Surveying Review

Our way of working is changing forever

Kevin Webb

managing director, Legal & General Surveying Services

When we emerge from the current crisis, some of the challenges we faced before will persist. Climate change is not front-page news right now, but will re-emerge as a pivotal business issue.

The lockdown may have illustrated the cost of shutting down parts of the economy and keeping employees at home for weeks, but it has also shone a light on the environmental impacts of our normal way of life.

Every business has a duty to help reduce its own carbon footprint and help clients and customers achieve a similar goal wherever possible.

ENVIRONMENTAL ISSUES

The Prudential Regulation Authority (PRA) has already asked financial institutions about their responses to climate challenges.

Legal & General Capital recently announced a 36% stake in one of the UK’s largest players in ground source heat pump technology, as it scales up its investments in addressing decarbonisation.

Heating and hot water for UK homes make up 25% of total energy use and 15% of our greenhouse gas emissions. By 2025, the current consultation on new building regulations will likely outlaw fossil fuel heating systems for new builds, presenting a significant opportunity for alternate low carbon heating solutions.

Retrofit also represents a significant market opportunity, with around 23 million homes in Great Britain using mains gas (which is carbon intensive), two million homes electrically heated (which has high running costs) and the remaining two million using heating oil or other fossil fuel systems (both carbon intensive and with high running costs).

In the world of property valuations we will need to understand the ramifications of these things upon value. Equally, current public health and climate concerns are coinciding with a need to reduce the role of physical inspections. Our way of doing things is changing forever.

Digital valuations are already embedded in our business. We have been delivering remote digital valuations using data, modelling, analytics and technology for a couple of years now.

The current working environment has accelerated the growth of remote digital valuation on a massive scale – in the last six months we have conducted over 50,000 – and has the potential to change the way our industry assesses, undertakes and manages property risk.

In this market 20 years ago, valuers drove to properties to assess risk on behalf of lenders and homeowners. For

the past 15 years, we have been refining automated valuation models (AVMs) for an increasing proportion of the UK’s housing stock. Now, a blend of automation and local knowledge is key.

We expect our number of remote digital valuations to grow for two reasons: they address the need to use available data and save our lenders unnecessary operational costs, and they fulfil a growing demand to address carbon footprint issues.

M I TECHNOLOGY SOLUTIONS

I also believe that the lack of precedent for our current market in AVM data will drive more new business over time to a ‘second check’ by a qualified person via a desktop. After all, we should not address one set of risks by creating another in the shape of a total dependency on data that may or may not be timely enough to reflect current market trends.

AVMs are also professional indemnity (PI) backed and signed off by a Royal Institution of Chartered Surveyors (RICS) qualified valuer, whose experience and expertise can leverage the information available in the ‘data lake’ to correctly ascertain the value of a property.

We are certainly not short of technology solutions to access and manipulate the data.

The role of surveyors and valuers is not disappearing. Our panel firm model means we can employ expertise that can match the ebb and flow of lenders’ own businesses.

But the way property valuations are made will continue to evolve to meet the demand for a new balance.

Digital valuations were happening anyway – current circumstances will simply hasten their adoption where and when it is appropriate.

Within Legal & General’s own fastgrowing housing platform, which now spans build-to-rent, build-to-sell, later living and affordable housing, as well as modular construction, plans are already underway to make all new housing stock operationally net carbon neutral between now and 2030.

Our mission is to support that and achieve a similar ambition in valuing for our lenders and the housing industry.

The time value of money

Steve Goodall

CEO, ULS Technology

That time is money is not a new concept. As I write this column in mid-April, however, it seems bleakly that time is now money lost. We are in the middle of lockdown.

That this will end, though, is inevitable. Our national response to this pandemic has proven that mankind will do whatever it takes to survive and protect life, including at its own economic cost. In the housing market, this economic impact is keenly felt by the many cashdriven businesses in the value chain.

From estate agents to brokers, and from conveyancers to valuers, many businesses are dependent on transactions, and the speed of those transactions, to thrive.

Putting the economy on hold has been necessary to preserve lives, but it has massive consequences that will affect us all for years to come.

But – and it’s a really big but – the total life change that has occurred as a result of lockdown offers as much opportunity as it does challenge.

REMOTE WORKING

Millions of us have begun working from home, meetings are being held remotely, and broadband is now considered a more fundamental infrastructure than the rail network.

Talking among colleagues and friends, it’s apparent that working from home is also helping many of us to be more efficient.

Less time spent on the commute is more time either at our desks or spent on life-improving things like sleep, outdoor exercise and time with our families. The added benefit of cleaner air is another reason to be cheerful.

While it has been a consequence of lockdown and coronavirus, something none of us would have wished, this uptick in efficiency within firms of all sorts can and should be harnessed as the positive change that it is.

Before the upheaval caused by coronavirus, economic productivity was fairly flat; economists speculated endlessly as to why our output per head was effectively falling in real terms.

OUTPUT FALL

The productivity puzzle has not been solved by this dramatic shift in the way we work, and in fact many economists are predicting huge falls in output globally as the inevitable fallout from suspending so much of the economy.

Nevertheless, this pandemic has at the very least shown us another way to improve efficiency and save money, at a time when all businesses are sorely in need of that.

Working from home would not have been possible at the scale it is today even just 15 years ago.

The progress made in digital communications, security and transactions in that time has been enormous – the effect of lockdown on an economy not able to power up remotely is virtually unthinkable.

A corollary of lockdown and this transition to working from home has been the enormous and urgent impetus to develop technology and online solutions that support distance working, particularly for those as yet unused to it.

The law is one sector that has, traditionally, been less willing to embrace the possibilities of what technology might offer.

The need for wet signatures on contracts and other documents has remained stubbornly in place, for example, even as digital signatures became increasingly common and more secure.

That reluctance to digitalise at scale has quickly disappeared, and it is largely down to the impetus created by our current public health challenge.

This willingness to embrace technology and digital alternatives to older methods provides a reason for optimism at a time when we are all feeling in need of it.

DigitalMove is just one example of how a digital process can benefit all of those engaging with it. The system has now seen 10,000 housing transactions enacted through it.

“The progress made in digital communications, security and transactions in that time has been enormous – the effect of lockdown on an economy not able to power up remotely, is virtually unthinkable”

M I

Having crunched the data, we can reveal that on average, each case took 20% less time to complete than transactions not carried out through the DigitalMove system.

Not only does that improve customer experience, it takes out a tangible cost for all firms involved.

If time is indeed money, then having a fifth of your time back offers a significant commercial opportunity.

At a time when all businesses, no matter how well capitalised, understand more clearly than ever that cash is king, it is clear that a 20% time reduction also offers a saving through cash flow that is 20% faster. It is delivering real value to the entire chain of users.

Yes, consumers get a better home moving experience, but DigitalMove is also delivering better business to those firms using it in a very real way, by delivering cash to them more quickly.

I sincerely hope that by the time this column is published we all have more clarity on the future and know when we can visit friends and family.

In the meantime, I think it is safe to say that one thing for the future is already clear: how we work is forever going to be changed. Changed, I think, for the better.