Property Exchange Australia (PEXA), which handles 80% of property sales in Australia, is to acquire property law firm Optima Legal from listed company Capita.
The deal was announced the day after the launch of PEXA’s mortgage platform in England and Wales, which entered the market earlier this year to support the digitization of property transactions.
A transformed buying and selling process slated for release in 2024.
Capita purchased Optima Legal in 2014 after obtaining an Alternative Business Structure (ABS) license. The Leeds-based firm specializes in fee-assisted remortgage and capital release work – it works directly with six of the UK’s eight major mortgage lenders, which equates to around 22% of the remortgage market.
The latest accounts filed by Optima, for 2021, showed revenue up 5% to £10.3m and an operating loss of £29,000, compared to £1.9m in 2020.
This improvement reflects “a partial resumption of instructions from mortgage customers in 2021 and the impact of cost reduction activities undertaken in 2020”. It had 278 employees at the end of 2021, down 36 from a year earlier.
The acquisition will be funded from PEXA’s existing cash reserves and is expected to be completed by the end of the year.
PEXA is a fully online property exchange network that completed its first transaction in the state of Victoria in 2013 and has since processed over 11 million transactions across Australia.
It was listed on the Australian Stock Exchange last year and currently has a market capitalization of AU$2.8 billion (£1.6 billion).
The PEXA platform provides an automated solution integrated with the Land Registry and the Bank of England to enable “frictionless mortgages and faster settlements”, he said.
“By integrating PEXA’s platform, Optima Legal will be able to demonstrate the benefits of digital fulfillment to its lenders and clients, starting with PEXA’s mortgage offering.
“For consumers, this means increased speed and certainty, greater transparency in the post-offer process and better loan offers created by the ease of switching, while lenders will benefit from reduced processing costs, a reduced settlement period and increased remortgage capacity.
“In addition, it provides transfer agents with a simplified platform, offering, among other things, a better quality of service for customers.”
In Australia, remortgage times have fallen from an average of 42 to 15 days, with some remortgages even ending within a day.
Lenders can use PEXA’s technology directly, through Optima Legal, or through any conveyancing company that integrates with the platform.
A spokeswoman said Legal futures that PEXA did not believe the acquisition would discourage companies from doing so.
“The acquisition of Optima Legal was an opportunity to allow us to reach more potential clients faster with our mortgage platform, while presenting the benefits of digitization – from improved accuracy and from efficiency to cost reduction – to other brokers.
“We remain committed to working with all partners and industry players to make the PEXA platform accessible to everyone.
“It is important to note that Optima Legal and other transfer agents will be offered access to the PEXA platform on equivalent terms.”
James Bawa, Managing Director of PEXA UK, said: “The acquisition of Optima Legal marks a significant step forward for PEXA in the UK and demonstrates the strength of our commitment to bringing about transformational change that will benefit both consumers, real estate agents and lenders.
He said that by starting with remortgaging, “we aim to streamline a conveyancing system that has come under significant pressure.”
A PEXA survey earlier this year suggested that up to 20% of borrowers looking to remortgage in the past 24 months have struggled with application issues so much that they have given up on it altogether. Another 28% chose to persevere, but experienced serious delays.
As a result, 76% of 1,000 respondents felt the remortgage process was not fit for purpose.
On Wednesday, PEXA confirmed that Hinckley & Rugby Building Society and Shawbrook Bank would be the first lenders to start processing remortgage cases through its platform, with the first onboarding this month. He said he expected to bring in other lenders in “later waves”.