COVID-19: Where is Property now?

Wednesday 6 May 2020

As we move into the sixth week of lockdown, this article attempts to look at what changes we have adopted for our clients, how property transactions have evolved and what is likely to happen as we move forward.

Blacks’ response to the crisis

With the impending lockdown there was no doubt that this new crisis would have a profound effect on property transactions.

At Blacks we have found that there is still an appetite and a strong will to proceed with transactions wherever possible. Our focus has been to help you achieve your objectives as safely and securely as possible.

The transition from office based working to working remotely from home has been a great success, coupled with electronic identification checks, and the use of Zoom, Microsoft Teams and e-signing has allowed us to manage client expectations and to continue to operate and complete your transactions.

At the heart of our dealings the focus has been on continuing to provide our clients with an exceptional level of service, which is something that we pride ourselves on. We continue to receive excellent feedback and testimonials, which you can find by visiting the following link: https://uk.trustpilot.com/review/www.lawblacks.com.

Blacks’ response to the Government’s advice

The advice has been to maintain social distancing and to delay any moves which are not absolutely necessary. This meant that transactions in which contracts have already exchanged required negotiations to delay completion dates.

This was not necessarily the end of the line for these transactions and although mortgage lenders have offered three month extensions to buyers, the risk of further delay meant that some contracts required long-stop dates.

A long-stop date provides the respective parties with a remedy should either party be unable to complete by the agreed date. Ultimately this allows the buyer to circumvent the risk of the expiry of its mortgage offer leading to non-performance of the contract.

However, such positions have been few and far between. We have sought to address the concerns of buyers and sellers by implementing, across the majority of transactions and where suitable, simultaneous exchange and completion.

This has reduced the risk of sellers becoming worried that they may incur additional costs if a buyer cannot ultimately complete following the exchange of contracts. Similarly, it has helped reduced the risk of buyers becoming worried that their seller may withdraw at the last minute should circumstances drastically change.

Key Stakeholders and their response

Whilst Covid-19 continues to compound home moves and the availability of removal companies, it has not left sellers and buyers at a complete stalemate. Sellers and buyers have still been moving whilst adhering to social distancing measures.

In recent news, the mortgage markets appear to be regaining confidence with some lenders now back to offering 85% mortgages and interest rates remaining at a record low level. Mortgage lenders are also learning to adapt with the use of desktop valuations ever growing. This has come as welcome news and we have seen buyers reacting to this positively with instructions continuing to come through.

It is anticipated that in the longer term, valuations will increasingly be done with the use of automated models and remote inspections, thereby reducing the reliance placed by mortgage lenders on physical inspections. With the vast amount of comparable data already available from desktop valuations, and the development of ‘fish eye’ cameras to capture the interior and exterior of the home, this is likely to be the direction valuers take.

Estate agents are looking to utilise new technologies such as ‘Resivue’ which aims to provide a digital sales brochure. Consumers can view a property through 3D tours and floorplans, communicate with estate agents via live chat, update property details, showcase any home and put their home on the market with ease.

NAEA Propertymark, a professional body for estate agents, has launched a campaign for the Government to include what is referred to as a ‘Property Sector Support Package’. This includes ‘Controlled Viewings’ with the aid of social distancing measures, a cash-incentive to buyers in the form on an interest free loan which is to be repaid upon the sale of the property and a six month holiday on stamp duty. Whilst it is yet to be seen whether the Government will consider such proposals, it is encouraging news for buyers and sellers alike.

Local Authorities are also adapting to this ever changing environment. At the time of writing there is now less than 10% of Land Charge Departments which are still closed. Thames Water and Yorkshire Water amongst other Water Companies are now fully operational and are providing drainage and water searches in line with their usual service levels.

This means that instructions for pre-contract searches are being accepted and completed with little delay. Where delays are likely to be detrimental to your transactions we can look at putting in place indemnity insurance to negate the risk of a lack of pre-contract search enquiries. This of course is subject to agreement from your mortgage lender, although the majority of mortgage lenders do accept search indemnity insurance.

We are pleased to report that HM Land Registry also continues to review its practice, policy and procedures to include the use of electronic signatures. Whilst all other services of HM Land Registry are seeing varying degrees of disruption and delays, they continue to prioritise the services that allow property transactions to continue as normal.

What does the future hold?

We know that large numbers of property transactions are on hold, however, we and other key stakeholders in the market continue to adapt to an ever changing way of doing things. As we wait for the end of this uncertainty and the return of normality, we should consider what the new norm will be and how it will affect our plans. It may be wise to test the water now, whilst there is scope to become accustomed to the changes being implemented.

The Government’s initial focus for reopening the economy is likely to be on sectors with the greatest multiplier effects and with minimum risks. The property market is an area which has wide multiplier effects and so you may find yourself scrabbling to get ahead as estate agents, removal companies and surveyors re-open their doors. Certainly, Landlords and investors are finding the current state of affairs to be conducive to their portfolio objectives.

We can guide you during this time and help you achieve your plans and objectives. If you are considering remortgaging, selling and/or buying, or perhaps you are considering investing in property, please email or call our specialist Residential Conveyancing team on 0113 207 1094.