In a notice, the regulator said the economic outlook for the UK was “uncertain” and said during the 2007 to 2008 Global Financial Crisis, conveyancing transactions fell by 40 per cent while the turnover of CLC-regulated firms dropped by 27 per cent.
While firms recovered quickly, the CLC said: “We are now entering a very different world.”
It added: “There is a growing consensus that property transaction volumes look set to fall and some of you are telling us that there is already evidence of that. That might be expected anyway given the very high volumes in 2021.
“However, increasing interest rates, the Bank of England’s stated expectation that the UK economy will be in recession until summer 2023, the falling availability of mortgage products and the tightening supply of properties for sale will all contribute to falling transaction numbers.”
Conveyancing firms need contingency plans
Considering this, the CLC said firms should “consider how they would respond to a significant downturn in the economy”.
It said firms which primarily or solely focus on conveyancing “would be wise to prepare a contingency plan that sets out steps they would take to protect the business in the event of a fall in transaction volumes similar to that seen in 2007-08 – a 40 per cent decrease.”
The CLC said plans to prepare for a decline in business could include cost savings, increasing the profit margin on services, pivoting to probate business or falling back on reserves.
It will ask its regulated firms about preparations in its regulatory return questionnaire next month.
The CLC said: “Preparing for the worst is vital for the resilience of the legal services sector and for the sustainable provision of conveyancing and probate services to the public.”
