Now that the Christmas decorations are down and most of us are considering what the new year might bring, I’m sure I can’t be the only business owner who is looking to make sure that I’ve covered off every eventuality around cashflow.
And in our world, cashflow is mostly driven by transaction times.
It’s something that every property professional will be affected by, whether you’re an estate agent, mortgage broker or conveyancer, because in the vast majority of cases, your fees are only paid once the transaction has completed.
It was over that particular period that, when I think about it, the business case for our Sprift shared dashboards really wrote itself. With the requirement for all property professionals involved in a transaction to have access to property information as soon as possible in a remote environment, we saw the usage of our shared dashboards soar. For those of you who perhaps aren’t familiar, the Sprift platform generates a unique dashboard for every residential property in the UK, all 30.1 million of them in fact. Each of those dashboards contain up to 300 data points on that property, including flood risk, planning data, radon levels, broadband and mobile coverage and possible blight or risk factors, which once generated can then be shared instantly with anyone by email, meaning that the transfer of information from the estate agent to the mortgage broker, surveyor and conveyancer working on the transaction is seamless. All of a sudden, everyone is looking at the same information, including the comparables, at the same time.
Now, once upon a time, pre-Covid, the average transaction time sat at around three months from start to finish. I know, it feels like a different world now, doesn’t it? If that makes you feel a bit nostalgic, then what I’m about to say next is likely to make you feel somewhat wistful for those heady days before ‘next slide please’ became a national punchline.
Recently, the Sprift data team analysed 591,632 residential transactions which took place between October 2023 and October 2024 in England and Wales to determine average deal times, both in terms of first listing to final SSTC (to allow for fall throughs and new deals to be agreed) and first listing to completion. Which all sounds a bit, well, you know, geeky… until you look at the insights.
Our figures are for England and Wales only, this is because Scotland operates under a different conveyancing system which means you can’t compare ‘apples with apples’ in terms of transaction times.
Let’s start with the slowest areas for sales to SSTC. What stood out for me here is that the journey to getting a property under offer varies significantly by region, with the top five slowest regions as follows, based on properties valued at up to £300,000, so around the national average property price, depending on which house price indices you read, obviously:
- London average days from first listing to SSTC: 114
- Wales average days from first listing to SSTC: 103
- South East England days from first listing to SSTC: 100
- East of England and South West tied days from first listing to SSTC: 93 days
In London, that’s nearly four months to go from the first day the property is available as a listing on a property portal, to the day that an offer is accepted. But that’s just the tip of the iceberg. Now let’s take a look at the time it takes to get from first listing to completion, in other words, the day that you get paid, for properties up to £300,000 in value. The top five slowest areas are (drum roll please…)
- London average days from first listing to completion: 249
- South East average days from first listing to completion: 219
- Wales average days from first listing to completion: 211
- East of England average days from first listing to completion: 208
- South West average days from first listing to completion: 207
That means if you’re involved in a property transaction in London, the chances are that it will take you just over eight months to get paid your fee. Eight months. The top performing English regions, again for average value properties, look like this:
- North East average days from first listing to completion: 191
- East Midlands average days from first listing to completion: 193
- West Midlands average days from first listing to completion: 197
- North West average days from first listing to completion: 198
- Yorkshire and The Humber average days from first listing to completion: 199
Now, while just over six months doesn’t feel fast by anyone’s standards, it’s around two months quicker than the Capital, which hopefully provides an amount of comfort.
I’m not here to depress you, quite the opposite. My point is that understanding the time it takes to get from listing a property to a completed sale is critical for business planning. And, as we start 2025, the impact of rising staff costs due to the increase in the Living Wage and National Insurance contributions in April will put added pressure on cash flow, regardless of the size of your business. Because, bluntly put, as a business owner, you’re going to have to account for an increased cost in salaries and operating costs over longer periods.
So, from my perspective, I thought that sharing this information with you at this point in the year may help you to better prepare for these challenges because, if your fees are delayed by, six or even eight months across the majority of deals you’re working on, as a business owner the buck stops with you to ensure that you’ve got the funds to manage your overheads and pay your staff without that income for at least half a year. In some cases, longer than that.
Number one: Monitor local market timelines: Keep yourself up to date in terms of how long transactions take to reach SSTC and complete in your area. Use this information to set vendor expectations and adjust your financial planning accordingly.
Number two: Plan for longer cashflow cycles: If you’re operating in an area with slower completion times, budget for longer cashflow cycles. Ensure you have sufficient reserves to cover operational costs during these extended periods so you don’t find yourself caught short, particularly if your Local Authority has an IT problem and search times extend out further…!
Number three: Enhance communication with your clients: Managing client expectations about the length of the sales process can help reduce frustration and ensure smoother transactions. It won’t get you paid any faster, obvs, but anything you can do to take the edge off is likely to help I’d suggest…
Number four: Smart staff management: There are various options open to business owners in terms of a hybrid model to include self-employment as well as PAYE staff, which may be worth considering. And I know as the owner of a proptech “I would say this wouldn’t I” but it’s perhaps also worth looking at how proptech may be able to help you streamline processes and reduce the need for additional hires. Just a thought.
I do appreciate that none of this is exactly a silver bullet and until such times as we see greater digital adoption by Local Authorities to sort out the pesky challenge of searches, as well as better and wider use across the entire residential ecosystem of property data, for now, the best advice I can give you is to be realistic around the challenges that this year may bring, and make a plan for how to deal with the worst case scenario then anything else is a commercial upside.
As I see it, staying proactive and informed will be the key to thriving in 2025.
