In a nutshell
Property lawyers, like their corporate colleagues, are essentially transactional lawyers; the only real difference is that real estate deals require an extra layer of specialist legal and procedural knowledge and there aren’t quite so many pesky regulatory authorities. The work centres on buildings and land of all types, and even the most oblique legal concepts have a bricks-and-mortar or human basis to them. It is common for lawyers to develop a specialism within this field, such as residential conveyancing, mortgage lending and property finance, social housing or the leisure and hotels sector. Most firms have a property department, and the larger the department the more likely the lawyers are to specialise. Note that ‘property’ and ‘real estate’ are entirely interchangeable terms.
What lawyers do
- Negotiate sales, purchases and leases of land and buildings and advise on the structure of deals.
- Record the terms of an agreement in legal documents.
- Gather and analyse factual information about properties from the owners, surveyors, local authorities and the Land Registry.
- Prepare reports for buyers and anyone lending money.
- Manage the transfer of money and the handover of properties to new owners or occupiers.
- Take the appropriate steps to register new owners and protect the interests of lenders or investors.
- Advise clients on their responsibilities in leasehold relationships and on how to take action if problems arise.
- Help developers get all the necessary permissions to build, alter or change the permitted use of properties.
- Manage property portfolio investments and advise real estate funds.
Realities of the job
- Property lawyers have to multi-task. A single deal could involve many hundreds of properties, and your caseload could contain scores of files, all at different stages in the process. You’ll have to keep organised.
- Good drafting skills require attention to detail and careful thought. Plus you need to keep up to date with industry trends and standards.
- Some clients get antsy; you have to be able to explain legal problems in lay terms.
- Despite some site visits, this is mainly a desk job with a lot of time spent on the phone to other solicitors, estate agents, civil servants and consultants.
- Most instances of solicitor negligence occur in this area of practice. There is so much that can go wrong.
- Property departments are known for offering trainees plenty of independent responsibility: often you'll be dealing with 20 or 30 small property files (sales, leases, licences to assign) at the same time.
- Your days will be busy, but generally the hours are more sociable and predictable than in other transactional practices.
- Arguably the most cyclical legal area around, property practice has always followed and will always follow the market. In an economic downturn, especially a global one, there’s less demand for properties and new developments, values plummet and conventional bank lending becomes increasingly hard to find. Conversely, in good times the property sector and the fortunes of property lawyers boom.
- The effect that Brexit will have on the property market is dependent on the effect it has on the economy as a whole. The housing market is mainly influenced by wages and interest rates, and a large number of economists expect Brexit to suppress wages. But the actual effects of Britain's exit from the EU will depend on how the negotiations go.
- In recent years, the UK property market, especially London, has been driven forward by investment from abroad, with overseas buyers snapping up luxury apartments and townhouses as investments guaranteed to make a profit. A 2017 study from KCL found that during the period of 1999 to 2014 house prices would have been about 19% lower without foreign investment. Many of these properties are kept empty after purchase, making this trend doubly contentious in the current housing climate. The Grenfell Tower fire brought this debate into the foreground.
- The fire also brought public attention to the importance of safe cladding in high-rise construction projects, as well as to the fire safety measures currently adopted in social housing estates. Investigations have revealed that the use of cladding without an incombustible core contributed to the Grenfell disaster. Currently there's around 300 high-rise towers in need of re-cladding. Legal disputes have also arisen over whether private sector freeholders or lease holders ought foot the bill for replacing the cladding.
- Average house prices in the UK have increased by 3% in the year to May 2018, down from 3.5% in April 2018. This is its lowest annual rate since August 2013 when it was also 3%. The annual growth rate has slowed since mid-2016 and has remained under 5%, with the exception of October 2017. This drop in UK house price growth is driven mainly by a slowdown in the south and east of England. Growth has been constant in the North, the Midlands and the South-West, with growth rates maintaining levels of about 4 to 5% annually.
- 2016-17 saw a rise in the number of homes built by 20% to 217,350 and this trend is likely to continue through 2018. The government's current ambition is to deliver an average of 300,000 homes per annum by the mid 2020s.
- A new market of crowd-funded property owners has emerged as people club together to purchase buy-to-let properties. According to property crowdfunder UOWN, 54% of investors in crowd-funded properties are aged between 18-30. The process allows buyers to get a foot on the property ladder with far smaller sums of cash; would-be owners could only need to stump up a mere £50 to get their hands on a share of the property. If the method proves popular, an increase in buyers could further drive up housing prices.
- Buy-to-let investors have taken a hit in 2018 due to a range of changes to the taxation of residential property by the government. This includes increased stamp duty on the purchase of additional properties, tougher affordability checks on borrowers and measures to phase out higher rate tax relief on mortgage interest. Buy-to-let purchase mortgages fell by over 5% at the beginning of 2018.
- Social change is creating interest in alternative investment opportunities. The UK's ageing population, for example, makes retirement living and the healthcare sector a good bet. Student accommodation has also attracted investors due to large numbers of EU and international students coming to the UK but it remains to be seen how much of an impact the Brexit vote will have on this particular market.
- The government plans to ban letting fees. In practice this means making it illegal to charge tenants for things such as references or inventories. There are also plans to introduce limits on how much deposit landlords can take and a range of new fines for those caught breaking them.