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Advice for individuals buying and/or selling a home during the coronavirus outbreak
6 April 2020
Last week, the government issued advice to both the public and those in the industry about residential property transactions during the coronavirus outbreak. Whilst they state that there is no need to pull out of transactions, where the property is currently occupied, they are encouraging people to delay moving until the stay-at-home measures against coronavirus are no longer in place. Where the property is vacant, the government’s advice is that you may continue with the transaction although you should follow their guidance on home removals.
The government has offered advice to the public, depending on what stage they are at in the process of buying and/or selling a home during the coronavirus outbreak. We have set out the advice below and have added some further information and practical advice gained from our own experience and from having spoken to estate agents, mortgage brokers and removals companies.
If you were planning to put your home on the market this spring but have not yet done so, the stay at home measures will make it difficult to start the process now for the following reasons:
However, there are practical steps that you can take during the stay at home measures to prepare for selling your home which could help speed up the marketing and conveyancing process. Read our article for further advice.
If your home is already on the market but you have not yet accepted an offer or exchanged contracts, you can continue to advertise the property as being for sale. However, you cannot allow people in for viewings. It is possible that you can allow virtual viewings either yourself or via the agents. However, these are not ideal for the following reasons:
If you were to receive an offer whilst the country is in lockdown, there is nothing to stop you accepting it. As a general fall in property prices is being widely predicted, if you do receive an offer close to the current asking price, you may be well advised to accept it. However, until exchange of contracts takes place, the offer is not binding and can be withdrawn at any point.
If an offer is made and accepted now, the parties can try to progress the transaction in the usual way but there may be significant obstacles to achieving exchange of contracts as a result of the coronavirus pandemic such as:
If you are able to overcome these hurdles and reach a position where you are ready to exchange contracts, the government’s advice is that you can continue with the transaction if the property is unoccupied. However, if it is currently occupied, they recommend delaying exchange until after the stay-at-home measures have been lifted. If you do exchange contracts during this period, the contract should include explicit contractual provisions to take account of the risks presented by the virus, such as allowing for the completion date to be delayed in the event of the parties and members of their household being in self-isolation.
If you exchanged contracts prior to the introduction of the stay-at-home measures and completion is scheduled to take place in the next few weeks or months, the government’s advice depends on whether the property is occupied. If the property is unoccupied, you can proceed with completion provided that the measures in relation to social distancing are adhered to. This is on the assumption that you can obtain the necessary removal services. Most removals companies are still operating and carrying out removals which are already scheduled but there may be shortages of staff if they have to self-isolate.
If the property is occupied, the government’s advice is to try to delay completion if possible. One issue with delaying completion is that, if the buyer is taking a mortgage, their mortgage offer may expire before the postponed completion date. The government have sought to agree with banks that mortgage offers should be extended in these circumstances for up to three months to prioritise safety. They state in the guidance that:
If a customer’s circumstances change during this three month period or the terms of the house purchase change significantly and continuing with the mortgage would cause house buyers to face financial hardship, lenders will work with customers to help them manage their finances as a matter of urgency.
Whilst they are recommending that house moves are delayed, the government accept that moving may be unavoidable where you are contractually bound to complete and to give vacant possession on a certain date and a postponement cannot be agreed. If one party still wants to complete on the contractual completion date but the other does not, there is the possibility of a dispute. If one party refuses to complete on the completion date, the other party who was willing and able to complete could argue that the defaulting party is in breach of contract. They could then take the matter to court seeking either payment of damages or specific performance (i.e. forcing completion to take place) or both. The party who refused to complete would argue that the contract has been frustrated by the coronavirus and that they cannot be expected to comply. It would be a matter for the courts to decide and their decision could go either way.
Where both parties wish to complete on the contractual completion date, they may proceed to do so. The government has stated that, with the new emergency enforcement powers that the police have been given to respond to coronavirus, there is an exemption for critical home moves, in the event that a new date is unable to be agreed. However, there are other practical issues to be taken into consideration:
It is certainly a challenging time to be buying or selling a home but moves are still continuing to take place. We are doing all we can to assist our clients in achieving completion where they wish to do so or agreeing a delay with the other party where this is preferable.
It should be noted that the guidance applies to people buying or selling residential homes which they intend to live in. If you are buying a residential property as an investment and you intend to let it then the advice to delay the purchase would not necessarily apply. If the property is already let and the current tenancy agreement is to remain in place after completion, the transaction will not involve anyone physically moving. If the property is vacant and you intend to let it after completion, it should still be possible to complete. However, it will be very difficult to market a property and find a tenant whilst in lockdown as viewings of the property will be virtually impossible. Whether the property is currently vacant or occupied, most of the problems noted above regarding the practicalities of the conveyancing process will still apply.
6 April 2020
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