Housing market squares up to lockdown

Last autumn, the UK housing market was being stifled by uncertainty. The Royal Institution of Chartered Surveyors’ housing market survey published 14 November noted that the combination of seasonal slowdown, Brexit and impending general election were in effect trapping the market in a state of limbo. The election outcome and Brexit agreement then gave hope that the seasonal bounce as Easter 2020 approached would be a healthy one.

Then we all became aware of a mysterious new virus, given the name COVID-19, and that it could have a global impact. The human misery and death toll were first and foremost on people’s minds, but it was clear that the commercial effects would also be far-reaching. This was recognised in measures announced before, during and after new Chancellor Rishi Sunak’s maiden Budget speech on 11 March. Many individuals and businesses were going to need support through the pandemic.

Rate cuts and mortgage holidays

Some of the Chancellor’s measures would be directly relevant to the housing market. On the morning of Budget Day, the Bank of England implemented an emergency base rate cut, from 0.75% to 0.25%. Then, in a package of support measures six days after the Budget, Mr Sunak announced that mortgage lenders had agreed to three-month repayment holidays for borrowers affected by the coronavirus outbreak. Two days after that, the BoE cut its base rate further to a lowest-ever 0.1%.

These measures were helpful to many homeowners, but market activity was already lessening as buyers and sellers became wary of the personal contact involved in viewings. When PM Boris Johnson placed the UK in virus lockdown for at least three weeks from 23 March, actual rather than virtual viewings all but ceased. There were inevitably completions pending, but on 27 March Mr Johnson urged home-buyers and renters to delay their moves.

BAR on home removals

The almost total shutdown of the housing market initially left the door ajar for completion of purchases, especially of vacant properties, provided that government rules were followed. Conscious of its duty to ensure the safety of its members’ staff and customers, the British Association of Removers (BAR) issued the following recommendation: “The Member should only complete any moves that are underway and immediately cancel or postpone any move that has not yet started.“

As regards the legal aspects of housing transactions, the Law Society issued broadly similar guidance to conveyancing solicitors: “Home moves into occupied properties should only take place where contracts have already been exchanged and it has proved impossible for the parties involved to agree a deferral. You should encourage your client to agree an appropriate deferral and only advise them to proceed if that has proved impossible.”

The difficulty of progressing new transactions before government restrictions on movement and social contact are lifted has severe implications for other players in the housing market, including estate agents, surveyors and mortgage intermediaries. However, HM Land Registry did issue a positive statement saying it would: “Operate as close to normal as possible after reviewing how best to continue delivering services during the crisis.”

Mortgage offers extended

Various home-loan providers have offered guidance to mortgage intermediaries, with reassurances about pipeline applications. The Nationwide Building Society website says: “We know that recent developments around Coronavirus (COVID-19) will be concerning for you and your clients,” and offers further information on key aspects such as payment holidays, changes to income criteria, automated valuations and mortgage offer extensions.

Whilst the face-to-face elements of house-moving aren’t possible and uncertainties remain about how long lockdown will continue, technology enables many market players to maintain contact with clients so that when normal life resumes their house-moving plans can be progressed. Thousands of firms up and down the country will be working positively towards the day they can tell their clients and customers it really is ‘business as usual’.