Brokers across the country have reported rising legal fees for simple purchases as solicitors take advantage of the homebuying frenzy.
Private Finance director and mortgage consultant Chris Sykes says one of his clients received a quote for £8,000 plus VAT for legal fees for a straight forward purchase.
“The borrower was a first-time buyer and the seller had no onward chain. There were no Help to Buy ISAs involved and it was a freehold, so no leasehold to review. In fact there was nothing complex about the transaction at all.” After speaking to Sykes, the borrower went to another firm and was quoted £3,500 for the legal work.
Sykes said he rarely saw conveyancing quotes before the stamp duty holiday but as the cost of legal fees doubled in some cases, his clients were asking him for a second opinion.
Bills of between £2,000 to £2,500 are not uncommon for his first-time buyers, said Sykes, but he is receiving an increasing number of calls from clients saying they have been handed a quote of between £4,500 and £5,000 plus VAT.
“It depends on the firm but we seeing this particularly if the client wants to complete within the stamp duty deadline. That seems to trigger additional fees.”
Fees for buyers who are not trying to beat the stamp duty deadline have also risen but not as much, he added.
“It’s a case of demand outweighing supply so I guess it does make sense to add a premium, but some solicitors are taking the Mickey.”
Rachel Dixon of RH Dixon, based in Leamington Spa, said the solicitor she recommends her clients to has just increased their fees.
“Normally in Leamington a typical transaction fee for a first-time buyer is around £650 to £700. Now I’m seeing clients being quoted as high as £900 for the same service.
“In one instance some of my local clients were receiving higher quotes than my London clients. Usually London is more expensive.”
Dixon said she has had multiple firms turn away new business because they are working at capacity. “I’m guessing they can cherry pick the business at the moment,” she added.
Matthew Jones of Moneywatch Finance in Solihull said he had seen lots of examples of dynamic pricing, where a price is increased at a time of high demand for the service, during the pandemic.
“They are making hay while the sun shines,” he said.
Jones has seen modest rises in legal fees by around £100.
He says the solicitors he recommends have stopped accepting new business.
Richard Campo, managing director of London-based Rose Capital Partners, said for his clients a typical legal fee can be around £1,500 but he has seen this creep up towards £2,800.
“I’m not surprised by this mindset,” said Campo. “The firm is probably thinking if they are going to save you £15,000 in stamp duty by completing before the deadline then we will charge you £5,000. When demand outweighs supply this much you can name your price.”
James Chisnall, director of City Finance Brokers, said he has seen valuation fees rise for cases where a borrower needs a quick turnaround on a case, for example a bridging or development finance transaction.
“I received a valuation quote for a client of £3,000 because he needed it within a few days.” he said. “If he could wait, he would paid half that amount. It’s daylight robbery.”
The Conveyancing Association was contacted for comment.