the application, could end up losing business to a faster rival.
Hundreds of articles have been written about how UK lenders need to update their antiquated IT systems to scale the mortgage application mountain and reduce the time it takes to purchase a house, (in Canada it can take as little as 24 hours). This is not one of them.
I'd like to focus specifically on how one link in the chain can be greased by looking at the pressures facing surveyors. The valuation process is a key area where customer service can make a difference. Research shows that once a mortgage offer has been received, a customer is unlikely to pursue offers from other lenders. So the quicker the conversion from application to offer, the higher the lender's customer acquisition rate is likely to be.
Our research also reveals that 36% of lenders say valuations are the part of the application process that takes the longest to complete. Some 69% of lenders say that, on average, the valuation process takes at least a week. Of course, new ways of working have been trialled by lenders – such as 'drive-by' valuations on lower value properties. These have eased the pressure slightly but increased the worries in relation to prudential lending. They are also only suitable for a small minority of properties and loans. In many cases, there simply isn't enough capacity in surveying organisations that make up the lenders' panels to cope with the rising number of mortgage applications.
Adding fuel to the fire, surveyors are coming under increasing pressure to offer more value-added services to their clients. For example, UK companies lose £18bn a year through inefficient management of property assets. Research by the Cranfield University School of Management concludes that 95% of businesses want chartered surveyors to perform property related management consultancy and advisory roles, presumably to help plug the leaks in the ship.
Clearly this is a great opportunity for the surveying industry to broaden its range of services and to earn more money by moving up the value chain.
But how can surveyors take advantage of new areas when they are unable to cope with their core business? As a chartered profession, bolstering the ranks of surveyors is not a viable option, except in the very long-term. And a dumbingdown of the qualification requirements is also likely to be resisted by many members who feel that they have put in a lot of work and years of study to attain their qualification and chartered status.
Many surveyors work as small local companies, partnerships or sole traders, so often the resource is thinly spread. Surveyors are going to have to be incredibly skilled jugglers if they are to cope with the increased demand on their time.
It is critical that surveyors maintain high levels of service to their industry partners to remain on their preferred lender's surveyor panel. It would be criminal for surveyors to ignore their core business, lured by the prospect of providing a more lucrative management consultancy role. They must 'stick to the knitting', or at least make sure the knitting's complete before embarking on new ventures.
So how can surveyors address this problem going forward? The valuation process is undoubtedly hindered due to the fact that many smaller surveyors use manual systems to interact with lenders, intermediaries and other related parties. In fact most communication is via faxes and letters.
Not having the advantage of modern IT systems makes co-ordinating valuation reports more long-winded – and valuation turnaround takes longer than it should. Furthermore, relying on manual processes makes co-ordinating surveyors' workloads more difficult.
Clearly, the quicker you know about a job, the easier it is to accept or decline it. The faster the job is booked and completed, the better the service offered. The ability to plan ahead and juggle workloads will be critical from now on.
Surveyors must cast their net wider
Smaller surveying firms cannot justify the large investments in IT infrastructure to improve the situation.
One way in which they can improve their processes and avoid a huge investment is by using the internet.
It is possible for surveyors to invest in as little as one computer and an internet connection and deliver huge efficiencies to the whole mortgage supply chain.
Online valuation exchanges enable lenders to panel valuation instructions to surveyors over a secure internet site. The surveyor can either accept the job or decline it immediately. If it declines it, the valuation is automatically repanelled to another surveyor within a couple of minutes. If that surveyor takes no action within three hours, the valuation is automatically repanelled to the next allocated surveyor and so on, thus ensuring there are no unnecessary hold-ups in the system.
It's a win-win scenario. From the lender's point of view, mortgage applications can be valued and processed in a shorter period of time, resulting in a better customer experience. From the surveyor's point of view, cashflow is improved as billing is automated. Because these systems usually charge per job completed, they've avoided a large IT infrastructure cost, and they've kept the lender happy by being able to turn around the survey in a faster time.
But most importantly for them, as their workloads are easier to manage, more time is made available to explore lucrative new avenues.