HCR Law Events

14 May 2020

What is the latest guidance on buying and selling houses during Covid-19?

Searches

Your legal representative should be able to carry out searches on your property online in order to progress your transaction and you can contact them to discuss likely timescales.

Your surveyor can undertake surveys of the property you want to buy.

Surveyors

Surveyors should not enter a property where a member of the household is showing symptoms of coronavirus or self-isolating. Where possible, we encourage inspections to take place by appointment only, with one person visiting the property at any time.

Surveyors should follow government guidance for professionals working in other people’s homes and guidance on social distancing. If your home is being surveyed, you should ensure the surveyor has access to all the parts of the property they need to inspect, and make efforts to minimise contact with the surveyor, for example by staying in another room whilst they are inspecting your home.

Agreeing to move

Once you have agreed to move home by exchanging contracts or signing a tenancy agreement, you have entered into a legal agreement to move. We encourage all parties to be as flexible as possible over this period and be prepared to delay moves if needed, for example if someone becomes ill with coronavirus during the moving process or has to self-isolate. You should not expect to move into any home where people are ill or self-isolating.

Your legal adviser should be able to help you to ensure that any contract you enter into has sufficient flexibility to allow the purchase to be delayed in the event that an individual in one of the parties contracts coronavirus or has to self-isolate.

What questions are conveyancers most frequently being asked?

Can I put my house on the market?

This was always possible during the lockdown, but the problem was getting details to estate agents who could not visit homes; property surveys and valuations were also not possible because surveyors could not enter properties. Many agents took to virtual viewings, requesting videos from home owners to upload to their websites, and some mortgage lenders were accepting desktop valuations rather than relying on physical inspections, but this presented more of a risk to lenders and so was affecting the amount they were prepared to lend.

Furthermore, even where a house was on the market, no physical viewings could take place which held the market back further.

Now the restrictions have eased, estate agents, surveyors and valuers can return to work, and people can now view and inspect properties (observing the social distancing rules and government guidance at all times). It is hoped that this will help the property market in England kick start and allow some estimated stalled 450,000 property transactions to proceed.

Is it safe to exchange contracts on my sale or purchase?

With removal companies, tradespeople and construction workers all being actively encouraged to go back to work (whilst observing the guidelines), buyers and sellers should now be able to move ahead with their transactions involving properties in England. However, given the government’s caveat that they may look to reintroduce restrictions if the rate of Covid-19 infections start to rise, we advise either looking to exchange and complete on the same day to ensure there will be nothing preventing a completion set for a future date from happening, or ensuring there is a provision in the contract allowing for completions to be deferred without penalty, in case completion is not possible due to government Covid-19 restrictions.

I had a mortgage offer issued prior to lockdown; will this still be valid?

The government actively encouraged lenders to extend mortgage offers by up to three months where buyers were not able to proceed due to the Covid-19 restrictions. This would mean buyers would not need to renew the offer in the usual way, provided their material circumstances remained the same. Nevertheless, you are advised to check the terms of your offer before exchanging contracts. If you are unsure, speak to your mortgage broker or solicitor.

Restrictions have been eased but my chain has just collapsed; what happens now?

Some homeowners may have already decided they are no longer able to proceed with a transaction due to a change in circumstances, which will inevitably cause issues for others in the chain – some parties may have already exchanged contracts.

With many lenders having pulled first time buyer loans at the start of lockdown, due to the high loan to values (LTVs) it is likely that those pulling out will be at the bottom of the chain. However, given that interest rates are at an all-time low and with the restrictions being gradually eased, it is hoped that there will be other parties ready and able to fill that gap in the chain.

Where parties have already exchanged, they may need to try to agree a deferred completion date.  Where that is not possible, an alternative might be a bridging loan to enable a party to proceed with a purchase, providing that party with financial assistance until the other property can be sold.  This is usually expensive and is not always possible depending on financial circumstances of the party.

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About the Author
Kate Potter, Associate (FCILEx)

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