Fewer than half of the current number of residential conveyancing specialist firms will be in business within three years and probably just one in ten, according to the entrepreneur who founded the UK’s most successful property website.
Addressing the Legal Futures conference in London yesterday, Harry Hill, the founder of Rightmove and chairman of AIM-listed online conveyancing business In-Deed, predicted that only volume conveyancers with external capital will be able to withstand a squeeze on margins brought about by unsustainable price competition. Only once the number of providers falls will prices “return to something more sensible”, he said.
In a bleak assessment of firms specialising in conveyancing, he said the move of estate agency groups and mortgage brokers into the residential market had led to a spiral of indebtedness and under-investment in people and technology. “There are probably eight or 10 firms in the UK who look as if they will make it long term, but the overwhelming majority will not,” he judged.
Mr Hill, who initially qualified as a surveyor, admitted to having “got a lot of things wrong” with In-Deed that brought him close to winding up the business before changing strategy and acquiring top-10 conveyancer Runnett & Co earlier in May.
He reported that the subsequent attempt to make In-Deed – which raised £4.5m in initial investment – into a “leading provider of residential volume conveyancing” has been hampered by a dearth of further firms worthy of acquisition. Most firms specialising exclusively in conveyancing “are bust – they are absolutely, completely dead and the corpse isn’t even twitching really”, he claimed.
A key mistake was to underestimate the importance of price as driver for internet customers, Mr Hill said. The average stay on the In-Deed website was 28 seconds, “just long enough for people to look at the headline price and realise it’s much more than the competition’s headline prices and to come off the site”. He added: “So all the time and money we spent developing the site and getting [TV property expert] Phil Spencer’s endorsement and adding content… is largely irrelevant because few people read it.”
Mr Hill said that in his 45-year working life, conveyancing has been “the business that I’ve found the hardest of any business I’ve ever done. It has the least reward for effort of any industry I’ve ever been in and I think it’s going to stay difficult whilst pricing stays difficult”.
He said that he had received “hate mail, most of it anonymously from within the industry” as a result of his founding Countrywide Property Lawyers while chief executive of the Countrywide estate agency chain. During his 20-years at the helm of Countrywide, it grew from 100 offices to 1000.
He admitted that he had initially been unconvinced by the idea of Rightmove – now worth some £1.6bn – but had been persuaded to proceed by colleagues. “If somebody had said to me 10 or 12 years ago Rightmove will be the 149th biggest company in the UK and the biggest internet business other than the search engines in the UK, I would have thought they were completely mad,” he said.