First, what state is the housing market in right now?
“As it stands today, the housing market is slowing down towards a standstill. There are several reasons; on a practical note the restrictions around social distancing and non-essential travel means it's difficult for agents to bring property onto the market and interest in their existing stock can't be progressed without viewings. From a wider perspective; confidence is one of the key factors in the buoyancy of the property market, and with such uncertainty surrounding the economy many would-be buyers are holding off making decisions until some level of normality returns. Throw into the mix the fact that many mainstream lenders are pulling mortgage products off the shelves, it leaves the market in a position where the only real movement is coming from in-progress deals coming to completion.” – Paul Wheatcroft, My Local Mortgage
“Disarray is the wrong word. The housing market has come to a standstill for very obvious and practical reasons. Because of social distancing measures, face-to-face viewings cannot be carried out and although virtual viewings are taking place, many people don’t feel comfortable unless they’ve seen a property properly. However, more positively, we can say that we’ve had two exchanges in the last ten days, without any renegotiation on price. Both properties were empty which helped the process, but it does show that things are still moving, albeit more cautiously. In cases where buyers have exchanged and a completion date is set, the issue which may cause a problem is securing a moving company or ‘man with a van’. If a company or van is secured, the move is still possible, as long as you follow government guidelines on social distancing. The safety and security of those involved with the move is obviously at paramount importance. These are unchartered and unprecedented times not just in the housing market but across every industry.” – Paul Cosgrove, director at Finlay Brewer
What does a mortgage payment holiday mean?
“A ‘payment holiday’ means you agree with your lender that you will not have to make mortgage payments for a set amount of time. Payment holidays are designed to help you when you may experience payment difficulties – in this case because of the coronavirus. It is important to remember that you still owe the amounts that you don't pay as a result of the payment holiday. Interest will continue to be charged on the amount you owe. This means that, at the end of the payment holiday, you will have to make up the missed payments. There will be various options for doing this, for example by increasing your monthly payments slightly, or by adding a short extension to your term. Your lender will be able to explain to you what options it offers. You should contact your lender if you are experiencing or reasonably expect to experience payment difficulties because of circumstances related to coronavirus.” – The Financial Conduct Authority
Is there likely to be any government support to keep buying and selling activity going?
“While there's no doubt that many businesses relying on the housing market (estate agents, valuers, even removal firms) will need government support to survive, the demand-driven economics that fuel the growth of the property market could mean that despite a short-term set-back, the fluidity of the market and housing prices jump back relatively quickly.” – Paul Wheatcroft
“The government have indicated great support in terms of contributing financially to companies and their staff. By ensuring people are paid, they will hopefully have the financial confidence to look forward towards potential sales and purchases. This means that with luck we’ll be able to start where we left off. But we’re unaware of any specific financial support for the housing market to keep activity going as everyone has been advised to stay put given the advice on social distancing. We, as agents, are continuing to facilitate viewings and transactions as much as possible, while adhering to the social distancing guidelines.” – Paul Cosgrove
So, is it a buyer's market?
“Naturally when demand for properties drop, it becomes a buyer’s market, and there will be bargains to be found. These are unprecedented times though, and any buyer looking to snap up a bargain is going to have to have several unique challenges to face, including finding a lender with attractive mortgage products available.” – Paul Wheatcroft
“This really depends on how motivated the seller is. Invariably there will be opportunities, but you’ll have to keep eye out for them because they may be few and far between. Transaction levels may not be as high as we like in the coming month, so unless you’ve got a huge mortgage there is no motivation for people to sell their homes, especially for those with interest-only mortgages.” – Paul Cosgrove
Once Covid-19 is over, do you expect the housing market to bounce back?
“While no-one knows exactly what post Covid-19 life will look like, we would expect the housing market to be one of the front-running areas in the return to growth. This is down to the simple fact that the demand for properties outweighs the available stock, especially in highly competitive areas like London. So, while the initial recovery of the economy is likely to slow things down, we envisage the property market returning to a position of growth within 12 months.” – Paul Wheatcroft
“Given the historically low interest rates, the biggest post-lockdown issue will be that people will be cautious, but as the dust begins to settle there should be pent-up demand given their recent compromised position. People after lockdown will likely have a renewed appreciation for outdoor space so demand for cheaper homes in the countryside, or for moving to larger properties may increase as they’ve been cooped up for so long.” – Paul Cosgrove
If you’ve found a property and the seller is happy to proceed, what are the chances of securing a mortgage?
“Lenders are in an unusual position right now. A large portion of their resource and focus is being spent on supporting their existing customer base, and while they need to lend to keep the wheels of their model turning, the level of uncertainty makes the positioning of some of their most popular products very difficult. For borrowers, the key factor is the amount of capital they have available as a deposit. There are still plenty of great products out there for people holding a 25% deposit or higher. However, for those who have a 10%-15% deposit, the number of available products is reducing by the day. A good mortgage advisor will be keeping a close eye on the market movements, and will be able to offer the right advice on finding the right product, and the likelihood of securing the loan.” – Paul Wheatcroft
“While some lenders have withdrawn certain products, there may be a change in the loan-to-value amount that you can borrow. However, there shouldn’t be any difficulty with securing a good deal, provided you’re not borrowing 90% or more of the cost of the property. If you’re looking to borrow around 70-85% you should be fine.” – Paul Cosgrove
If you were mid-transaction but hadn't yet exchanged contracts when the UK went into lockdown, is it possible to pull out without financial penalty?
“Yes, absolutely. It’s really important to understand that the only thing that’s binding is the exchange of contracts. Any seller or buyer can withdraw at any time prior to exchange of contracts with no financial penalty. The only time there would be a penalty is if you as a buyer paid a non-refundable deposit, which is highly unlikely.” – Paul Cosgrove
If you had exchanged contracts and confirmed a moving date prior to lockdown, but now the seller says they don't want to move out, what are your rights?
“This will be something that needs to be negotiated with your seller and worked out with the solicitors. Legally, the sellers have contracted to complete and they will be obliged to do so and make their own arrangements. But most understanding people should show sympathy during these very difficult times and should accommodate the seller’s predicament through discussion with their solicitors. We as agents would work with our clients to sort out these potentially tricky situations.” – Paul Cosgrove
If an onward purchase falls through, but the people trying to buy your home want to proceed, what can you do?
“In this situation, try to be straight with your buyer and advise them you’ll need to find a new property to move to and then do everything you can to secure an alternative. People will likely be understanding as we are not in the norm.” – Paul Cosgrove
If everyone in the chain wants to proceed – should you? Or will you be making a mistake?
“If it makes sense to you as seller or buyer and you’re happy with the price you’re getting, or with the purchase you’re making, you should definitely go ahead with the purchase or sale. However, if you’re worried that you think you’re paying too much, discuss this with your agent.” – Paul Cosgrove
If you’re renting a property but find your financial situation impaired by coronavirus, what can you do?
“The government has made a temporary change to the law around eviction because of coronavirus. If you rent from your local council, you’re likely to be an introductory or secure tenant. If you rent from a housing association, you’re likely to be an assured or assured shorthold tenant. If you rent from a private landlord, you should check your tenancy type. If your landlord gives you an eviction notice on or after 26th March 2020, the notice has to be increased to three months for these tenancy types: assured tenancy, assured shorthold tenancy, protected tenancy, secure tenancy, flexible tenancy, demoted tenancy and introductory tenancy. If you have a different type of tenancy, your landlord doesn’t have to give you any extra notice. If you’re renting a room in your landlord’s home, your landlord can ask you to leave – they won’t have to go to court to evict you.” – Citizens Advice Bureau
“We suggest that you speak to your landlord as soon as possible if you are concerned about your financial situation. Landlords should be sympathetic if required because they’d rather have a reduced rent than a void period. From there, you can discuss a repayment schedule for when you can repay the outstanding rent, if appropriate.” – Paul Cosgrove
If you’re a landlord faced with multiple tenants unable to pay their rent what should you do?
“You should communicate with your tenants as soon as possible to establish a way forward in these extraordinary times. In addition, speak to your agents and take advantage of the proper legal advice available to you in a situation like this.” – Paul Cosgrove
“The government has announced a range of measures to help support those in the private rented sector, namely a moratorium on evictions for three months in England and extending its mortgage payment holiday to mortgaged buy-to-let landlords whose tenants are in financial difficulty.” – Savills
Anything else you'd advise right now?
“Now is the time to do all those odd jobs around your house you kept saying you were too busy for. Paint that hallway, fill in those cracks in the living room wall. This is the time to do a bit of touching up around the home if you can get the supplies. Also, while the weather is getting better, it’s an ideal time to spruce up your garden if you have one and make the front of the house and entrance look sharper so you’re in a good position to sell once out of lockdown. We’re also suggesting to our clients that they should speak to their solicitors to ensure the paperwork is all in order, whether this be planning permission or building regulations. It’s often missing paperwork that holds up sales.” – Paul Cosgrove