We are in uncharted waters at present. The UK Government’s guidelines on social distancing are presenting us with challenges in conveyancing and across the whole residential property market. However, with goodwill and perseverance we can rise to these challenges and find solutions.
At the time of writing, the advice from the Government to sellers, buyers and those looking to rent is:
- Where possible, delay moving to a new house while stay-at-home measures against Covid-19 are in place.
- If the property is unoccupied then the transaction can continue provided social distancing requirements can be met.
- 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.
- 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.
- Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice which will mean not moving house for the time being. 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.
So, what do these guidelines mean for you?
The process of buying or selling a property means that several people will be going in and out of the property during the transaction. These will include selling agents, EPC assessors, potential buyers, surveyors and removers. The guidelines from Government do state you should not allow people into you home during this lockdown, and therefore whilst there is no restriction on accepting an offer on your home, the process may take longer.
As with many other businesses, bank and building society staff are also working remotely so delays in mortgage offers being issued may also be encountered, especially if a physical valuation is required.
Care must also be taken if you are intending to proceed with a transaction to ensure that you don’t find yourself in contractual difficulties.
If Contracts Haven’t Yet Been Exchanged
If the process has started but contracts haven’t yet been exchanged then, as mentioned above, if the property is occupied then parties are strongly encouraged to delay exchanging contracts to ensure that there is not a contractual obligation to complete during the lockdown period, which may breach government guidelines.
That doesn’t necessarily mean stopping the process altogether. There is much that needs to be done before contracts can be exchanged anyway (for example, the formal conveyancing due diligence process) so that can still be done so that things are as progressed as they can be. However, the transaction can then be ‘paused’ until you are sensibly able to commit to a completion date.
We don’t recommend exchanging contracts with a fixed completion date – there is currently too much uncertainty as to what the situation will be when that completion date arrives and therefore a significant amount of risk of inadvertently finding yourself in breach of contract due to not being able to complete for reasons outside of your control.
If Contracts Have Already Been Exchanged
Once contracts are exchanged, the parties have entered into a binding agreement to sell and buy the property and completion is usually on a fixed date.
Due to the restrictions in place as a result of Covid-19 it may not be possible to comply with the contract – for example to give ‘vacant possession’ as a seller, or to be able to provide mortgage funds as a buyer (more on that below).
Normally, failure to complete your sale or purchase on the contractual completion date carries penalties including payment of interest for late completion and ultimately potentially losing your deposit (as a buyer) and being sued for damages in respect of any losses that the other party may incur.
Currently, however, we are all being encouraged to work together to agree to vary the contract to delay the completion to a later date once the lockdown restrictions have been lifted. Our experience is that most parties understand the need for this and are willing to cooperate to find a suitable, amicable solution.
Mortgage Offers
UK Finance, a trade association for the UK banking and financial services sector, has confirmed that lenders are working on ways to assist with the delays expected in residential conveyancing transactions. Measures being put in place including extensions to existing mortgage offers of up to three months. It is important, however, that you approach your individual lender if you hope to benefit from an extension – they are not automatically assured.
There are however risks, due to the uncertain economic climate and changing personal circumstances, that mortgage offers may be withdrawn by the lender.
If your circumstances change, for example losing your job, or another substantial change to your income, this could be a material change that would need to be disclosed to your lender which could result in the mortgage offer being withdrawn. Failure to disclose any changes would potentially be mortgage fraud.
Therefore, at this time, we are recommending that any purchase is by way of a simultaneous exchange of contracts and completion on the same day. This would prevent the buyer being committed to a purchase which then cannot be fulfilled should mortgage funding being withdrawn.
Energy Performance Certificate (EPC)
It is a requirement for all residential property, unless the property is a listed building or due for demolition, that it has a valid EPC prior to being sold or let. There has been no suspension of the requirement for an EPC during the current restrictions. This may cause additional delays if the property does not have a valid EPC as it will have to be assessed.
How We Can Help
We have a significant number of clients going through the conveyancing process during the Covid-19 Lockdown. Where many firms are simply advising clients that they will effectively be unable to help until this is all over, we are actively working with our clients to achieve the sometimes difficult balance of fully complying with government restrictions but also finding acceptable outcomes for our clients.
Despite all the hurdles being placed before us we will endeavor to support and guide you through your property transaction.
If you have any queries about the topic discussed above please contact a member of our conveyancing team.