Property lawyers have been urged to prepare for a housing market crash that is similar to the financial crisis of 2007 and 2008.
The Council for Licensed Conveyancers, which regulates conveyancing firms, recommended that solicitors brace for a 40pc fall in transactions.
In a note to firms, the industry body said there was a “growing consensus” that property transaction volumes will fall.
“Some of you [members] are telling us that there is already evidence of that,” it said.
The CLC said rising interest rates, a recession, the falling availability of mortgage deals and reduced supply of properties for sale will lead to a drop in transactions.
Mortgage rates have climbed above 6pc for the first time since 2008 and are expected to keep soaring as interest rates rise. The Bank Rate is at 2.25pc and is forecast to reach just under 5pc next year.
The Bank of England predicted in August that the economy will contract for 15 months starting at the end of this year.
The CLC said: “All law firms should consider how they would respond to a significant downturn in the economy. Those that are focused significantly or entirely 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 40pc decrease.”
Chris Sykes, of mortgage broker Private Finance, said he had seen “a drop off” in activity in the house purchase market, although said the number of remortgage cases had increased.
However, Mr Sykes said many purchases had been held up because of delays in the conveyancing process. Home buyers are being forced to spend tens of thousands of pounds to prevent house purchases from collapsing as delays spiral out of control.
Logistical hold-ups in the property market mean sales are dragging so long that buyers’ mortgage offers are expiring before they can complete – and rates have climbed so fast that replacement loans are as much as triple the cost.
