Coronavirus has brought the U.K. to a standstill and not even housing, the bricks and mortar of our economy, is immune to its effects. We’re not quite at a complete freeze yet, but the options available are narrowing for homeowners and tenants, so here’s a concise look at the current landscape:
The government has advised that buyers and renters delay moving house whilst self-isolation and social distancing measures are in place so as to limit the spread of the virus. Official guidance has been very clear that all parties are to delay transactions if possible, urging people to ‘adapt and be flexible’. This means that the only moves that can go ahead, with the proper precautions, are those that are too far along to cease activity, i.e. parties involved are contractually obliged to proceed, or if the property is already vacant.
UK Finance has also confirmed that lenders have agreed to provide a three-month mortgage offer extension to homeowners impacted by Covid-19 who have already exchanged contracts – giving them the option to move at a later date.
For buyers looking for a mortgage the options are starting to dwindle. Some lenders have also begun to rescind mortgage offerings, starting with Halifax refusing to offer mortgages with a loan-to-value (LTV) of more than 60%. Meaning buyers will need a minimum 40% deposit to qualify for a loan.
If you’re looking to sell a home and your property is not yet on the market the procedure is likely to be very challenging as agencies are unable to market on your behalf and it would otherwise be extremely difficult to complete a transaction during this window. But what I do know is that many estate agencies are working through this crisis and they will be able to offer advice and support for when the market reopens.
For properties already on the market it is possible to advertise for sale, but, again, the government’s guidance states that people should not be allowed into homes, to enforce social distancing. On the positive side, viewings can still take place through technological means such as virtual or remote views.
The government has said that they are working with conveyancers to develop new legal processes to allow completion dates to be moved to a later date. But for the meantime the process for those who do wish to proceed under the high-level restrictions is fraught with risk, more details of which can be found on this in the Law Gazette.
Overshadowing this, a report in the FT suggests the banks are pushing for a full suspension of the U.K. housing market as the pandemic impacts on their ability to deliver accurate valuations as they are unable to conduct building surveys.
Laura Conduit, a property solicitor at Farrer and Co, has said that banks will have to rely on valuations using videos of properties, rather than surveyors, and this could impact on credit teams’ decision making as they struggle to determine ‘what the value of anything is.’
The bottom line is that, for now, some ongoing transactions can proceed, but for the rest it’s likely that many home moves will be put on ice for the time being. That doesn’t mean that you can’t still look at properties that are already on the market or consider putting yours up for sale. At some point this pandemic will end and the demand for housing will surge upwards again.
If you are looking to buy or sell, my best advice would be to consult your estate agent. Their expertise will be invaluable during this time and they are working around the clock to provide support to their clients.
