Covid-19 and Conveyancing

During this challenging time it is fair to say that all areas of life, professional and personal, have been affected by recent events. Specifically in relation to the housing market, there have been some notable knock on effects.

The marketing of houses for sale by estate agents, has clearly been affected by the lockdown situation we find ourselves in and the need for social distancing. New listings are certainly down from where they have been in recent weeks.

Clearly viewings of properties are very difficult, if not impossible, to arrange. As a result some agents are promoting the use of virtual viewings and some sellers are looking to market their properties via remote bidding auction houses. Savills website for example, recorded that their auction on 26th March 2020, covering London and national resulted in 67.2% of their stock offered for sale being sold.

In terms of financing the purchase of properties, this too has been affected as mortgage lenders are unable to organise valuations and struggling to issue mortgage offers. Whilst some lenders are coming up with solutions, they are being held back by their processing ability due to the lockdown. For example some lenders have offshore processing centres and being on lockdown is stalling mortgage processing. Other lenders struggle with mortgage processing as they have staff self-isolating.

Those buyers holding physical mortgage offers however, in connection with their forthcoming purchase, are in a slightly better position given that in most cases, their mortgage lenders will not need to do another valuation and so this source of funding is secure insofar as their mortgage lender honours the mortgage offer issued and the borrower’s circumstances do not change (see below).

Some lenders have taken the view that they will not process any new mortgage applications and will now concentrate their efforts on applications “currently in the pipeline”. Other lenders are focusing on dealing with enquiries from current borrowers relating to changes in their interest rate or mortgage repayment holiday requests.

The good news is that some lenders have now come to market and are carrying out desktop valuations, when previously they didn’t. Such valuations do however require the property to have an on-line presence/footprint. Loan to values may be affected given the current climate and the nature of the valuation.

The position with mortgage lenders and products available changes daily though, and clients are best advised to speak to a suitably qualified, independent financial adviser now or again, if they have already spoken to one, so that they are as secure as they can be in relation to their mortgage offer status. This is particularly important when client circumstances have changed e.g. they have been furloughed, have had to take a drop in salary or have been made redundant, as this will affect a mortgage lender’s lending decision.

In terms of the conveyancing market, agents and solicitors are working closely with one another to continue servicing current transactions and having regard to government guidance.

There are some clients buying properties who have decided to put their transaction on hold for the moment rather than withdraw from their transaction altogether. Other clients are still looking to press ahead.

Current government guidance is that, where possible, buyers should delay moving to a new house while measures are in place to fight COVID-19. Such guidance does not however completely halt the conveyancing process. A significant amount of legal work such as; reviewing the title documentation, raising enquiries, applying for searches, reporting to clients etc, can still be undertaken. There is mileage in proceeding with this work because it allows for effective use of time now and will save delays later on having already completed this part of the process.

Current government guidance also provides that where contracts have already been exchanged and the property is currently occupied, then all parties should work together to agree a delay or another way to resolve the matter. Where this is not possible, people must follow advice on staying away from others to minimise the spread of COVID-19. Where the property is not currently occupied however, the exercise is a little easier to manage for obvious reasons.

Many conveyancers are now dealing with exchanges and completions on the same day whereas traditionally there would have been a gap of a week or so between exchange and completion. This cautious, but arguably sensible approach, is to ensure that everything is in place on the moving day to facilitate the move e.g. the removal company being on site and no occupiers suffering from or suspected of suffering from COVID-19.

For the time being the property market remains rather difficult to navigate but all stakeholders remain committed to pushing through transactions where possible; having regard to client needs and government guidance. Conveyancers are working from home remotely and are embracing technology such as video apps in an effort to keep clients moving too.

For the future, I would like to think that the property market will be equipped with new tools to help the moving process unfold in a more user friendly and accessible manner. I would also certainly expect there to be an increase in properties listed for sale as there are many motivated sellers out there, holding back from marketing their property until the current circumstances have stabilised.

For more information on the above contact

-Nic Dino

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