Industry prognosis: Conveyancers feel the squeeze

WITH nearly a million conveyancing transactions signed off this past year, Australia’s agents are in agreement – they are stretched to the limit by heavy workloads and by time-consuming and ever-growing compliance burdens.

AIC National President Michelle Hendry says the industry is in for more shaking up in the coming five years, with a Deloitte report identifying two “critical uncertainties” for the future of the Australian conveyancing industry. Australian Conveyancer magazine speaks to industry leaders countrywide for our State of the Nation special report, which examines how the sector is faring in 2024 and how it is shaping up for the future.

More than half a million of Australia’s 11 million dwellings were sold last financial year. And that bumper workload – along with at least 20 per cent of time spent on each file being compliance-related – is making for long days in the office for the country’s conveyancers, settlement agents and property lawyers.

“I think conveyancers are feeling stressed and time poor and it’s a national issue,” AIC national president Michelle Hendry tells Australian Conveyancer magazine.

“Conveyancers very much underestimate how important our role is, and, as a result, we probably lean towards doing more high-value work at lower price points rather than getting the fee that we should be getting paid.

“Our role is extremely important, and it’s only expanding. The work that we’re required to do and the compliance we are required to do for each file is a lot. Now we’ve got anti-money laundering (AML) requirements, which are about to come out, which means more compliance requirements. That just continues to expand for us and we’re not increasing our fees accordingly for all this additional work.

“The real estate industry is a major part of the Australian economy, and the conveyancing profession is a fundamental contributor. The role of a conveyancer for a consumer is more important now than ever with the rapidly changing market and the ever-changing regulation and compliance.”

Hendry believes the role of conveyancers and settlement agents will further reshape over the next five years.

“The role of the conveyancer will likely start changing more rapidly as a result of innovative technology, automation and consumer behaviour as well as generational change, and a conveyancer must adapt,” says Hendry. “But it is how a conveyancer adapts to change that is vital to our profession.”

In The Future of the Australian Conveyancing Industry 2025 and 2030 report from Deloitte in 2018, >> two “critical uncertainties” for the conveyancing industry were identified:

Adelaide-based AIC national president Michelle Hendry says there is pressure to perform and remain profitable.

1. will conveyancing be digitally enabled or digitally led?

2. the visibility of conveyancing as a distinct or embedded service.

“If conveyancers provide a personal service deriving benefit from digitisation, automation and integration of new technologies, we will have a digitally enabled profession and be a distinct standalone service,” Hendry says. “Adversely, if a digitally-led service is provided reducing human input, the profession will be at risk of becoming an embedded service – vertically integrating with an electronic lodgement network operator, financial institution or other element of the property transaction.

“In our view, this will not only have a huge impact on the profession but ultimately the consumer, restricting choice and deteriorating the consumer’s ability to seek the right advice for what can be their most significant investment in their life.”

Hendry reports another problem facing the industry nationwide is when business referral partners assume they can dictate a conveyancer’s fees to them.

“Real estate agents and buyers’ agents, some mortgage brokers, try to negotiate our fees for their clients with us,” she says, “which is kind of hard to swallow when their fees are a certain percentage of the price and they are not doing the legal work that we’re doing.”

Being squeezed on price and time means conveyancers nationwide are finding it difficult to grow their SMEs.

“It’s the chicken and the egg, isn’t it?” says Hendry. “We’re small businesses that don’t get paid appropriately for our work which makes it difficult for us to grow and to employ the resources to help us grow and it’s because of all that compliance.”

Hendry says while the states may have their differences in the way they carry out day-to-day conveyancing, fundamentally there are a lot of similarities.

“Even though each state will say, no they’re not similar, they’re all different, they all stem from the Real Property Act and the Torrens Title in SA, so there are a lot of similarities but there are certainly nuances,” she says.

“Probably the biggest difference is the scope of work in each state. I think WA is quite limited, SA has a relatively good scope of work but NSW and Victoria can give legal advice whereas the other states can’t. Which is stupid. Take SA for an example – we’re an exception under the Legal Practitioners Act but we can’t give legal advice.

“It’s pretty hard for Tasmania and the Northern Territory right now who are not on PEXA. But I do have views about PEXA. PEXA is a private entity that we are mandated to use and they get $137 a transaction from each party – the vendor and the purchaser.

“There is a bit of a false impression out there that PEXA has created so many efficiencies and that it’s e-conveyancing, when in actual fact it is e-settlement. All it is is the settlement platform. There’s still a lot of work that needs to be done prior to the settlement platform.

“So it’s coming down to the value of what we do is very important. Someone buying a home is their most important and biggest financial investment in their life.

“People are spending an average of between $500,000 and $800,000, probably higher, on their homes and yet they are squabbling with us over a few hundred extra dollars.

“It is a bug bear of mine – and it’s a national sentiment as well – that we have to bring up our value. It’s not going to remove the stress as much but I think it will have an impact.”