Buying a home during the Coronavirus

06/05/2020
Buying a home at any time is stressful, however this has worsened because of the outbreak of the Coronavirus (COVID-19). Among the matters of uncertainty you face are: will your surveyor attend the property if your seller is in isolation? What happens if your seller pulls out at the last minute? What do you do if you fall ill after exchange and can't complete? Could your mortgage offer be rescinded? Or even, what do you do if the banking system goes down? Mad to even think about it, but these are the times where mad things are actually happening.

The good news is that are still buyers and sellers who want, or even need, to complete during this time so the housing market is moving. At SAM we're still seeing buyers and sellers successfully accepting offers and getting through to completion. I've written this article to answer some of the questions you may have and offer solutions using all of my years of experience - I hope it helps you.

Update 6 May: Homes England issues new guidelines re: desktop valuations for Help to Buy scheme (see within part 4 below).

Andrew Boast, the author, has frequently been quoted in many national media publications - including the BBC and the Daily Telegraph - in response to topical questions posed on the UK housing market. To find out more, visit Andrew's personal profile (20-year career as a property professional)

Summary of effects to the conveyancing process
    1
    Viewings
    2
    ID and Instruction Documents and what if your solicitor falls ill?
    3
    Conveyancing Searches
    4
    Mortgage Valuation and what if your circumstances have changed?
    5
    Signing Documents
    6
    Exchange of Contracts - failing to complete and Law Society Announcement 25th March 2020
    7
    Completion - delays, access issues and vacant possession
    8
    Delays with registration
    9
    Should you be buying during the Coronavirus?
    10
    Our top 10 tips for buying during the Coronavirus outbreak

We will continually update this article with any new tips or workarounds which become apparent so save the link down in your favourites and keep returning to it from time to time.

Do you need a conveyancing solicitor?

We were early to act and have ensured our team are all safely working from home so that we can offer you an uninterrupted service if you are buying a home during the Coronavirus outbreak. Conveyancing is all that we do so you can benefit from all of our years of experience and we offer specialist conveyancing solicitors and local RICS surveyors. If you are worried or just need some help then please give us a call and we'll help you become a SAM client and guide you through the conveyancing process.



    1
    Viewings
The majority of this article focuses on if you have a property, however what if you are in the process of viewing properties and getting your offer accepted? The key challenge is gaining access to the property if the estate agent is open, as they may close, or if the seller is self-isolating. The additional complexity is that should can gain access, you'll have to ensure you take all the necessary precautions to protect yourself from the virus as it can survive on glass or metal and hard surfaces in general for up to 9 days or so.

During any viewing, wear a face mask; wash your hands before and after the viewing; don't touch your face and avoid touching too many surfaces in the property. For up to date advice on how to protect yourself around infected or isolated people go to - WHO: Q&A on Coronaviruses (COVID-19)

Buying a home with the Coronavirus within it is also a challenge that can delay completion so read more about this below.


    2
    ID and Instruction Documents
Some solicitors require you to attend their offices in order to complete their ID checks. During self-isolation this may not be achievable so you should look for a solicitor that employs online ID checks using scanned documents such as passport or driving licence. You can find out more what ID is needed here - What ID does your solicitor need?

Buying a home during the Coronavirus - Top Tip

What if my solicitor contracts the Coronavirus?

This is an issue if the solicitor you have instructed works in a small law firm. There will be limited cover and if there is another solicitor then they will be trying to 'hold the fort' on their own. In a larger firm your file will be passed to another solicitor or they'll have the resources to provide 'work from home' cover.

While you might want to ensure you support your local smaller law firm, you might wish to consider the better protection which a larger solicitor offers - they will have better resources to support your purchase through to completion during the Coronavirus outbreak. It's to be hoped that as many firms as possible, large and small, will survive these challenging times however buying a property at present is particularly hazardous and subject to many unprecedented problems. Ideally you don't want one of these to result from your solicitor being unable to work 14 days and then, when they return, being backlogged with tasks to clear before they can attend to your home move.

What if Royal Mail stops working?

This is a risk, but not one we expect to see occur. At present Royal Mail are working with a reduced work force and here are the measures they have implemented:

  • No handing over of hand-held devices to customers to capture signatures
  • For items posted from Thursday 19 March 2020 onward, we’ll no longer guarantee deliveries by 1pm the next working day. We’ll still prioritise Special Delivery parcels and letters and will aim to deliver by 1pm or before the end of day.
  • Special Delivery Guaranteed by 9am service remains unchanged

Read more on the postal system updates here - Royal Mail - Coronavirus: changes to service


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    3
    Conveyancing Searches
Local councils' resources are currently overstretched and many are working with reduced staff, which is likely to continue at least until June 2020 at the earliest. The estimated time from order to receipt of your local authority search can be more than 6 weeks.

Under normal circumstances the right time to order your conveyancing searches during the Conveyancing Process is once the seller has sent contracts in. While you may be tempted to order searches earlier in an attempt to speed up the process, we'd advise you to wait. The seller could change their mind and leave you exposed to the cost of the conveyancing searches.

At SAM we're seeing a some councils who have online local search data not being affected at all and other councils without this taking longer. We're working on compiling a list of local authorities with completely online processes where there shouldn't be a delay.


Buying a home during the Coronavirus - Top Tip

What if I am buying a new build?
Under normal Help to Buy/Shared Ownership new build time frames you have 28 days from receipt of contracts to get to exchange which means even if you order your conveyancing searches on instruction you still won't get them back in time. You need to raise the subject of delays with the developer/estate agent at the outset. They will normally agree to a longer time frame once they know you have ordered your conveyancing searches.


    4
    Mortgage Valuation
When you are getting a mortgage the mortgage lender will need to get the property valued. As we highlighted in section 1, carrying out a valuation inspection when there is an owner in isolation places the surveyor at risk.

Mortgage lenders are working with the RICS (regulators for surveyors) on this point because the mortgage offer cannot be issued until the property has been valued. Regarding valuations during the Coronavirus pandemic, the RICS has released some guidance notes - RICS RESPONSE TO COVID-19. While desktop valuations can be used because they don't require the surveyor to be there physically, there are some forms of conveyancing where they aren't acceptable and an actual site visit must take place.

Update 27 March - Finance is drying up with mortgage providers now not offering new lending, with no new applications being considered. Lloyds/Halifax Bank of Scotland and Barclays have taken this stance and will offer a number of remortgages but no new lending until further notice. Skipton Building Society, Virgin Money (and therefore Yorkshire Bank) have this morning followed suit.

Most residential loans are for a ratio 80% loan to value (LTV) and above. Lenders have taken the position that desktop valuations will only be permitted at present for loans not exceeding 60% LTV. This means that in effect, with surveyors not working out of precautions taken not to catch and spread the coronavirus, residential purchases at this stage of the conveyancing process (i.e. pre-valuation) will be suspended until further notice. Mortgages in principle will be extended in validity for at least 3 months, although if you are likely to be affected you need to check with your individual lender.

Will the Coronavirus affect the value of my property?

Property prices might well fall during the Coronavirus outbreak, however they could bounce back just as quickly. This makes it difficult for a RICS Building Surveyor to value the property for a mortgage lender because previously properties will have been sold for higher prices than those sold during the crisis. The RICS acknowledges this by stating:

"Market activity is being impacted in many sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement"

What a property is actually worth during such unprecedented times is a tough question to answer. You should bear in mind your mortgage valuer's opinion but factor in your own market research concerning the sold prices of other properties from March/April 2020 onward. Those sold in February and before that are less worthy of consideration as they relate to the state of affairs before the outbreak. The other factor is that although you may feel the property is worth less than it was, can the seller afford to sell to you at a lower price? If they can't, then you'll lose the property unless you can negotiate a price agreeable to both you and the seller. The risk to the buyer is paying too much for a property which could end up falling further in price over the next 18 months - the time some specialists are saying it'll take to find a cure for the virus.

Buying a home during the Coronavirus - Top Tip

Does this affect my Home Buyers Survey?
The RICS guidance - see above - applies to both mortgage valuers and independent home buyers surveys. However our surveyors are still undertaking home buyers surveys for the HomeBuyer Report and Building Survey. Call our survey specialists on 0333 344 3234 or click below and get an online quote.

Fast Availability | Excellent Trustpilot Rating | Open throughout the Coronavirus outbreak

Do I need to tell the mortgage lender if my circumstances change?
Yes you do and this includes losing a job or long term sickness. Within your mortgage offer it will state:

"...there has been a material change in your circumstances since you applied for the mortgage which is likely to have a material impact on your ability to afford the loan"

You will be in breach of your mortgage terms if you fail to disclose a change in your circumstances to your mortgage lender. You risk them repossessing your the property after completion and forcing a sale on top of which your credit score will take a devastating hit. If you have a mortgage offer and are in the process of losing your job due to the Coronavirus or have just lost your job for any other reason then you must speak to your mortgage lender immediately. You can read more about this subject here - Can a mortgage offer be withdrawn after exchange of contracts?


Update 6 May: Homes England allows desktop Help to Buy valuations

To take account of ongoing circumstances, Homes England has decided to accept desktop valuations - i.e. where a surveyor doesn't physically visit a property to carry out a valuation but performs their actions remotely - for its Help to Buy scheme instead of onsite valuations during the lockdown. This is under the proviso that your main mortgage lender is using a desktop valuation to support its mortgage offer.

Additionally the following conditions must be met for the Help to Buy desktop valuation to be acceptable to Homes England:
  • The surveyor must be approved by the Royal Institution of Chartered Surveyors (RICS).
  • The surveyor must be independent of the estate agent looking after the sale of the property (if applicable).
  • The surveyor must not be related or known to you, to avoid any conflict of interest.
  • The survey must be provided on headed paper of the surveying company or approved surveyor (if they’re a sole trader), signed by the RICS surveyor, and addressed to Homes England. It needs to be in PDF or another non-editable document format.
  • The surveyor must list at least six comparable properties and sale prices. These properties must be like-for-like in terms of type, size, age and within a two-mile radius of the property being valued, as per RICS guidance. If six properties aren’t available, the surveyor must explain the reasons why they aren’t comparable.

Valuations are valid for three months from the data of the report.

Buying a Home During the Coronavirus Outbreak

    5
    Signing Documents
Prior to exchange you will need to sign and return a number of documents to your solicitor. Some of these  require a witness signature such as the mortgage deed and the TR1. These documents cannot be witnessed by family or anyone connected to the transaction.

Under normal circumstances a friend, work colleague or neighbour would be fine, however with the need to self-isolate and keep distance you run the risk of getting an infection. The best advice is to:

  • wash hands before and after providing the document for signing;
  • wear a face mask;
  • don't provide the pen (let them use their own); and
  • immediately place the document into an A4 envelope to send to your solicitor via special delivery

    6
    Exchange of Contracts - failing to complete
Exchange of contracts should normally be the exciting part of a house move because it legally binds the seller and buyer into a contract with financial penalties for pulling out, however the Coronavirus has caused issues that your solicitor might need to consider.

The Law Society has released the following guidance here - COVID-19 and residential conveyancing transactions.

"Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus.

“If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus.

“Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being.”

We’ll be publishing further guidance as soon as possible.

Where moves do need to go ahead, all those involved should take care to follow government guidance on social distancing and hygiene. See Public Health England’s guidance for households with possible coronavirus (COVID-19) infection.

If you’re acting for someone who has exchanged contracts and has a completion date within the next few days, and you, your client and the other side are able to proceed, which may be very difficult given the position with removal firms, there’s currently nothing to prevent you doing so.

The Law Society update has made it cleaer, although there is still speculation. For some clients who have handed in their rental notice they may feel they are contractually bound through fear of losing their home. It would look as though the movement is for a total lock down on the housing market meaning that if you have not already exchanged, that it is unadvisable to do so "while emergency measures are in place to fight coronavirus"."

With other contracts there is a force majeure clause for unforeseeable circumstances that prevent someone from fulfilling a contract. In conveyancing this doesn't exist in the standard contract of sale so any additional clauses need to be agreed by both the buyer and the seller and as such can take a week or two to agree. Getting this right is incredibly important - read more about why here - What happens when you pull out after Exchange of Contracts?

Buying a home during the Coronavirus - Top Tip

Can I waive my right to a same day exchange and completion?
The guidance from the Law Society is "Exchanging contracts on a ‘business as usual’ basis may be preferable to using new provisions, but you’ll need to make this assessment" however some solicitors want to ensure their client has no risk of failing to complete after exchange. The only way to remove any risk if if you exchange and complete on the same day.

Whilst a same day completion makes sense from a risk perspective, what happens if that is something the buyer or seller can't do because:

  • Can't get a removals company with that much flexibility
  • Need to hand in notice on a rental and can't afford 2 months of rent a mortgage repayments
  • Can't risk waiting for mortgage funds to come in and the chain or mortgage lender changing their mind
  • The seller can't pack and leave the property all on the same day
  • What if there are 3 or more in the chain? There would be too great a risk for the middle to top part of the chain that completion wouldn't be achievable if done all on the same day.

As you can see, a same day exchange and completion is logistically challenging and for some not achievable, however what can you do if you need time between exchange and completion but your solicitor won't agree to this as the risk of a claim against them if you don't complete is too great? In these cases you should speak to your conveyancing solicitor and ask if they can draft you a waiver to remove the risk of you making a claim against them in the future in the event of you failing to complete due to:

  • Banking system crashing to include receipt of mortgage funds, buyer's money and sending from the buyer's solicitor to the seller’s solicitor
  • Mortgage offer being rescinded due to a change in buyer's circumstances
  • Buyer being too ill to complete
  • Buyer dying and failing to complete

These are very real risks and should not be ignored. Whether such a waiver is fit for purpose will be questionable as your solicitor needs to protect you from these events and not simply look to protect themselves from a future claim. A risk not covered here is if the law firm is closed due to the Coronavirus. This eventuality leaves the buyer with no law firm to complete the transaction - would the Law Society step in and enter an infected Coronavirus infected property? What is clear is that there is no way to get to a no risk position with exchanging and completing on the same day.



The risks can be out of your control, however Law Society states "If completion does not take place after contracts have been exchanged due to COVID-19, the parties not completing will be in default. The contract provisions relating to default will apply unless the non-defaulting party takes a ‘good faith’ view. If the transaction forms part of a chain of transactions, it may not be possible to take such a view without incurring a penalty".

    7
    Completion - delays, access issues and vacant possession
Completion day is when you collect your keys, however it can be full of 'what ifs' that need answers:

What if
Answer
What if the seller is so sick with the Coronavirus they can't vacate the property?
If the seller doesn't vacate then they are in breach of contract and have 10 working days to vacate the property, failing which the buyer can rescind contracts, ask for a return of their deposit, interest and make a claim for their losses (legal fees, survey, mortgage valuation). The exact wording is:

7.5.2 The buyer may rescind the contract, and if he does so:

(a) the deposit is to be repaid to the buyer with accrued interest
(b) the buyer is to return any documents he received from the seller and is, at the seller's expense, to cancel any registration of the contract.

7.5.3 The buyer retains his other rights and remedies.

Read more here - What is Vacant Possession?

What if the seller has left property that is infected with the Coronavirus?
If the buyer doesn't complete because they are concerned the property is infected with the Coronavirus then they are in breach of contract and have 10 working days to complete, failing which the seller can rescind contracts, retain the deposit, interest and make a claim for their losses (legal fees, survey, mortgage valuation). The exact wording is:

7.4.2 The seller may rescind the contract, and if he does so:

(a) he may:
(i) forfeit and keep any deposit and accrued interest
(ii)resell the property and any contents included in the contract
(iii) claim damages
(b) the buyer is to return any documents he received from the seller and is to cancel any registration of the contract.

7.4.3 The seller retains his other rights and remedies.

There's a difference between transactions where COVID-19 is present and all the other situations where it’s a possibility. There is a further difference from when the seller leaves their items in your home that should have been removed (which makes them in breach of contract until removed) and being worried about the Coronavirus being in the property. Read more here - Seller left personal property in house - what can you legally do?

What if the banking system crashes and my completion monies don't reach the seller?
If the buyer fails to send the completion monies in time on the day of completion, the time is set in the contract and is normally 1pm or 2pm, then the buyer will be in breach of the contract. Completions often take place after money is received after this time because the seller can still redeem their mortgage and get their net sale proceeds sent to them up until 3.30pm. This is acting in good faith and reasonably.

But what happens when:

  • Received after 3.30pm - the seller's solicitor, if they can, can agree that the buyer move in under licence and then they will complete the next working day. The buyer is normally asked to pay the additional costs of the interest for the seller. This is the good faith and reasonable approach, however the contract would allow the seller to not complete, not allow access to the property, serve notice and request interest to be paid under the contract and then they'll complete on the next working day.
  • Received the next day or up to 10 days later - the seller's solicitor would not complete until funds are received - although once received the seller is still under contract to sell to you. They would serve notice to complete on the day of completion, not allow access to the property, request interest to be paid under the contract and any additional costs the seller has inured such as removal fees. Completion would take place once the completion monies are received and an undertaking is given to send the notice fee and interest. As long as the solicitor sent the money by CHAPS then the additional costs should be reclaimed from the buyer solicitor's bank as they guarantee to send CHAPS money on the same day it is sent however check the terms with your bank.
  • Received after 10 days - the seller can either rescind contracts (stop the sale to the buyer) or allow the transaction to complete. If the latter then the buyer is still bound to pay the interest and costs due under the contract however they would still be able to complete - this is the good faith approach. However, the seller can choose the former which would mean they keep the buyer's deposit and the buyer still has to pay the sellers costs and interest.


Removals

Update 27 March: I have advised all staff to check in every situation that:

    1
    a removal company is prepared to move the client (the Federation of Movers has advised that all removal companies stop moving clients);
    2
    they advise that clients check with their mortgage lenders that they are going to release the money; and
    3
    they advise clients that lenders' releasing money is paramount when house moves involve same day exchanges and completions.

    8
    Delays with registration
The knock on effect of the Coronavirus will be felt for many months to come and it will take a year or more to get back to business as usual; especially at the Land Registry. Whilst we expect a fall in the volume of transactions due to the Corona pandemic, it will be fair to assume that the Land Registry backlog will increase during these next few months which will mean the normal 1 to 6 months time to register a property will take longer.

Buying a home during the Coronavirus - Top Tip

Can I speed up the registration?
The Land Registry work on a First in, First Out basis however you can speed up the application if you can flag that the case requires expedition due to specific circumstances. The criteria for this is strict so if you are looking to expedite the process purely because you want to see your name as the legal owner on the title then this won't be good enough.


    9
    Should you be buying during the Coronavirus?
This is a decision that only you can decide. Is the property still in the right location with the right size and been valued by the mortgage lender for what you are paying. If so then why stop buying the property? Other factors such as job security are key to consider because buying a home could stretch your finances and the money you have saved for your deposit could give you a buffer until you get back on your feet.

The average house price in England and Wales was highest ever at £246,788 from the latest data at House Price Index, however there are few who will argue that a property's price now will be lower than what it was worth in December 2019 when that was posted. The question is how far will property prices fall and for how long? Some predict a post Coronavirus boom, with lower house prices driving property sales, plus during this isolation time, DIY sales have increased meaning more properties put in a better position to sell.

When looking at the risks of buying during the outbreak here are some things to consider:

  • The costs of a failed purchase - if the seller pulls out before exchange, which they are entitled to do, then you are liable to pay your own costs which will most likely include solicitor fees, conveyancing searches, mortgage valuation and home buyers survey.
  • Illness or death of a loved one - it is difficult to think about, however such an event could happen and could change on your decision to move to a specific area as you may need to move closer to loved ones.
  • Failing to complete after exchange - it may not be your intention now, but if you lose your job or fall ill then you may have to pull out after exchange because you cannot afford to buy the house. The costs incurred would be high.
  • Property prices fall lower than you bought for - at the time of writing (March 2020) we are at the start of the Coronavirus outbreak and cannot see the end. Whilst Boris Johnson states there could be 12 weeks before we get through, it may be longer. House prices could fall well below what you paid and this is classed as negative equity. The upside is that whilst property prices may fall, as long as you can afford to repay the mortgage, property prices bounce back. In 2008 after the property crash house prices fell in England and Wales from £187,181 (May 2008) to £157,355 (March 2009), and then bounced back higher in April 2014 (£190,739) and then on to levels we see today. The risk is if you can't afford to pay your mortgage until the property market recovers.

What cannot be ignored is the Bank of England's unprecedented move of reducing the base rate to 0.1%. This offers an opportunity to buyers of securing a more favourable mortgage interest rate subject to mortgage lenders passing on the saving. This rate is expected to stay at this level for a number of months whilst England and Wales are working through 'lock down'. Buyers should work with their mortgage broker to find the best rate to suit their circumstances.

Buying a home during the Coronavirus - Top Tip

If I pull out, can I buy the same property in the future?
This may well be the safest thing to do and allows both you and the seller to get through the outbreak with a view to 'picking things up again' once you are both ready. It would be more or a handshake approach because neither party will know if they will be fit and well enough after the outbreak to move forward, however if they are then matters can progress forward. Whether the sale price would need reviewing would depend on what the mortgage valuer feels the property is worth.


    10
    Our top 10 tips for buying during the Coronavirus outbreak
    1
    Use appropriate protection during any inspection of the property
    2
    Instruct a solicitor that uses online ID checks, is large enough that another solicitor can cover your file in the event of illness and that offer legal fee protection like a No Sale No Fee
    3
    Agree a time frame with the chain that allows for the local search to come back (nothing under 6 weeks)
    5
    Inform your mortgage lender if your circumstances change
    6
    Ask your solicitor to review the contract and include any additional clauses they feel appropriate
    7
    Keep in contact with the seller to find out if they have been infected with or in isolation because of the Coronavirus. If you can, agree to not exchange and wait until the market can start again.
    8
    Organise an inspection of the property before you exchange contracts to ensure the seller is preparing to move out
    9
    Reduce the length of time between exchange and completion. Push for either the same day or 5 working days (or however long it takes to get your mortgage advance in)
    10
    Ask your solicitor to send completion monies the day before completion so they are in the seller solicitor's account ready to complete early on the day of completion


"Whilst we all work through one of the greatest challenges of our time, I believe by working with each other we can see our way through. Like it or not, we're in this together. Please stay safe and healthy."

Andrew Boast
CEO of SAM Conveyancing

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