Coronavirus: What it means for home buyers and movers
The coronavirus pandemic is having a drastic effect on the property industry.
The certainty provided by the election of a majority government in December, which saw buyers and sellers who had been holding off amid uncertainty over Brexit getting busy again, feels like a long time ago.
That renewed demand saw 103,870 homes sold in February according to HMRC, up six per cent year-on-year and four-and-a-half per cent on the figure in January.
But home buyers now are facing a landscape that has changed dramatically and is continuing to evolve as the Government daily announces new measures to combat COVID-19.
OnTheMarket has looked through the implications of the current crisis for home buyers.
What if I had exchanged contracts before the coronavirus restrictions?
In a statement on 26 March, the Ministry of Housing, Communities & Local Government advised buyers and sellers that “if you have already exchanged contracts and the property is currently occupied then all parties should work together to agree a delay or another way to resolve this matter.”
Only in cases where ‘moving is unavoidable for contractual reasons’ should parties consider proceeding.
Where a property is unoccupied, the transaction can continue to go ahead, according to Government advice. But it was not made explicit whether this means a house move could proceed.
If any party involved is showing symptoms of COVID-19, a move should not go ahead.
What flexibility is there during the coronavirus pandemic on contracts and mortgages?
The majority of lenders are offering customers an extension to their agreed mortgages.
Stephen Jones is Chief Executive of UK Finance, the trade body representing the business and finance industry.
He said: “To support these customers at this time, all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months to enable them to move at a later date.
“If a customer’s circumstances change during this three month period or the terms of the house purchase change significantly and continuing with the mortgage would cause house buyers to face financial hardship, lenders will work with customers to help them manage their finances as a matter of urgency.”
With regards contracts, those who have already exchanged are being advised to negotiate an extension based on ‘good faith’.
If you haven’t yet exchanged but are hoping to do so once coronavirus restrictions are lifted, it is advisable to insert a clause allowing for either party to delay the completion date should COVID-19 mitigation measures once again be enforced, making it impossible to complete.
Are removal companies operating during coronavirus?
Some are and some aren’t. Members of the British Association of Removers are to stop all moves except those currently ongoing, the group has said.
But not all firms are members of the body and some are continuing to operate in cases of ‘essential moves’.
What if I hadn’t exchanged contracts before the coronavirus restrictions?
You will have to sit tight. The Government has advised surveyors they should not be carrying out any ‘non-urgent’ surveys on occupied properties and should refrain completely if they or “any person in the property is showing symptoms, self-isolating or being shielded.”
The advice continues: “It may be possible to carry out some of your work online and also carry out urgent surveys on empty properties, or those where the occupants are out of the property or following guidance to stay at home and away from others.”
“Surveyors should follow the latest Government guidance which currently states that work carried out in people’s homes can continue, provided the tradesperson is well and has no symptoms of COVID-19.”
Homebuyer in limbo because of coronavirus
James Woodman, 31, is a management consultant living in a rented flat in Willesden Green, North London, with his fiancée.
In November, James had an offer accepted on a three-bedroom 1950s end-of-terrace house in Loughton, Essex.
Issues over the valuation of the property have held up the process but the couple are still hoping to press ahead.
James said: “We really like the house, it’s the best one we’ve seen out of about 20.
“We had a third valuation carried out on 20 March and have been told the mortgage offer will be delayed because of the situation with COVID-19.
“We feel unsure because the next stage now was going to be the full structural survey and when we booked the valuation the restrictions weren’t so severe.
“For a structural survey you don’t need to have anyone in close proximity to anyone else but obviously there aren’t any being carried out for the foreseeable.
“We do still want to go ahead but it’s a bit worrying with the uncertainty whether we’re going to be able to get it over the line.”
If I’m looking to buy a house?
You may now struggle to get a mortgage. A number of banks and specialist lenders have now withdrawn new mortgages to focus on existing customers, many of whom are attempting to negotiate mortgage payment holidays.
Lloyds Banking Group and Barclays, two of the UK’s biggest lenders, are among those who have withdrawn new mortgage offers.
Lloyds has stopped offering mortgages or remortgages through brokers unless the customer has a deposit of at least 40 per cent of the value of the property.
Barclays told brokers it would no longer offer mortgages for customers who did not have a deposit of at least 40 per cent, but it would continue to offer remortgaging deals.
Mortgage approvals for house purchases in February actually rose to 73,500, the most since January 2014, according to the Bank of England.
Simon Gammon, Managing Partner at Knight Frank Finance, said: “February’s strong lending data is largely down to a surge of deals agreed in the wake of December’s decisive election result.
“Lending will be suppressed over the coming months, particularly for house purchase, while restrictions on movement remain in place and surveyors are unable to visit properties to carry out valuations.
“The lenders continue to show appetite to lend. Though some have withdrawn completely from the new purchase market, others have reduced the loan-to-value ratios at which they are willing to lend and continue to do business using automated or desktop valuations. We continue to see strong demand from borrowers to remortgage following successive Bank of England rate cuts.
“We’re also seeing lenders with skeleton staff that were struggling to cope with demand for three month mortgage holidays now get to grips with applications by adding forms on their websites to reduce call volumes.”
Are home viewings still going on during coronavirus restrictions?
No – estate agents are not ‘key workers’ and have been told by the Government to shut their offices and work from home, forgoing any property viewings.
What about virtual viewings during the coronavirus pandemic?
Virtual tours are a service many agents were already offering before the coronavirus crisis hit.
Paul Timson is the Chelmsford Area Sales Manager for Go Homes and has just seen a sale finalised subject to contract on a two-bedroom semi-detached converted Georgian property in Hertford.
He said: “Things are changing rapidly day by day. We accepted this on 22 March and see no reason right now why we shouldn’t see it all the way through to completion.
“Everything has slowed down, which is to be expected as solicitors are working from home, but we’re optimistic.
“We are stepping up virtual viewings and videos. Even if people aren’t willing to buy on that basis, it’s an opportunity for people to register their interest, so we can hopefully proceed in a few weeks’ time.
“Our Customer Experience Managers have been taking videos of themselves walking through a home and talking about it, showcasing it to potential customers.
“It’s not ideal, as obviously you’d always rather see a home in person, but at least it gives us something to show to people and it is receiving a great response.”
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