The English property market has got the green light to reopen as the Government announced new regulations that will lift the seven week freeze on property viewings and home moves today.
Housing markets in Northern Ireland, Wales and Scotland remain shut, but in England people are now allowed to travel to visit estate agents and view properties. Surveyors, valuers and conveyancers can return to work following social distancing guidelines.
Since the sector was effectively suspended at the end of March, 373,000 transactions have been thrown up in the air and newly agreed sales have dropped by 90pc, according to the property portal Zoopla.
The process of buying and selling a house is now going to be radically different. The Government has issued detailed guidance for how viewings and sales can go ahead in line with social distancing requirements.
The Royal Institute of Chartered Surveyors has sent out pan-industry guidance with further details on how to navigate the physical contact points of house moves. Here’s what it means for the market right now.
- Over lunchtime on Friday, May 15, Melissa Lawford and Isabelle Fraser answered your questions on moving, buying and selling during lockdown. You can find Friday’s Q&A at the bottom of this article.
How soon will we be able to go to house viewings?
Before Prime Minister Boris Johnson’s announcement beginning lockdown easing on Sunday evening, the property industry was already gearing up to restart at the end of May, pending a Government sign-off on proposed guidelines.
Now, it has been given the go-head to reopen immediately, but viewings will depend on when individual estate agents plan to reopen.
Dexters opened its 70 London offices on Wednesday by appointment and is now offering viewings. Knight Frank is now arranging viewings and market appraisals and will reopen its offices on Monday. Winkworth will start viewings again today and will also reopen its offices on Monday. We will update this page as more agents confirm their plans.
How different is the process of buying a house now?
Be aware that even the current guidance could change again quickly. The Government guidance states: “It may also become necessary to pause all home moves for a short period of time to manage the spread of the coronavirus.” The current information is dependent on the outbreak staying under control.
Virtual viewings will become far more commonplace. The Government’s newly published guidelines say that initial property viewings should be online.
According to the Rics guidance, viewings should be kept to only the agent (who will stay at a two metre distance) and a maximum of two adults from the buyer’s household. An agent should be present for viewings wherever possible to ensure the guidance is followed. Small children are allowed to come to house viewings but they should be kept from touching things and was their hands regularly.
Sellers will be expected to open all doors and turn on light switches, and then wait in the garden or vacate their home while the buyer views the property without touching anything. They should provide a place where buyers can wash their hands and dry them with separate towels (ideally paper towels). Surfaces and door handles must be cleaned before and after every viewing.
Buyers must avoid touching any surfaces and should bring their own hand sanitiser. There is a ban on open house viewings. If a member of any household is exhibiting coronavirus symptoms, the viewing should be delayed.
When the industry body guidelines are released, they could also include recommendations for buyers, sellers and agents to wear PPE. Everyone will most likely be expected to provide this for themselves, said Mark Hayward of NAEA Propertymark.
Wherever possible, mortgage lenders will make their valuations remotely, using existing local transaction data. The exceptions will be if the buyer is purchasing with a small deposit (namely 5 or 10pc) or the property has a particularly high value, in which case a physical valuation in line with social distancing guidelines will still be necessary.
Will there be a surge of activity when the market reopens?
Those 373,000 sales that are currently on ice cannot be quickly or easily reheated when restrictions lift. Zoopla expects the total number of sales in 2020 to sit at half the normal benchmark.
But initially there will likely be a small flurry of completions, as seen in the first few days of New Zealand’s market reopening. These will primarily be transactions that were previously agreed and which had their completion dates pushed back in line with the Government guidance.
After that, there could be something of a stalemate. The good news is that relatively few vendors have withdrawn their properties from the market. But all eyes will be on what happens to house prices, and these will be closely tied to employment figures – although we won’t know the effect on house prices for some time as the Office for National Statistics has said there aren’t enough transactions to publish its index.
For now, the Government’s furlough scheme is protecting the wages of 6.3m people and one in seven home owners are part-way through a three-month mortgage holiday.
When these schemes end, forced sellers who have no choice but to accept price discounts may start to come to the market, and these sales will drive the price statistics down. Their numbers will be reduced by record low interest rates, which will make their mortgage debt less of a problem than in previous recessions, but the Bank of England still expects values could fall by as much as 16pc.
Will the Government help?
Many in the property sector are calling for Government stimulus. A stamp duty reduction or holiday is, as ever, at the top of the wish lists of estate agents. The Royal Institute of Chartered Surveyors (Rics) is among the trade bodies that are calling loudly for tax cuts.
But this may be wishful thinking: any kind of reduction in tax revenue is hard to imagine while the Government is battling what is set to be the worst economic downturn in 300 years.
More plausible is an extension to the Help to Buy equity loan scheme, which is currently due to be reformed in April 2021 and to end completely in 2023.
Deals on homes being sold under the current scheme will effectively need to be agreed by December to meet the April deadline. An extension would prevent the risk that home sales would miss the deadline because lockdown has delayed both construction and sales.
The below is from a Q&A with readers. You can submit a question for our next Q&A by sending your queries to email@example.com.
Should I negotiate my offer price?
The first question comes from Anon via email. They ask:
‘I’m in the process of buying a house. I had an offer accepted in mid-February for a property in Oxfordshire at a reasonable price, but is that going to be too much now? House price forecasts vary from falling 3pc this year, to 23pc.’
Here’s Isabelle’s advice:
When you put your offer in, the market was likely near the peak of what it will be for a long time. It may be worth trying to negotiate, depending on the circumstances of the vendor – and whether you are prepared to have your bluff called. If you plan to stay in the house long-term, and think the offer was reasonable to begin with, then you may find you want to pay the offer price and get on with the purchase. If you plan to sell the property quickly (for example next year), then I would definitely negotiate – hard.
What do I do amid such uncertainty?
This questions comes from Anonymous via email. They write:
‘In December I relocated from London to Leeds for a new job. I was intending to buy a flat in Leeds, but my purchase has been put on hold due to solicitors being furloughed. In the meantime I’ve been living with family.
To make matters more complicated, the tenants I had in my old London flat have given notice to quit, and my employer is hinting that we might be working from home for the foreseeable.
I do really like the flat in Leeds but feel a little overwhelmed with all the uncertainty. I also don’t know whether to ask for a reduction in anticipation of house values falling, or whether this would cause the seller to walk away leaving me without anywhere.’
I think everyone is with you on the uncertainty! I think it would be wise to try to renegotiate politely. The market has changed significantly since you made your offer. Knight Frank estimates that house prices have already fallen by 5pc over the lockdown period. The Bank of England is anticipating a 16pc drop.
It is far from unreasonable to ask for a discount. You make a valid point that the seller could walk, and there will certainly be fewer homes on the market going forwards, but you need to make an assessment based on how you would stand financially if you purchased the property and values then fell significantly.
Regarding your tenanted property, it may prove trickier to source new tenants quickly, given the new social distancing guidelines on property viewings. However, the lettings market is set to fare the best in the property sector. It tends to be counter-cyclical to sales. When prices fall, more people hold off buying and stay in rented accommodation for longer.
Will my mortgage offer still be valid?
This question comes from Melanie in the comments. She writes:
‘I was ready to exchange and complete on a property when lockdown was announced. I was offered a 95pc LTV mortgage. Do I need to check that the lender will still lend the required amount, or if they will need to revalue the property (valuation was in January 2020)?
‘The property is unoccupied, but not empty of the vendors’ belongings. No one has been in the property for more than two months. Can I revisit to check the condition of the property before exchanging contracts? And is the vendor required to deep clean/sanitise the property before handing over the keys?’
Most mortgage offers are valid for six months, so you may need to ask the lender to extend the date, which many will allow due to lockdown intervening in the market. Many lenders have also withdrawn mortgages for purchases with low deposits from the market, so you may find that given the economic circumstances it is less willing to loan money at such a rate. And if you have had any material change in your income you need to report that to the lender, which may reconsider the offer. Be sure to speak to your lender to explore all this issues.
You can request to revisit the property before exchanging, and that will be easily done if it is vacant and hasn’t been occupied for that amount of time. The vendor is required to clean the property between viewings (though it’s unclear who is to do that if the property is vacant), and they are also required to do it before handing over the keys. If you’re worried you may want to get in professional help.
What are tenants’ rights when it comes to house viewings?
This question comes from Michael via email. He writes:
‘My daughter is living alone in a rented property and is working from home. Her landlord has put the house she is living in up for sale and she is concerned about the virus risk from prospective buyers that she doesn’t know. In view of this and the law stopping her from inviting friends or family into the house, how should she deal with this situation?’
This is a really tricky question that wasn’t directly answered by any guidance issued by the Government or any industry bodies.
I asked Generation Rent, a body which advocates for tenants, which said: “Tenants have the legal right to ‘quiet enjoyment’ of their home, regardless of the coronavirus guidance. If a tenant refuses entry, a landlord cannot legally enter other than in a genuine emergency. Landlords must give 24 hours’ notice if they wish to enter the property.
“Although the guidance does permit viewings, the reader’s daughter has the legal right to refuse entry. However, I’d advise first contacting the landlord, explaining her health and safety concerns, and trying to come to an agreement, rather than just refusing entry. (If relationships break down the landlord could decide to remove the tenant via a section 21 eviction notice.)”
I also asked Phil Stewardson, a landlord and one of the Telegraph’s Property Doctors, who wrote: “She should insist that anyone viewing does not touch anything, not even door handles. During the viewing she could wait in the garden and ask the agent to either provide gloves and shoe coverings for those viewing, which are disposed of afterwards, and ask the agent to wipe down any door handles that are touched.
“The agent has an obligation to check with anyone viewing if they have any symptoms of the virus, and if so the viewing should be cancelled. ‘Open house’ viewings are still banned so she should only have to cope with individual viewings.”
Can we get our stamp duty back as our transaction got delayed by lockdown?
This question comes from Anon via email. They write:
‘In late March I moved with my family into a new house. My wife purchased the property outright with an inheritance. However the purchasers of our property have been delayed due to the Law Society of Northern Ireland advising that no contracts can be exchanged after March 26, and Northern Ireland’s market has not reopened like England’s.We had to pay an additional £10,000 of stamp duty due to not having sold our property prior to moving (we have been advised that this would be refunded within three to six months of sale). However would there be any way to release this sum prior to sale if the market stays closed?’
I asked Stefanie Tremain, one of the Telegraph’s Property Doctors and an expert on tax, to answer this. She said: “To date the government has resisted pressure to relax (or scrap) the Stamp Duty Land Tax (SDLT) surcharge rules in light of the current conditions. You should be able to claim a refund of the additional SDLT paid provided your previous home is sold within 36 months of the purchase of your new home.”
Are virtual viewings the future?
This question comes from Deborah via email. She writes:
‘My house went on the market just before lockdown. We managed to have two viewings before they were stopped. I received a call before the changes were announced from the agent to say they have two interested parties and could I do a video walk through. Do your experts think that regardless of how things progress, providing such a video, perhaps more expertly done, might be a good way to reduce the number of time-wasting viewings? Until now agents seemed to think there was merit in quantity, perhaps over quality of viewer.’
You are absolutely right. In fact, virtual viewings are now close to compulsory. Under the new Government guidelines, any initial viewings of properties should be done digitally and buyers should not visit homes unless they know they are definitely interested.
Though I have spoken to several buyers who have felt confident to purchase a home off the back of only a virtual viewing (and one agent recently completed on the sale of a £2.5m property that the buyer only saw virtually!), few expect them to replace physical viewings, but it is certainly already becoming an essential part of the buying process that will be here to stay.
The good news is, the tech is getting pretty slick (you can read more about the different options here), it is getting cheaper to do it well, and they can come with the perks of getting much more accurate floorplans. Spec, which offers 3D scans, estimates that the typical London property is normally so badly mismeasured it is mis-sold by an average of £33,800.
London v Lincolnshire: where will property prices change the most?
This question comes from Jayne via email. She asks:
‘We spoke to estate agents about putting our property in London on the market just before lockdown with the intention of moving to rural Lincolnshire. Are either or both of these areas likely to show a significant change in value?’
There has been a lot of discussion during lockdown of the public’s desire to move to the countryside out of cities, prompted by many of us (me included) being cooped up in flats without a garden. This could lead to less demand for properties in London, and more in the countryside, and while I think that could be the case, I reckon economic circumstances will be more of a cause of price falls in the capital than this lifestyle trend.
Perhaps it might help increase demand and therefore push up prices in some of the more accessible and exclusive areas of the countryside, such as in Surrey or the Cotswolds. Lincolnshire may be popular with those following this new trend of moving to the countryside as it has good train links, but property values there will also be more affected by local economic circumstances and levels of unemployment.
Will my new purchase be classed as a second home?
The next question comes from Philip via email. He asks:
‘I was about to exchange/complete and move into a new property in Norfolk on the point of lockdown in March. Since selling my house in early March I have been living temporarily with my partner in Hertfordshire. Our plans are to keep our own houses and live in both properties as life and work commitments allow. You could say, one household in two houses.
‘Shall I exchange and complete or hold off? My vendors are requesting to complete and move soon as they are purchasing from a builder. I do not wish to purchase the house and then be locked down there, unable to stay in my partner’s house or for her to come to Norfolk. We have observed all social distancing rules during lockdown and are symptom-free. Would my purchase of the barn be considered as a second home and whilst I could live there my partner couldn’t visit or would we be free to move between them?’
Under government rules, you can’t stay in both a primary residence and a second home, moving between them. But you are now allowed to move into a property if you buy/rent it. So one could interpret that you could both move to the barn in Norfolk, or just one of you, but the other wouldn’t be able to come and go from it, nor would you be able to both switch between your Norfolk and Hertfordshire homes.
Lockdown – hopefully – won’t last for ever, so if you love the Norfolk property, there’s no reason why you shouldn’t buy it then resume your lifestyle between both properties when the rules allow it.
My tenants can’t move in because of lockdown elsewhere
The next question comes from Sam via email. He writes:
‘I was in the process of moving houses and my current property was going to have tenants moving in from Ireland. Just before the lockdown announcement we had already paid a deposit on the home we want to buy, but then everything had to be put on hold. The estate agent for the new property we want to move into is giving an ultimatum with the moving in date and says that the tenants wanting to move into our property is a separate issue for me to resolve. But without tenants, we have a cash flow problem.
What are the current rules in regard to this? Can we go ahead as the Government has eased restrictions within the housing market? If not, how soon before Ireland make an announcement?’
This sounds like it must be quite an ordeal. I am assuming that your property is in England, in which case you now have the green light to move tenants into it (if it is in Northern Ireland, Wales or Scotland, however, everything is still on hold).
The problem of course is how soon your tenants can move over from Ireland. I’m afraid that is not likely to be soon. Ireland’s plan for leaving lockdown will only allow people to move beyond a 20km radius of their home on July 20.
I think that your options are first to push back with your seller’s estate agent. Remind them that the Government’s guidelines stress that all property professionals should work to be as flexible as possible to allow for complications arising from coronavirus and lockdown.
Then I would also consider sourcing new tenants. This may feel unkind to the people you have lined up, but if the other option is losing your deposit you may have no choice. You can now market your property and host viewings within the new social distancing guidelines. While there is a large question mark over house prices, demand for rentals will increase as more people will hold off from the sales market and agents are reporting pent up demand in the lettings market. Hopefully, it shouldn’t take you too long to find new tenants.
When can I get a survey done?
The next question comes from Joanna in the comments. She writes:
‘We have been told surveyors aren’t allowed inside houses yet, which will slow down the whole process. Is there a sign as to when this may change?’
Surveyors (as well as valuers, removals men, and estate agents) are now allowed inside people’s houses, provided they follow new detailed guidance on social distancing that was released on Wednesday.
The issue now is not whether they are allowed in, but how quickly surveyors are able to reopen their businesses to work in line with the guidelines (for example, many will need to work out how many staff they can take off furlough) and how big their backlogs are. The industry is up and running again, but buyers are already reporting long wait times.
Will the Government change stamp duty rules due to lockdown?
The next question comes from Anon via email. They write:
‘I have a question about Stamp Duty Land Tax (SDLT). We are in the process of buying a home. We had almost reached exchange, but then we went into lockdown. We are currently living in a house owned by my elderly mother, but we also own a small second home at the seaside, which we intended to sell next year, once we have sold my mum’s house for her.
‘Our solicitor says that we will be charged the higher rate of SDLT this year (assuming we proceed to completion), but that we should be entitled to a partial tax refund, once we sell our second home. That’s fine, but what if we run out of time to sell it, because the country keeps going into lockdown? If the property market occasionally has to close during the next couple of years, might people who own two homes run out of time to claim a partial SDLT refund once they sell their second property, or are lockdown periods (the ‘closed’ months) discounted when measuring the period between buying a new home, and selling the old one?’
You raise a very valid point. Even though the market has now reopened, the new Government guidelines on house moves include a note that the market could be suspended again if the outbreak gets out of control. As things stand, the taxman does not discount the closed months of the property market. Some buyers have already been affected by this as their postponed sales meant they missed the April deadline for changes in capital gains tax.
Unfortunately, I think it is unlikely that the Government will grant tax amnesty for people in this situation. If the market is suspended again, the Government says that it would only be for a short period, so hopefully this should not affect you too much. The bigger problem of course is that the market is going to be slow now. Buyers are wary that values are expected to fall and I think all properties are going to take longer to sell unless their prices are reduced.
Should we accept a £100k discount on our flat?
The next question comes from Lucy. She asks:
‘We’re selling a two-bedroom flat in London and are upsizing to a house. We listed it for £550,000 and accepted an offer at £50,000 below asking. Our buyers have since asked for another £50,000 reduction. This would bring the property down 20pc from asking price and we have rejected it.
‘We’re not greedy, we just need to sell and that’s the lowest level we can go to (we bought it for £500,000 in 2014, have invested £40k in renovations). Our concern is that if we don’t sell now it could be another two years before we can move (I am due to be on maternity leave from November). Are we being unreasonable in rejecting a £100k cut on a £550k property?’
This is a tricky situation and I think you have to look both at your finances – can you afford to move to the new house with this £100k discount on your flat? – and at the wider economic picture. This year property prices look set to fall, with the steepest drops in value likely to be in the months after furlough ends and when unemployment rises. It’s not clear when that will be exactly, but it could be as soon as the end of October if it isn’t extended by the Chancellor again.
Your property transaction – both sides of it – is taking place in an environment of economic uncertainty. Can you ask for a bigger discount on the house you are buying? The vendors may be in a situation too where they need to sell, so you may be able to balance your buyers’ demand for a discount with a lower price for the house.
In those two years you may find that the market has bounced back enough you can sell your house at less of a discount, but can you stay there for two years? Good luck!
When will property viewings start?
The next question comes from Anon via email. They write:
‘I live in Bavaria (have done for 10 years) and this morning was at the Notary, along with the buyers, to sign the paperwork regarding selling my house here. I’ve put a stipulation on the move-out date as being as late as end of April next year due to uncertainty. My plan is to move back to the UK and was wondering when I’d be able to do any viewing?’
Melissa says: You are certainly doing all the right things with regards to keeping your move date flexible. The market has now reopened in England, but the Government has made a caveat that it could get suspended again if the outbreak gets out of control. Viewings are now legally possible under guidelines that include restricting viewings to members of only one household (the Royal Institute of Chartered Surveyors recommends no more than two adults), and asking the seller to clean surfaces, open doors and vacate the property.
How soon you can book them will be dependent on when individual estate agents reopen (some, such as Knight Frank, are already operating viewings, others are still making plans for how they can run their businesses in line with the new guidelines). The Government strongly recommends against speculative viewings and advises buyers to only visit properties that they have viewed digitally in advance and are seriously considering buying.
Should I renegotiate the price of the new-build I’m buying?
The next question comes from Siyana via email. They ask:
‘I am buying a new-build in London (under the Help to Buy scheme). The price is relatively on the low scale £330,000 for 560 sq ft. We had an offer accepted prior to lockdown and also had a valuation/survey completed. We have paused proceedings with our solicitor while in lockdown.
‘However, we are now uncertain if we are going to be paying too much and whether we should negotiate a lower offer, given there are reports that the market may drop by up to 7pc?’
I think trying to renegotiate is good sense. A 7pc price drop is at the lower end of the predictions out there. The Bank of England is anticipating a price drop of 16pc. Deutsche Bank predicts up to 23pc. It is plausible that your mortgage provider will request a revaluation of the property anyway.
If you are buying with a relatively small deposit, you can get into negative equity quite quickly (especially as there is normally also a premium for new-build homes, that is not passed on when you sell). Bear in mind that the current Help to Buy scheme ends in April 2021 (though the Government is currently considering plans to extend it), which means that the developer may be under pressure to get the property signed by December. You could have some decent leverage.
Will the valuation be lower than the price I agreed to buy it for?
The next question comes from Adam via email. He asks:
‘We are purchasing a new-build property and all legal documentation has been completed. We have been approved for a mortgage with a 10pc deposit, pending a physical valuation. Do you have any idea when physical mortgage valuations may start? Is it likely that lenders may now say the property is not worth what I have agreed to pay for it?’
Physical mortgage valuations have this week been given the green light to restart after having been abruptly stopped in March. But there is a big backlog, and so it will take weeks or months to get back on top of things.
It is possible that the valuer will say that it is worth less than what you agreed to buy it for; that is called down valuing and will become more common over the next few months as prices fall. If this is the case, and as it’s a new-build, you may have some leverage in getting the developer to lower the price. If not, the bank will expect you to make up the difference.
Can I get a discount without losing the property?
The next question comes from Anon via email. They write:
‘I am in the stage of final queries being answered with exchange and completion to follow shortly. It has taken a long time to find this property, and I have paid a lot of money out to get surveys, as well as architects for an extension. (My previous property also fell through).
I can see the predicted fall in prices varies from 3pc to 30pc with the Bank of England at 16pc. How can I get a discount without losing the property? (I paid £295k and feel that I’d like to renegotiate to buy at the most of £275k). The seller and I both have equal incentives to get this completed, although there is a chain. The property is in Bedfordshire.’
If you and the seller are both motivated, and there is some flexibility in the chain for price cuts, it is definitely worth pursuing a price cut. But you must weigh up whether the rest of the chain can absorb or apply their own price cuts, and whether the vendor would be able to quickly find another seller if they were to call your bluff.
On the latter, I would reckon there are few buyers out there ready to move fast enough, but you may find that the chain could not sustain such a price cut (ie, two properties up the chain may have already locked in the price and so can’t afford to take any less). It’s a case of weighing up psychology, risk and the economic conditions too.
Is there really a lot of pent-up demand?
The next question comes from Anon via email. They write:
‘I’m selling a house in Surrey, which has been on the market since November. I have been following the housing dynamics around supply and demand. Do you have new insights that others have missed or are very recent?’
I think one thing to be wary of is the people who are saying that there will now be a surge of pent up demand. Agents are certainly being inundated with calls now that the market has reopened, but much of this will simply be buyers who had their transactions on hold because of lockdown.
I think that there will be a flurry of completions as the delayed sales go through, but analysts expect transactions this year to be half their usual volume. Rightmove reported that 2,115 properties came onto the market within the first five hours of the housing sector reopening on Wednesday, but these will not be new listings.
Agents haven’t been able to do market appraisals during lockdown, so anything that can come online that quickly will probably already have been on the market and was simply taken off while the market was shut.
So my take is the environment for the next few months will be low supply, low demand, and very price sensitive.
How much have prices really fallen in the last eight weeks?
This is our last question and it comes from Philip in the comments. He writes:
‘Prior to the lockdown I had agreed a price with a cash buyer for my two-bedroom terraced house of £240,000. As I am shielding, the transaction had to be postponed. I am now trying to resurrect the move and the person purchasing my house now wishes to negotiate the price downwards. In your opinion, how much has the value of my house reduced in the past eight weeks?’
Price data is extremely limited at the moment as so few transactions have taken place over the lockdown period, but Knight Frank estimates that sale prices have so far fallen by 5pc. The problem is that buyers are trying to negotiate based on how far they feel prices will fall in the future, so that they can protect themselves from getting into negative equity. The Bank of England is anticipating a drop of 16pc.
But of the buyers I am speaking to at the moment, I am yet to come across someone who is realistically expecting to be able to shave more than 5 to 10pc off their agreed price.
I would also offer a note of caution. The Government has reopened the housing market, but its new guidelines on home moving include a caveat that the risks are still greater for those in the shielding group (who have received a letter advising them that they are extremely clinically vulnerable). They recommend seeking medical advice before deciding to commit to a move.