Advice to homebuyers and sellers during Lockdown
by June Caunce, Vincents Solicitors Head of Conveyancing
Among the myriad headlines over the last few weeks were those which worried people in the process of buying or selling their home.
The government announcement was interpreted by some to forbid moving home under any circumstances, leaving some fearing their sale or purchase would fall through.
But, as ever, things are not quite so simple or so bleak.
Can I still move home?
It’s not quite a blanket ban, in fact the government statement explicitly says not to pull out of a transaction, but asks that everyone be ‘flexible’ and matters paused in some circumstances.
The key is to abide by advice to reduce unnecessary journeys and contact between people. This extends to removal companies who have been advised not to operate and to only fulfil existing bookings if it can be done while implementing public health guidance on social distancing and keeping clear of people who are self-isolating.
It also aims to avoid the difficult situation of people moving into a property that was occupied by someone else until only a few hours earlier, due to the risks of the virus remaining on surfaces. This is crucial if anyone in the chain is self-isolating, shielded or indeed ill with the virus.
In that case, people are being asked not to go ahead with the actual move for the time being. Speak to your solicitor and ask them to open the conversation with all parties to agree to pause proceedings. But of course documents can still be prepared to make sure everything is ready to go as soon as the restrictions are lifted.
If contracts are already exchanged, a delay can’t be agreed or there is a ‘critical’ reason for the move to still go ahead, the government has made provision for this. Speak to your solicitor to find out if your circumstances meet the criteria.
There are no obstacles to stop progressing the sales of unoccupied properties, for example if you’re a First Time Buyer moving into a new build property or for investment property purchases. Other types of property transactions such as purchasing the Freehold of your existing property, remortgaging your property or transferring equity ownership can still proceed.
Meeting the threshold for essential travel is difficult and must be considered carefully. Under current guidance only a property completion that doesn’t involve the physical act of moving belongings and possessions is allowed.
In addition, our current advice is to only proceed on a Simultaneous Exchange and Completion basis meaning exchange of contracts and completion takes place on the same day. The advantage of doing this in the current situation is that if for some reason your mortgage money doesn’t arrive from the lender or one of the parties in the transaction is suddenly self isolating then as contracts haven’t been exchanged there can be no penalties under the contract such as interest for late completion.
This also means of course that there is no certainty that completion will take place until the day. As we are not completing any transactions which are part of a chain then whilst this may be a slight inconvenience, this is outweighed by the offset of the risk of not being able to complete on the day.
Will I lose my sale, purchase, mortgage offer?
Not necessarily, and it may depend on where you’re up to in the process.
Many mortgage companies are extending their mortgage offer to help out buyers. It’s worth calling yours to check if they will do this.
Some lenders have also promised to be flexible and work with homebuyers if the economic impact of the current situation will materially change their financial circumstances.
It has been advised that all parties should agree to a delay exchanging contracts until social distancing measures are lifted.
If you’re at an earlier stage of the process, having had an offer accepted, there’s no reason your conveyancer can’t continue with searches and preparing everything so you’re ready to press the button as soon as Lockdown is over.
Can I even put my house on the market?
This could be difficult when you can’t have agents visit to evaluate the property value or take pictures, and the EPC assessor can’t do their report. Nor too, obviously, can potential buyers pop by to have a look around.
Most people use online listings these days and lots of opinions are formed well before anyone step through a door. There is no restriction on making or accepting an offer, and your solicitor might even be able to help draft a conditional offer.
But I want to pull out, can I?
There are no new rules on this. If you’ve not exchanged contracts then yes, no problem. Either party can change their minds.
But if a buyer has exchanged contracts and, typically, paid a deposit, that deposit would be lost if they pulled out. You are legally bound to complete a transaction once you have exchanged contracts.
If you are selling the property and want to back out then the risk to you depends on whether it is a sale only or whether you have a related purchase. At the very least you would need to return the deposit to the buyer together with any interest earned from the date of exchange. The buyer may take action against you to recover lost costs such as solicitors fees, search fees, and survey fees. If you are in a chain of transactions then the seller to you may have similar losses as would anyone else in the chain.
Have a chat with one of our Conveyancing team to talk through the issues and see if they can advise on a solution which would allow the purchase to still go ahead.
For more information about what you can and can’t do right now, or getting prepared for when the restrictions are lifted, contact 01772 555 176.