Buy-to-let changes will be worth the pain if they improve conveyancing
Like many, I am struggling to find the positives in the Government’s all-out assault on the buy-to-let sector and, in particular, amateur landlords. This mainstay of the private rental sector is effectively under threat because of the changes to both stamp duty and mortgage interest tax relief.
As many more qualified than me have pointed out, there is a real danger that, in trying to level the playing field between first-time buyers and landlords, the changes could wipe out great swathes of landlords who were effectively helping to fill the housing gap.
The stamp duty deadline in particular has brought a considerable spotlight on the role of conveyancers though, which I believe (in the medium term) can only be a good thing for the sector.
At present, that focus is around the ability of different conveyancing firms to get purchasing landlords through to completion before the stamp duty changes are introduced on 1 April.
But in a much wider sense this has opened up a debate about the work of conveyancing firms: their abilities, their skillset, their resources, the nature of conveyancing itself and whether the process is fit for purpose.
When the Legal Ombudsman reveals almost a quarter of all complaints it receives relate to conveyancing, it should set in motion a period of reflection. It should also set warning lights flashing for both advisers and their clients about the conveyancing firms they use and their ability to get them through to completion within a fair timescale.
For too long we have accepted a system where thousands of under-resourced and uninterested firms have muddled through the conveyancing in order to (eventually) get a case completed.
There is really no need to accept this any more and, if the greater spotlight we are currently seeing achieves anything, hopefully it can move the sector further away from an amateur, cottage industry to one that is led by the specialists.
Harpal Singh, Broker Conveyancing
Are you sure you’re ready for the MCD? It’s less than a month away
Earlier this month, I had a call from a firm with the word ‘independent’ in its name and, even at this late notice, it was asking if the MCD would affect it and, if so, what it needed to do. Understandably, it was rather shocked at the list of considerations I set before it, which were many and varied.
First, you need to consider how you will approach second charge mortgages. If you are not going to give full advice on both firsts and seconds, you cannot call yourself ‘independent’. Given this, you will need to consider whether you want to train all mortgage staff on how to advise on seconds – this would include training on sourcing systems and linking with a second charge master broker to gain access to lenders.
If you are not willing to do this, you may have to think about setting up a mortgage business without the word ‘independent’ in its name; a different trading style will not be sufficient to appease the regulator. In doing this, you are also going to need to consider the costs of a new business set-up and the length of time it takes to register with the FCA. The latter is between six and 12 months – what income will be sacrificed during this period?
Once that decision has been made, there are still a large number of changes to implement: updating your training needs analysis and T&C plans to include training and CPD on second charges; familiarising yourself with the sourcing systems approach to seconds; reviewing disclosure process and documentation; and ensuring you have detailed information on the ‘alternative finance options’ disclosure for clients wishing to borrow further money.
And that is not the half of it – don’t forget the factfind, KFI/KFI+/Esis and knowing your client. Your documentation also has to be in order and your suitability report must be reviewed to ensure it has the changed language and references.
It is a lot to be going on with and you have less than a working month to get there. Fortunately, there is lots of useful information that will help you manage all these action points.
Christine Newell, Paradigm Mortgage Services