Can I Still Buy During The Coronavirus? Conveyancing Questions Answered2nd Apr 2020
The outbreak and spread of COVID-19 is like nothing we have seen before.
Coronavirus has impacted us all, including those looking to get onto the property ladder. Best laid plans have been thrown into doubt and given way to a host of difficult questions. Can I still buy? Can I still own my dream home?
In times like these it serves to know who you can trust and moreover whose advise to seek.
The Law Society have moved to offer reassurance and guidance. Indeed, they have recently released information on conveyancing transactions but are careful to state it should be read in conjunction with the government’s own home moving advice. Coles Miller echo that sentiment.
The advice states that moving home should occur only where contracts have already been exchanged and – significantly - if there is no flexibility at all in completion dates.
If contracts have previously been exchanged but all parties are open to moving the completion date, this should be favoured. While police have been granted new powers to help combat the spread of COVID-19, preventative measures are relaxed for critical home moves.
In those instances where buyers are moving into an empty property, they will be permitted to do so but must comply with guidance laid out by Public Health England and Wales.
As conveyancers with your best interests at heart, both financially and morally, we will not encourage you to move if it is not in your best interests or will any way affect your health or welfare.
Things to consider when providing your solicitor/conveyancer with instructions:-
Expiry date of your mortgage offer. Some lenders are extending mortgage offers by three months to allow for delayed completion where purchasers have exchanged.
Whether your seller is willing to pause.
Whether you can still afford the mortgage you are committing to should you be furloughed or made redundant.
Whether the new home is more important than your health.
Whether the property market is going to waver, impacting your lender’s ability to lend.
Have I got my mortgage offer yet? Lenders are currently unable to get their valuers into properties to conduct valuations. Many lenders have also recalled new offers. The mortgage market is for all intents and purposes locking down.
Nationwide, for example, are now only offering loans to those with 25% equity or more, thus ruling out first-time buyers or buyers mortgaging a large percentage of the property value. Elsewhere other mortgage lenders have reduced the loan-to-value ratio by up to 60%. This change dictates purchasers will need to acquire at least a 40% deposit of equity in their property in order to obtain a mortgage. It is an approach already adopted by the likes of Barclays, Halifax, and Virgin Money.
Are my removals still operational? Do I want strangers in contact with my partner and children?
I have my mortgage offer…
If this is the case, you are safe according to current guidance. Lenders will continue to offer loans already confirmed.
What to do if you are at the point of exchange?
At this point in time your contract will be binding and, though a delayed completion may be agreed, a lot can change in the space of a few weeks or months. By the time completion comes around you may not be in the same financial position you are now. It is therefore vital to think long-term.
Insist that your conveyancer adds a suitable COVID-19 clause into the contract in case completion cannot take place due to the virus. Be mindful however this may not be watertight.
Take comfort in knowing moves are still happening. As a Firm we are taking every precaution to ensure Coles Miller remains open for business. We have our clients’ best interests at heart and will move on their instructions, subject to those being in line with the advice of both the Law Society and the government.
If you do complete a move during this turbulent period, ensure you give your new property a deep clean and follow the guidance from Public Heath England and Wales.
If you need to seek advice during these uncertain times, please don't hesitate to contact us. We are responding to queries like normal and are happy to help.