Residential Transaction FAQs: To move or not to move?

Last Updated: 16:20, 1st September 2020

In light of the COVID-19 outbreak and the first phase of easing of lockdown restrictions, the government has updated its guidance to allow people in England to move homes where this can happen safely and in line with social distancing guidelines. A link to the government's full announcement can be found here. Our summary of the position, as at 13 May 2020, is set out below.  We have also provided answers to some FAQs on this fast moving area.

Summary of current guidance

• The government's recommendations will continue to have a significant effect on the residential property market as the process for finding properties and moving into new homes will change.
• To help prevent the spread of Coronavirus during the moving process, all parties should follow public health advice such as washing hands regularly and staying away from others during the process.
• Where the property is vacant, there is no reason for the parties not to proceed.
• Where someone has tested positive for Coronavirus, has symptoms, or is self-isolating, the advice remains that moving home should be delayed until the period of self-isolation is over for all household members. Different moving dates should be agreed between all parties, or health advice sought if a move is essential during this period.
• Where someone is vulnerable and shielding from the virus, medical advice should be sought and followed. If a party in the chain is in this position, priority should be given to extending the moving period to accommodate this.
• Prospective buyers should make use of technology to carry out virtual property searches and initial viewings, wherever possible.
• Sellers starting to market their property can be visited by estate agents for the purpose of taking photos or videos.
• Sellers should:- open all internal doors before physical viewings and allow those viewing the property to access handwashing facilities. Sellers are recommended to vacate their property during the viewing to avoid mixing with others from outside of their household;- clean surfaces after each viewing, such as door handles; and- personally pack as much of their possessions as possible when moving or clean their belongings in advance before they are handled by removal firms.
• Estate agents should:- try to assist with agreements between sellers and buyers in terms of moving dates and other arrangements;- encourage prospective buyers to view properties virtually, with physical viewings only arranged using an appointment system if the buyer has a strong interest in the property; and- not drive clients to viewings but can accompany physical viewings. During viewings, a distance of 2 metres should be maintained from others, wherever possible, or, if not possible, agents should consider wearing a face covering.
• Surveyors:- can carry out surveys on occupied properties in line with social distancing guidelines and the governmental guidance on working safely in other people's homes during Coronavirus, unless a member of the household has Coronavirus symptoms or is self-isolating.- should contact homeowners in advance of the survey to ensure all surfaces have been cleaned in accordance with public health advice and doors/access panels are open.
• If the surveyor is unable to inspect an area due to public health restrictions, they should indicate this in their report.
• Removal firms should operate in line with social distancing guidelines and the governmental guidance on working safely in other people's homes during Coronavirus. Note also that the British Association of Removers has told its members to “take all appropriate measures to mitigate any associated risks.” Such steps will include checking, in advance, whether any member of the household has Coronavirus symptoms or is self-isolating, as well as minimising contact with homeowners and having access to hand washing facilities.
• For those located in Scotland and Wales, the devolved governments' guidance to 'stay at home' will continue to prevent the majority of house moves taking place.

Frequently Asked Questions

Will I still be able to get a mortgage offer?

If you do not already have a mortgage offer, it will become more difficult to obtain one as some lenders are not making new mortgages offers at present.

What if I already have a mortgage offer, but the delay in completion of my purchase goes beyond the deadline?

On 29 March 2020, UK Finance confirmed that, “To help home movers impacted by COVID-19, mortgage providers will give customers who have exchanged contracts the option to extend their mortgage offer for up to three months to enable them to move at a later date”.

If we haven't exchanged contracts yet, can either party pull out?

Yes, if contracts have not been exchanged, one or both parties can decide not to proceed. Any costs incurred to date, for example, searches and surveyors' fees, will not be refundable.

If we have exchanged contracts, can either party pull out?

You and the other party are legally obliged to proceed with the transaction, unless you can reach agreement to terminate the contract. If either party does not complete after the other party has sent them, what is known as, a “notice to complete”, the sender of the notice has several options including:

• terminating the contract  and, potentially, suing for damages. Damages for a seller could include the difference between the sale price and the price achieved on any future sale. Also, if the buyer is the party who is unable to complete, the seller can forfeit (keep) the deposit paid on exchange and sue for any balance up to 10% of the sale price.  Notwithstanding that, some buyers may choose to sacrifice their deposits rather than complete on a transaction if residential property prices fall because of COVID-19!; or
• applying to court for an order known as “specific performance” where the defaulting party is compelled to complete the transaction. The party awarded specific performance can also, potentially, sue for damages.

If we have already exchanged, can we change the price or the date for completion?

The parties are free to renegotiate terms and vary the contract but only by co-operation and agreement. The Law Society has made recommendations and provided guidelines for conveyancers to follow in this situation. You can find links to all of that guidance here. Delaying the transaction may mean repeating searches and surveys, which could increase costs.

How does COVID-19 affect tenancy agreements?

Although the advice on this topic is aimed primarily at people who are buying and selling houses, many of the points will also apply to residential landlords and tenants. Landlords and tenants will need to be flexible on terms and termination dates so as to avoid moving house when it is not strictly necessary and the tenant wants, and is able to, stay. Letting agents and inventory checkers will need to follow the same guidelines as estate agents and surveyors. You can find further detail on the effect on tenancy agreements in Residential Properties - The 'Winter Truce', restrictions on evictions and additional protections for renters.

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If you would like to talk through the consequences for your business, please email us and one of our team will get in touch.