COVID-19: Guidance on residential property transactions
Following the Government’s guidance to stay at home unless absolutely necessary, there has been some confusion over whether home-buyers and sellers can continue to market their houses, proceed to exchange contracts, or complete their purchase or sale when they are contractually bound to do so.
On Friday 27 March, guidance was released on how to approach transactions, setting out which can still go ahead, and which should be delayed.
We answer some of the questions you may have about your residential property purchase here. Do get in touch with our team about these, or any other questions you may have. We will continue to progress your transaction as far as possible and in accordance with the Government’s guidance.
Please note, the Government’s guidance applies to people buying or selling private residential homes which they intend to live in.
Should I pull out of my transaction?
The Government has stated that there is no need to pull out of your sale or purchase altogether. Instead, you should speak to your solicitor and ensure that you are proceeding in line with the guidance.
We are still able to progress transactions where allowed by the Government, and the movement of funds on exchange and completion is not affected.
Can I still exchange contracts?
If the property is unoccupied, for example if it is a probate sale, you can continue with the transaction.
If the property is occupied, parties are advised to agree explicit provisions which will take into account the risk of delay due to Covid-19 before exchange. This is something your solicitor can help you with. This will provide more certainty for all parties involved and avoid parties being at risk of breaching their contractual obligations. Alternatively, parties are advised to delay exchanging contracts until the stay-at-home measures are lifted.
What if I have already exchanged contracts, and the agreed completion date is during the stay-at-home period?
If you are moving into a property which is unoccupied, you can continue with the transaction whilst following the guidance on home removals below.
If you are moving into a property which is occupied, parties are advised to agree to delay completion if possible. When completion is delayed, under the terms of the contract compensation may become payable. It is therefore important to speak to your solicitor who will work with the other parties to endeavour to agree a variation of completion date in the contract of sale to avoid you being liable for any compensation.
Buyers and sellers can also consider rescission of the contract. This effectively reverses the exchange of contracts, which means putting both parties back in the position that they were before contracts were exchanged. The deposit money would be returned in full and neither party would have any claim against the other.
If it is not possible to delay completion, and an agreement to delay simply cannot be reached, then the move can go ahead but the guidance on home removals must be followed.
If you have symptoms of Covid-19, are self-isolating or shielding from the virus, you should not move house if at all possible.
What is the guidance on home removals?
For moves which absolutely must go ahead, the Government guidance states that everyone present including removal companies staff must follow Public Health England guidance, ensuring that they keep a 2 metre distance from others at all times and wash their hands regularly with soap and water for 20 seconds. Any person who has Covid-19 symptoms must not carry out any work whatsoever.
What should I do about my mortgage offer if completion is delayed?
UK Finance has announced that mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months. However, the Covid-19 situation could also lead to other complications, such as a change of circumstances due to market values fluctuating over the coming months, or borrowers losing their employment. UK Finance has said that mortgage providers will work with customers in these circumstances to find a solution, so it may be possible that mortgage offers could be adjusted or withdrawn altogether.
Can I keep my house on the market, or arrange to view other houses on the market?
The Government’s advice states that whilst you can continue to advertise your house as being for sale, you should not allow any visitors into your home. Where possible, virtual viewings are preferable and can be arranged through estate agents. Though you can accept offers on your property, it is important to be aware that the conveyancing process is likely to take longer than usual.
Can my survey still be carried out?
Surveyors are advised that they can carry out urgent surveys in empty properties, or where residents are out of their property or present but following the Government’s advice about social distancing. Surveyors must not carry out a survey on a property if any member of the household is shielding, self-isolating or suffering from Covid-19 symptoms.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.