Buying or selling your home – How might the coronavirus affect your move?
There is a huge amount of uncertainty around at the moment and many things will feel like they are on pause – the housing market is no exception. The lead up to a big move is a stressful enough time without the added extra delays and uncertainty that current situation brings.
With the UK now being in ‘lockdown’ peoples movement is restricted and there are a number of factors which may affect your ability to complete your sale or purchase in the time frame you had hoped, particularly if this was due to happen across the next couple of weeks. We understand how upsetting and unsettling it might be to have to wait and delay your moving date, but we would encourage you to have patience, keep in touch with your solicitors/lenders and across the chain (if there is one) to help understand your obligations, and finally, be flexible and realistic about completion dates.
* Update: latest Government guidance*
Please find below the latest guidance from the Government and the UK Conveyancing Association. The full guidance can be found here.
- Home buyers and renters should, where possible, delay moving to a new house while measures are in place to fight Coronavirus and in accordance with Government guidance.
- If you have already exchanged contracts and the property is currently occupied then all parties should work together to agree a delay or another way to resolve this matter. There is a formal process required to effect a deferral of a completion date which will involve your conveyancer exchanging agreements on your behalf with the other party to confirm the new arrangements. If you are buying a property with a mortgage you should check whether you will need written confirmation from your lender to this extension. (Lenders generally have agreed to extend mortgage offers by three months).
- If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on staying away from others to minimise the spread of the virus. You should also review the Government advice on completing a deep clean of the property.
- In line with Government’s advice, anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice which will mean not moving house for the time being, if at all possible. All parties should prioritise agreeing amicable arrangements to change move dates for individuals in this group, or where someone in a chain is in this group.
- Clients who are ready to move are advised not to exchange contracts on an occupied property unless they have made explicit provision for the risks presented by the virus. Please get in touch with your conveyancer directly to discuss these risks.
- If you are both buying and selling, bear in mind that if your own buyer or seller’s circumstances change, and they need a mortgage, they may not be financially able to proceed with your transaction at the end of the restrictions.
- You should also bear in mind that even when the restrictions are removed there may be other unavoidable delays in your move, perhaps if someone in the chain has died and their estate needs to be settled before the move can be completed. In that case you could agree a further delay or seek to end the contract.
What happens if you can’t complete?
Once contracts in a property transaction have been exchanged, the parties are entered into a legally binding agreement to complete the transaction on a given date (this can be either a fixed date agreed by all, or in the case of new build properties, ‘on notice’ once the property is structurally complete). Once the exchange has happened, there is effectively ‘no going back’ and both parties are bound by the terms of the contract. This is normally unproblematic, however the sudden outbreak of COVID-19 has meant that this may no longer be quite as straight forward
If you fail to complete then you can be held liable under the contractual provisions contained in either the sale or purchase contract for breach of contract. This could mean that under the terms of the contract, you could be liable for financial penalties which have the potential to be significant. It may be possible to vary the terms across the chain and with the goodwill of everyone involved, to delay the completion date but we urge you not to rely on this and review your contractual terms carefully.
Risks will vary depending on each party’s personal circumstances, the length of the chain and the aspects of each transaction or link in a chain. It is possible, but not a certainty, that the longer the period between exchange of contracts and completion then the higher the risks.
How can you avoid the risks?
A potential solution is for contracts to be exchanged and completion to take place simultaneously on the same day, rather than exchanging in advance of the completion date.
By doing a simultaneous exchange and completion, the risk of financial implications are alleviated, as you have not legally committed yourself to buy/sell until the very day the keys are to be handed over. This means that you will not run the risk of being sued for damages or lose your deposit as you are not a party to a legally binding contract. This solution does of course bring with it uncertainty and potentially additional stress in that you will not know definitely whether you are moving or not until the actual day of completion. Despite this, the possible financial implications of being in breach of contract pose a higher risk than the disappointment or inconvenience of an exchange and completion not going through when planned.
In order to avoid the pitfalls of doing a simultaneous exchange and completion and to provide more certainty, some property developers have produced/are in the process of drafting additional contract clauses to account for the various risk factors that individuals have been exposed to as a result of COVID-19. This would of course be preferable and the best option, so long as the clauses can be agreed by all parties.
We encourage you to think through all the circumstances of your transaction, and factor in all the things you cannot control but on which you may be (even sub-consciously) relying.
For anyone part way through a house purchase, we advise you to:
- Check the obligations that you have to your own mortgage lender and the need to advise them prior to completion of changes in your personal financial circumstances such as changes to your income or potential job security.
- If your completion date goes ahead as planned, be as prepared as possible to move, ensuring properties are cleaned to a very high standard, you may find there are additional requirements for this given the current situation.
- If you are due to complete in the next three weeks, check in with your removal company to check they are still able to complete the move and ensure they are following the governments social distancing guidance. They may ask you to confirm you are not in a high risk group and whether you have been self isolating.
- Consider the best ways to physically exchange keys, it may be possible to leave keys in a key safe box, check what steps your estate agents to ensure this takes place in a safe environment, again adhering to the governments social distancing guidance.
- Check with your insurance companies on their position in covering you in your new property.
- Check when your mortgage offer will expire. If the completion date is delayed you need to ensure that you will still have a valid mortgage offer to enable you to complete your purchase on a later date.
The Government continues to provide guidance for homebuyers, conveyancers and lenders – you can find the latest advice here. Whilst we cannot give a 100% guarantee that your transaction will be completed smoothly, as a firm we are fully set up to work remotely and our conveyancers are all continuing to progress properties through exchange and completion wherever possible.
We are regularly monitoring the latest updates from the Government and the Conveyancing Association, so please do give us a call if you are concerned about your move. We are doing everything we can to ensure you are able to progress to completion as planned, though the health and safety of everyone involved is our main priority so please do prepared to compromise on dates to ensure a safe move!
If you would like further advice on your move please do get in touch with your conveyancer or a member of their team, you can find their direct contact details here. Or alternatively fill in the enquiry form below and we will come back to you as soon as possible.