Being unsure of which way to turn and what to do in the current situation is understandable.
There is no definitive answer and a lot of poeple have very similar questions they want help with.
Here’s Phil’s advice to home buyers during coronavirus.
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Should we reduce our offer during lockdown?
Think of the market as being in suspended animation at the moment. It has not crashed; prices have not changed – for the time being it has simply stopped.
Property valuations are based on comparable evidence of similar property that has recently sold in the local area. Right now, this won’t have changed so therefore you don’t have anything to base your argument for a price reduction on (yet).
Until restrictions change and people can start marketing a property for sale, physical property viewings can take place and surveyors can attend a property for mortgage valuations, we aren’t going know the immediate impact on house prices.
For me, the answer heavily depends on how long this disruption to the economy will last, how quickly this lockdown can be relaxed and then how quickly consumer confidence is restored.
If you are getting a mortgage, has your lender already carried out a valuation? If yes, did the survey report raise any concerns in respect of value? It could be useful to ask the banks surveyor now to provide an updated opinion on value.
Other things you should consider in making your decision
- What is the surety of your own financial situation, particularly if you are currently in furlough?
- How long you envisage living in the property?
- Are you prepared to walk away from the property if your reduced offer is rejected?
Will house prices fall?
Its not possible to forecast this. Nobody yet knows how long things are going to take or how they will eventually pan out. Although I guess it is fair to say prices are certainly not going to be rising for the foreseeable future.
None of us have a crystal ball. It really depends upon what you perceive to be the scale of the economic impact of coronavirus.
There had been a decent uplift in activity in the marketplace before all this kicked off, which would suggest there are lots of people out there who planned, and would still like to plan to, buy/sell/rent/move this summer. The big question is will that same appetite remain?
Consumer sentiment is a big influencer on the UK housing market, so to some extent, it will depend on how confident people are with their own household finances, and at what point they regain this confidence.
I have to assume there will be some impact on pricing, but while we’re still in lockdown it’s impossible to say how much.
While money is certainly cheap to borrow, unemployment is likely to rise.
Can I still exchange contracts?
Talk to your lender and solicitor as soon as possible. Once all the necessary information has been gathered and is satisfactory yes, it is still possible for you to exchange.
It is the agreement of the completion date which is more challenging to pin down. Government advice is to delay the moving date where possible. It is very hard to physically move house while maintaining social distancing.
Solicitors and conveyancers are actively drafting new contract clauses to enable flexibility where necessary, on completion dates. Mortgage companies are extending pre-agreed mortgage terms that also allows for delayed completion dates.
If you’ve not yet exchanged contracts, then you should establish your lenders’ position and then discuss the best way forward with your solicitor and throughout the chain (if there is one).
Will my house move fall through?
Because the housing market is on hold, in theory, when we can all move again the properties and the people involved should still be there.
You should continue to communicate with everyone involved, especially if you are in a chain. Make sure everyone is ready and ready and able to proceed when restrictions are lifted.
There really isn’t anything else you can do other than sit tight and let it play out.
Will there be a stamp-duty holiday?
There is every possibility that the government will do this. If they do it will either be a very short holiday or a reduction for a short time.
Activity in the housing market is a huge economic driver. The idea behind a stamp duty holiday would be to give the market a good shot in the arm and stimulate it as fast as possible.
Stamp duty is a very straightforward tax for HMRC to collect and it generates enormous sums for the Treasury. The government has supported our economy with £330 billion (which obviously wasn’t budgeted for). They have also collected precious little in revenue over the last few months, so are under pressure to collect as much tax as possible.
A stamp duty holiday will not be an easy decision to make.
Many large influential organisations are calling for one i.e. The Royal Institution of Chartered Surveyors and the Home Builders Federation. However, the unfortunate thing is that in the absence of any decision people may very well hold off from buying as they don’t want to miss out on a stamp duty saving. This could further immobilise the market.
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Last Updated: May 1st, 2020
