Government Put Brakes On Housing Transactions

Government Put Brakes On Housing Transactions

The government has issued a plea for stakeholders in the home buying and selling process to do all they can to delay home moves until restrictions to reduce the spread of the coronavirus are lifted.

Robert Jenrick has stated that, even if the legal exchange has taken place, both parties should ‘amicably agree’ a new move in date.

The ‘advice on home moving during the coronavirus outbreak’ is ‘urging parties involved in home moving to adapt and be flexible to alter their usual processes.’

This means that buyers and sellers should agree to delay movement into new homes; potential sellers should not allow any stakeholders into their home for viewings, marketing or surveying purposes; and conveyancers should advise all those ready to exchange to delay this process.

The official advice for buyers and sellers who have already exchanged contracts and entered the legal obligation to buy the property  are asked to ‘work together to agree a delay or another way to resolve this matter.’

UK Finance confirmed that mortgage lenders will do everything they can to extend the mortgage agreement by up to three months until exchanges can take place.

If a delay or agreement cannot be agreed upon, then people must ‘follow advice on staying away from others to minimise the spread of the virus.’

This advice may be difficult to follow given the strict guidance that ‘there should not be any visitors into your home.’ However guidance also suggests that removers can honour their commitments ‘where the move can be done safely’ with all work adhering to guidelines such as ‘maintaining a 2 metre distance from others.’

This is where the guidance will remain contradictory whilst moves are still permitted to take place. Where critical moves need to take place, the police have been granted exemptions to waive new enforcement powers concerning breaches of social contact.

Conveyancers have been advised to prioritise the following issues:

  • Conveyancers are advised to support the full sales process of unoccupied properties as far as possible, advising clients that they will be able to move if all advice is followed regarding social distancing.
  • Conveyancers have been urged to encourage transactions due to complete in the days ahead to delay the process whilst the government continues to enforce the stay-at-home period.
  • Conveyancers should advise their clients who are ready to move not to exchange contracts on an occupied property unless they have made explicit provision for the risks presented by the virus.
  • Conveyancers should prioritise support to anyone with symptoms, self-isolating or shielding from the virus and those they are in chain with, and we urge them to do all they can to help a new date to be agreed in these circumstances.

Whilst the current advice has not placed a declarative brick in front of the property market by preventing future sales, the advice is a lot clearer in encouraging all in the process to delay future moves until stay-at-home restrictions are lifted.

Lenders on the other hand have suggested that finance will be limited until restrictions are lifted. Many lenders have stressed that resources are being ploughed into dealing with mortgage break enquiries and restrictions imposed on the surveying process make valuations extremely difficult.

Barclays and Lloyds, two huge players in home finance, have issued warnings concerning offering finance whilst the economy is so uncertain.

Simon Davis, Law Society of England and Wales president, commented:

“We welcome the government’s advice which provides much needed clarity around some of the issues home buyers and sellers are facing.

“Those who have not exchanged contracts would be well advised to wait and those who have exchanged contracts are encouraged to take a practical view and extend the contractual completion date if this can be agreed – and if the risks are clearly understood by both buyers and sellers.”

“Our members will now be talking to their clients to try to find workable alternatives to completion – in situations where there may be practical barriers whilst social distancing requirements are in place.
“They will be aiming to find pragmatic solutions in situations where contracts have been exchanged but the purchase is not yet completed.

“There remain further issues that require consideration, and we will continue to liaise with government and update our own advice to members accordingly.”

Stephen Jones, Chief Executive of UK Finance, said:

“Lenders recognise that many people looking to move into their new home are facing significant stress and uncertainty due to the impacts of coronavirus. Current social distancing measures mean many house moves will need to be delayed.

“It is clearly not appropriate for people shielding or self-isolating to move home. Therefore where chains contain people in these groups, lenders, conveyancers and other professionals are working together to enable these customers’ moves to be delayed.

“Where people have already exchanged contracts for house purchases and set dates for completion this is likely to be particularly stressful. 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.”

Robin Fieth, Chief Executive of the Building Societies Association (BSA), said:

“Lenders and borrowers face an unprecedented set of circumstances. People who would have been preparing and expecting to move house in the coming weeks now face a wait until Covid-19 restrictions can be lifted. Our hearts go out to them and our heads are clear that it would be unfair for these people to have to start their mortgage application all over again once life returns to a more normal state. A three-month extension of existing mortgage offers seems a fair and reasonable step to take.

“It is possible that some borrowers financial circumstances may change during the three months. If this happens, or the terms of the purchase change we will work closely with the borrower to achieve a sensible outcome.”

Mark Hayward, Chief Executive, NAEA Propertymark, said:

“This advice gives long awaited clarity for home buyers and sellers after some previous mixed messages. The new advice does enable some moves to take place, but under prescribed conditions. We now look to lenders to take a pragmatic approach and facilitate extensions on mortgage offers. Agents should nurture any deals that are currently agreed and keep both buyers and sellers informed as the situation develops. Health and safety is imperative, so we urge anyone who can stay home to do so.”

William Michael, partner and head of real estate residential at JMW Solicitors London, says:

“The Government have finally provided some guidance for those involved in the buying/selling process. The guidance is largely encouraging whilst advising all parties concerned to “adapt and be flexible to alter their usual processes”.

“The guidance boldly suggests that buyers and sellers should not pull out of transactions as a result of the current climate, but follow the Government’s guidance on staying safe.

“Very useful advice is also given on the type of transaction that should be able to proceed, such as the purchases of vacant properties. In addition, the guidance also goes onto state that with occupied properties, all parties should agree alternative timescales for moves when it is likely that stay-at-home measures will no longer be in place.”

Click here to read the full advice.

Is this guidance clear enough? Will this guidance reduce the amount of home moves and housing completions in the days ahead?

Martin Parrin

Martin is a Senior Content Writer for Today’s Conveyancer, Today’s Wills and Probate, Today’s Legal Cyber Risk and Today's Family Lawyer Having qualified as a teacher, Martin previously worked as a Secondary English Teacher that responsible for Head of Communications. After recently returning to the North West from Guernsey in the Channel Islands, Martin has left teaching to start a career in writing and pursue his lifelong passion with the written word.

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