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How will Coronavirus (COVID-19) Affect the Property Market?

House price index figures from Rightmove showed that in March 2020, the average asking price for residential property hit a record high of £312,625.  Not only that, but agreed sales were up nearly 18%, and properties were selling 6% faster.  Unfortunately, this is yesterday's news.

As many buyers and sellers will attest to, the residential and commercial property markets have been put into a complete spin as a result of Coronavirus.  This is unsurprising as not only has it (albeit temporarily) effectively halted the UK and global economy, it happened so quickly that transactions already underway well before anyone had heard of COVID-19 have been caught in the crossfire. 

12 April 2020
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How is the residential property market being affected by COVID-19?

After what was a very promising start to the year for property sales in the UK, most activity is now on hold.  This will not come as a surprise to many, after all, without the ability to view properties of interest, and with the extent of financial uncertainty due to an economy on pause, most buyers will be forced to wait.  That said, some estate agents are getting creative and offering Skype / Facetime viewings of the property. Unfortunately, this is not likely to do much to alleviate paralysis in the property market.  Many sellers, who were planning to benefit from the much-touted Spring 2020 property boom will now be looking to defer their sale, perhaps even for another year.

 According to Zoopla, as a result of Coronavirus, there was a 40% fall in demand from buyers between 15th – 22nd March.  And in the coming months, it is expected that the number of sales will decline by around 60%.  However, house prices are expected to remain relatively steady in the short-term, mainly due to sales agreed prior to the pandemic.  The future will depend heavily on the recovery of employment and the overall state of the economy next year.

What is the recommended advice for homeowners currently buying or selling?

This is an unprecedented situation in modern times, and as such conveyancers are handling matters on a case by case basis.  Much will now rely on goodwill and compromise between buyers and sellers.  All parties should make decisions based on understanding the risks they are exposing themselves and others too.  While the financial aspects of a property transaction are important, these should in no way trump health and safety considerations. 

If you are yet to exchange and/or complete

The Homeowners Alliance (HOA) recommend that any property transactions which are yet to exchange should be delayed until after the current period of restrictions.  For those who have exchanged but have not yet completed, the advice is to speak to your conveyancer as soon as possible to come to an arrangement as to the best way forward.  The HOA advise proceeding with the completion if possible, however, you may face problems in relation to finding a company who will move your possessions.  Also, in terms of borrowing, UK Finance has confirmed that lenders will extend the period of any mortgage offers where needed.

If you have completed but not yet moved

The Government's position is 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. If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus.  Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being."

As we have already eluded to, moving may prove tricky as the British Association of Removers has advised their members they "should only complete any moves that are underway and immediately cancel or postpone any move that has not yet started".  Hence everything should be done to negotiate a delay in moving; ultimately, moving may pose a risk to you, your family, and anyone involved in the moving process.  

If moving is absolutely unavoidable, then the law society has reminded movers to observe the government advice on social distancing and hygiene. 

If parties to a transaction cannot agree on a delay until the current restrictions are lifted, consider that there are some factors which may mean moving cannot be completed anyway, including if the property is currently occupied by individuals with, or suspected of having, Coronavirus, or if occupants are in enforced self-isolation (e.g. a GP has told the individuals to isolate due to suspected exposure to the virus or if they are showing symptoms).  

Coronavirus and house prices: be ready for the unexpected

Even if your property transaction is proceeding, you may still encounter challenges which would not ordinarily occur.  Some of these situations may include:

  • refusal to vacate because the seller may be in isolation
  • failure or disruption to parts of the banking system (e.g. the CHAPS system)
  • delays in local searches as a result of local authority staffing problems
  • difficulties obtaining witnesses when signing documents
  • a request for a property to be decontaminated

In any event, it is essential to speak to your conveyancer or a residential property solicitor as soon as possible to find a workable solution.  With the best will, it may be that complications such as these effectively force the property transaction to pause, regardless of the preference of the buyer and seller.

How will Coronavirus affect the property market?

Everyone needs to work together in times such as these.  Flexibility and understanding are going to be vital in the coming months, in the knowledge that normal life will resume, perhaps not this year, but hopefully next.  We will continue to keep you updated on events in the property market as they happen.

Guillaumes LLP Solicitors in Weybridge has a full-service law firm ready to help.  We have a highly experienced property law team who can assist you with any property law matters.  Whether you're looking for commercial property lawyers, probate solicitors or a property dispute lawyer, we can help. To make an appointment, please call us on 01932 840 111 or contact us today.