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Government puts freeze on UK housing market during coronavirus lockdown
The government has effectively put a complete freeze on the UK housing market as a result of the coronavirus lockdown, by advising people to delay moving into new homes to avoid breaking social distancing rules.
The unprecedented move by the government was revealed in guidance published last night, which includes calls for buyers to “adapt and be flexible” when it comes to home purchases.
The advice to buyers is as follows:
- Home buyers and renters should, where possible, delay moving to a new house while measures are in place to fight coronavirus (COVID-19).
- Our advice is that if you have already exchanged contracts and the property is currently occupied then all parties should work together to agree a delay or another way to resolve this matter.
- If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on staying away from others to minimise the spread of the virus.
- In line with government’s advice, anyone with symptoms, self-isolating or shielding from the virus should follow medical advice which will mean not moving house for the time being, if at all possible. All parties should prioritise agreeing amicable arrangements to change move dates for individuals in this group, or where someone in a chain is in this group.
The government said there is no need to pull out of transactions but urged both parties to agree a new date for moving, unless the property is empty. There is also an exemption for “critical home moves”, in the event that a new date is unable to be agreed on.
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The government said that it had agreed with banks that mortgage offers should be extended by up to three months where a delay to completion of a sale takes place, in a move to “prioritise safety”.
It also said it is working with conveyancers to develop new legal processes that would allow completion dates to be moved until after the coronavirus outbreak is lessened.
The moves come in response to the unprecedented restrictions on movement the government is currently imposing on UK citizens in a bid to halt the spread of the virus.
On Monday, Boris Johnson brought in stringent social distancing measures, which limit people from leaving their homes except to purchase essential goods, collect medicine, travel to work where “absolutely necessary”, and exercise.
The property sector, which has already seen falling sales figures as a result of the coronavirus outbreak, will be hit hard by the government’s move. Housing associations, which sell homes for private sale and shared ownership, will also be badly affected.
The government advice said: “Given the situation in the UK with regard to the outbreak of coronavirus (COVID-19), we urge parties involved in home moving to adapt and be flexible to alter their usual processes.
“There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times, including the specific measures for those who are presenting symptoms, self-isolating or shielding. Prioritising the health of individuals and the public must be the priority.”
UK Finance, the body representing the banking industry, has confirmed that its members will support customers who have already exchanged contracts for house purchases and set dates for completion, and will give the option to extend mortgage offers for these people by three months.
The body also said that if customers’ circumstances change during that three-month period, or if the terms of the house purchase change 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.
Stephen Jones, chief executive of UK Finance, said: “Lenders recognise that many people looking to move into their new home are facing significant stress and uncertainty due to the impacts of coronavirus. Current social distancing measures mean many house moves will need to be delayed.
“It is clearly not appropriate for people shielding or self-isolating to move home. Therefore where chains contain people in these groups, lenders, conveyancers and other professionals are working together to enable these customers’ moves to be delayed.”
Offers for homes can still be accepted by homeowners during the lockdown period but those selling have been warned that the process could take longer than usual as advisors and surveyors will not be allowed into the property. Surveyors have been advised that no surveys in homes should take place in a home where any person in the property is showing symptoms, self-isolating or shielding.
The government told conveyancers to make buyers aware of the difficulties of completing transactions in this period and advise their clients who are ready to move not to exchange contracts unless they are fully aware of the risks presented by the virus.
For those trying to sell their homes, the government has said that they can still advertise their home as being for sale, but people should not be allowed into others’ homes under any circumstances.
