Following the lockdown announcement on 23rd March the government issued a statement on 25th March that “Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus.”
But what does that statement mean for you?
Here’s our 10 FAQs on the impact of coronavirus on residential property matters.
- What types of transactions can still proceed to completion during lockdown?
- Can I still exchange contracts for my sale or purchase?
- Will there be any delays with the legal work for my sale or purchase?
- I have already exchanged contracts but now I cannot move due to the lockdown?
- Will I be able to get a removal company to move me?
- Can I proceed with a remortgage?
- My mortgage offer is due to expire before completion can take place – what will happen?
- I have exchanged contracts to purchase a new build house. Can the developer serve the completion notice during lockdown?
- Can I move into a completed new build property?
- I want to extend the lease of my flat – can I still do this at present?
1. What types of transactions can still proceed to completion during lockdown?
There are still matters that can proceed and can be completed. These are mostly those which do not involve anyone physically moving house or perhaps where there is only one house move into an empty property. Some examples would be:
- Sales of probate properties
- Purchase of property as an investment with a continuing tenant
- Matters where there is no chain
- New build purchases
- Transfers of equity
2. Can I still exchange contracts for my sale or purchase?
Whilst there is no legal prohibition on exchanging contracts at the present time there are a number of factors that should be considered carefully.
Once contracts are exchanged you are bound by your obligations and if, for any reason, you become unable to complete on the agreed date you will be liable to pay interest and related costs and possibly lose your 10% deposit on a purchase.
Some of the risks that may be encountered, and could mean you cannot complete in accordance with the contract, include removal companies not being available, mortgage offers being amended or properties revalued, individuals within a chain having to self-isolate or becoming unwell.
We will discuss your particular case with you and advise you accordingly.
3. Will there be any delays with the legal work for my sale or purchase?
Our residential property team are working remotely and are able to actively progress matters as always. We do work with others and rely on third parties to provide information to us so there may be some disruption. At present we are noticing:
· Searches – there are delays with some Councils providing search results which are essential in property purchases and required by all mortgage lenders.
· Mortgages – many lenders are operating on reduced staffing levels and are requesting more time to deal with enquiries and to release funds. Where physical valuations are required but cannot yet be undertaken mortgage offers can be delayed.
· Leasehold information – on the sale of a leasehold property the selling solicitor has to obtain detailed information from a Management Company or the landlord. Some Management Companies not able to provide this information at the present time, or are experiencing delays in providing the information due to reduced staffing levels.
· Signing documents – some deeds for the sale or purchase of property require a physical signature, sometimes with a witness. With the current restrictions this may be difficult. If you are having problems with signing a document or having it witnessed speak with your solicitor and we will try to find a solution. We may be able to arrange to witness your signature through a window.
4. I have already exchanged contracts but now I cannot move due to the lockdown?
Once contracts are exchanged you are legally bound by the terms of that contract and if you cannot complete you may have to pay interests, costs and could lose your 10% deposit (on a purchase).
These are exceptional times. As recommended by the Law Society we are working collaboratively with other solicitors to try to find ways to agree variations to contracts in these situations.
5. Will I be able to get a removal company to move me?
It is likely to be extremely difficult to find a removal company who are able to move you during lockdown
The current lockdown restrictions and social distancing requirements make it very difficult for removal companies to undertake their usual work. The British Association of Removers has issued a recommendation to its members that they should not undertake new moves during this period.
6. Can I proceed with a remortgage?
A remortgage does not involve any physical house moving and so these types of matter should be able to be completed during lockdown. However you may find some delays with your mortgage lender issuing the offer if they are unable to undertake a physical valuation.
7. My mortgage offer is due to expire before completion can take place – what will happen?
Mortgage lenders have announced that they will agree to extend mortgage offers by three months. You should check with your lender and request this extension as it may not happen automatically.
8. I have exchanged contracts to purchase a new build house. Can the developer serve the completion notice during lockdown?
New build properties are often marketed and reserved well in advance of being structurally completed. Contracts for these are exchanged “on notice” meaning that once the property is built and ready the developer serves a notice giving a set amount of time (usually 10 working days) for you to complete the purchase.
There is nothing stopping a developer from serving this notice during lockdown if the property is ready.
If notice is served you should consider carefully with your solicitor whether you are able to complete.
9. Can I move into a completed new build property?
New build homes are empty and so you would be allowed to move into the property.
Any moving arrangements would have to comply with social distancing rules and you may find it difficult to employ a removal company.
10. I want to extend the lease of my flat – can I still do this at present?
The current guidance does not prohibit the extension of leases an there is nothing to stop you doing this. In fact the length of your lease will continue to decrease so waiting may not be in your best interests.
Due to social distancing rules surveyors, who are a key part of the process, may no longer be able to inspect properties and provide their valuations and so there may be some delay. In some circumstances it may be possible for the surveyor to provide a desktop valuation and still advise on the premium to be paid.
You should speak with your solicitor and surveyor who will be able to help you proceed.