Last updated: 27th January 2021
We’re now in our third national lockdown, with restrictions not looking likely to lift any time soon.
While, for most of us, the primary concern is our health and keeping our loved ones safe, the ongoing situation with coronavirus certainly throws up a lot of property-related questions.
From moving home to stamp duty extensions, this guide covers the latest when it comes to coronavirus and property.
- Latest rules
- Will there be a stamp duty holiday extension?
- First-time buyers
- Mortgage holidays
- Can your home be repossessed?
- Advice for renters
- Financial advice
- What other help is out there?
- The current housing market
Latest COVID-19 rules
In England, the entire country is in full lockdown until at least mid-February. Schools, restaurants, gyms, pubs etc. are all shut.The rule is ‘stay at home’ as much as possible, and follow safety measures such as wearing a mask and keeping 2m apart.
What does this mean for property?
The situation appears to be changing daily, but here’s where we stand currently:
- You can still move home. Currently, the housing market is open and the government advice states that you can continue with planned moves and property viewings
- The latter should be done virtually (at least initially) as much as possible
- Estate agents can continue to work (unlike the first lockdown) and conduct house viewings but only with homebuyers who are in a position to proceed
- Guidance requires agents to verify each buyer is in a position to proceed (e.g. their own property must be under offer, and they have a mortgage agreed in principle)
- ‘Open house’ viewings cannot take place
- Wear face coverings during viewings
- Take care to avoid unnecessarily touching surfaces and door handles if possible when viewing a potential property
- Family members (or people outside of your bubble) shouldn’t help you pack and move
- This applies to both tenants and buyers
- If you want to buy a new build, contact the sales team of the development you’re interested in
- Tradespeople remain able to enter your home (e.g. electricians, plumbers)
- Removal companies can continue to work also following strict guidelines
- Professional cleaners also remain operational while following guidelines
Caution when moving home
Some hopeful buyers are travelling hundreds of miles to view properties, breaking safety regulations. People shouldn’t leaving their area for non-essential purposes. Estate agents have raised concerns over the issue, calling for tighter restrictions. They have the right to refuse viewings, or close their offices completely if needed. Agents are recommending people travel to viewings once lockdown is lifted – not before.
Estate agents have also reported that the public are putting pressure on them to break COVID-19 rules during house viewings. It’s extremely important we all do our bit to keep each other safe during this time. Some agencies have closed voluntarily due to safety fears.
What about sellers?
- You can put your home up for sale and advertise it, estate agents’ designated photographers are permitted to enter to take photos and collect other marketing material such as floor plan measurements
- Initial property searches should take place online
- All physical viewings must be by appointment-only
- Properties should be thoroughly cleaned and aired after every viewing
- Ensure all parties wear a facemask when entering your home (this includes estate agents – they must adhere to safety rules)
- You can accept offers as normal
- Note: some things might be slower due to the ongoing situation with COVID-19, but a lot needs to happen between exchange and completion
- Take care to micromanage your property purchase
- Keep communication open to avoid delays
- Ensure you know where everyone is at and what needs to happen
- Work closely with your solicitor and estate agent
Will there be a stamp duty holiday extension?
To help inject some life into the housing market, a stamp duty holiday extension (SDLT) was announced in July. This provided a temporary holiday of SDLT on the first £500,000 of all homes sold in England and Northern Ireland.
Currently, this is due to end on the 31st March 2020.
What will this mean?
Sellers and buyers alike have benefitted from this temporary holiday. However, with lockdown stretching on for longer than anticipated, many are calling for it to be extended. A petition calling for an extension of an additional 6 months has (to date) gathered over 118,000 signatures. It will now be debated by MPs in parliament.
Move iQ’s founder and property expert, Phil Spencer, has shared concern over a sudden end to the temporary holiday, fearing that many deals would collapse. These fears aren’t unfounded, as it’s been reported that a third of would-be buyers would pull out of a purchase if they missed the deadline.
In Phil Spencer’s view, a tapered end to the extension is a much better solution. That way, it avoids deals collapsing and the potential ‘bedlam’. Without this, everyone will be rushing to complete by a certain date. If one person in a property chain didn’t meet the deadline, and had to find an extra £5,000-15,000 somewhere, this could, in Spencer’s view, cause chaos.
Rightmove has reported a 0.9% drop in the average house price as of January 2021. Could this be a sign of things to come if the holiday isn’t extended?
The other side
Not everyone agrees, including buying agent and property expert Henry Pryor. According to Pryor, the housing market ‘had a pulse and didn’t need a life support machine’. He calls the scheme unnecessary and said it removed the advantage for first time buyers and stamp duty.
A question arises: was the housing market boom due to the policy, or due to playing catch-up for the lost time during the first lockdown?
There are also concerns that some buyers have ended up paying more for properties than they save in stamp duty. This is because the market boom has inflated house prices, meaning people are paying more on average than in previous years. As of 2020, the average house price in the UK is valued at £245,443, which makes for an annual price rise of 5.4%.
There were reports that MPs may not be able to debate the stamp duty extension before the 31st March, because all sittings in Westminster Hall, where petitions debates take place, were suspended until further notice – due to COVID-19. However, it has now been confirmed that the debate will go ahead on February 1st.
The Chancellor is also under pressure to scrap SDLT completely, in favour of another tax. But, there’s no word yet on whether this will happen.
Some Tory MPs are calling for the holiday to extended a further twelve months. There’s speculation that the Chancellor is being tight-lipped about it so as not to take the pressure off those hoping to buy and move.
How are things for first-time buyers?
There’s no doubt that first-time buyers have been one of the worst hit groups when it comes to property in the pandemic. While it can be hard to get on the property ladder, they made up a significant chunk of the market.
Until March 2020, high loan to value mortgages were widely available. However, after lockdown, many banks withdrew these loans due to posing now a higher-risk. 90% and 95% mortgages all but disappeared. This meant many would-be buyers had to delay their plans to buy, as their mortgage options dried up.
Also, applications for the Help to Buy Equity Loan scheme closed in December 2020. Those who applied must legally complete by 31st March 2021. There is now a new Equity Loan scheme in place, which runs until 2023. It allows you to borrow between 5-20% (40% in London) of the full purchase price of a new-build home.
Are changes coming?
Despite the difficulties, the mortgage limitations haven’t gone unnoticed. As announced by Boris Johnson in a press conference, the government is planning to back 95% mortgages, in a bid to help turn ‘Generation Buy’ into ‘Generation Rent’. The scheme promises to offer a helping hand to buyers with only a 5% deposit.
However, as of yet, there’s little detail on how this will work in practice.
What’s the latest with mortgage holidays?
A mortgage holiday is a temporary freeze in payment for a set period of time.
When’s the deadline to apply?
The deadline to apply for a mortgage payment holiday has been extended to 31st March 2021. This holiday can be for a maximum of 6 months (if you’ve not taken any holidays on your mortgage payments yet).
Who can apply?
This is in place to support you if your income has been affected by coronavirus, for example if you’re furloughed or self-employed.
If you’re behind with mortgage payments, you can still apply.
You can also still apply if the reason you need it isn’t related to coronavirus. However, there are different rules in place, so speak to your lender to find out what they are.
How to apply
Different lenders have different rules, but the process should look something like this:
- Contact your mortgage lender (many have online functionality which might make life easier)
- Be open and honest about why you need the holiday
- Discuss in detail the implications e.g. on future payments
- Discuss alternative means of repaying the amount if suitable e.g. a lump sum payment
- Ensure all information provided to you is clear
- Ask them to explain exactly what this means for you
What if you’ve already taken a holiday?
If you’ve already taken a mortgage holiday, it’s in your best interests to start paying again as soon as you can afford to. However, you can extend (or ‘top up’) to a maximum of 6 months if you feel it’s necessary. The same deadline of the 31st March applies.
Payment holidays are typically given in 3-month blocks.
If you’re still on your first payment holiday and extending it takes you past the 31st March, you can apply for an extension. Bear in mind that all payment deferrals need to end by 31st July 2021.
What not to do
Cancelling your direct debit or regular payment is not the same as a holiday: you must apply and your agreement must be accepted by your mortgage lender. Simply cancelling without prior agreement with your lender will likely negatively affect your credit score and missed payments may affect your ability to remortgage with favourable rates, or at all.
While payment holidays won’t count against you like missed payments will, they are still logged on your credit history. This may not directly impact your credit score, however lenders may take this into account in a future application, which in turn may not affect the rates you’re offered.
How does it work?
It’s important to consider carefully if this is the right decision for you. Deferred payments will mean an increase in your monthly payments when payments resume, as you will have accrued interest. Can you afford this? Consider your future financial commitments also.
You can elect to extend the term of your mortgage, but bear in mind this will mean you’re paying your mortgage back for longer.
Another option is to pay just the interest or capital-only repayments during your mortgage holiday, which will decrease the amount you have to pay back once the holiday is over compared to if zero payments were made.
Ensure your lender clearly explains and you fully understand the implications of any decision you make and what it means for you.
Should you take a mortgage payment holiday?
The answer to this depends entirely on your personal circumstances. For example, if you’re on furlough, have a family and income has been significantly reduced, it might be wise to talk to your lender straight away. Bear in mind, it could affect your ability to get credit in future.
However, if you need temporary relief, it’s something to consider – only after discussing the implications with your lender.
Better to be open and honest – they are here to help, ensure they discuss your options in detail and what any decision will mean. Things to discuss in detail with your lender include:
- What future payments will look like (will it mean higher future payments, as interest won’t be frozen?)
- How it will be viewed on your credit score
- How long you’ll be paying it back for
Whatever you do, don’t take matters into your own hands without discussing with a mortgage provider or debt finance support.
Need more help?
If you’ve already had 6 months of holiday, there are some other options available to you. You can apply for tailored support:
- An extension to your mortgage term (essentially a remortgage)
- Changing your mortgage type (e.g. to interest-only)
- A further payment holiday – good for those who can’t commit to longer-term changes e.g. mortgage type
- A further period of reduced payments
Speak to your lender to explore your options. Bear in mind that tailored support will go on your credit report. Your lender should let you know if any support offered to you will negatively affect your credit score.
Can my home be repossessed?
Unfortunately the pandemic has caused many to find themselves in financial difficulty. Redundancies have been high and we’re currently in an economic recession.
However, mortgage repossession proceedings (without your agreement) have been suspended until 31st January 2021.
What can I do if struggling to pay rent?
You might be entitled to more financial help, such as universal credit. You should also speak to your landlord to see if you can come to an agreement on a revised repayment plan.
Can I be evicted?
If you rent your home, your landlord cannot start eviction proceedings until the 21st February 2021 at the earliest. This is subject to review, so it may well be extended further.
The original suspension was announced in August 2020, and renters will continue to be protected.
However, it’s important to remember that in some circumstances, you can still be served notice to vacate, including:
- Illegal occupation
- False statement
- Anti-social behaviour
- Perpetrators of domestic abuse in the social sector
- Rent arrears (for 6 months’ rent or more a minimum of 4 weeks’ notice will be required)
- Breach of immigration rules
Should I stop paying rent in the pandemic?
Landlords aren’t required to stop charging rent, and often they have mortgages to pay on their properties. Falling into arrears could result in the house being repossessed, so it would be a lose-lose all round.
Tenants should continue to pay if they can afford to, and continue to abide by their tenancy agreement as normal. If not, you should speak to your landlord as soon as possible.
If you’re seeing your income fluctuate due to the ongoing situation with the pandemic, start a conversation on the issue. It’s likely your landlord will also be negatively affected, particularly if not receiving rent, so perhaps an agreement could be found that works for both of you. We should all try to work to support each other during this difficult time.
Communication is never more important right now – being upfront and honest is the only way forward.
Finding it hard to pay your bills?
It’s extremely rare for power to be completely disconnected or switched off by energy suppliers because someone is in debt or behind on payments.
When it comes to prepayment meters, there are rules on who can be disconnected, for example, premises solely occupied by pensioners.
Some suppliers have offered to help during the pandemic, however this is done on a case-by-case basis, so there are no guarantees. But, it can’t hurt to explore your options. If you find yourself struggling, contact your provider straight away.
Switching energy supplier could help you save. You could save hundreds a year, which might just be a big help at this time, where every penny counts.
Where to go for support
Unable to top up your prepayment meter? Suppliers must provide you with emergency support, which could be:
- ‘Friendly-hours’ credit (overnight, at weekends and public holidays) if top up points are closed or your meter runs low or runs out
- Additional support credit
- Emergency credit, if your meter runs low or runs out
Are you struggling to keep up with financial commitments?
Whether it’s car payments, loans or credit card debt – you can apply for payment holidays of 3-6 months – any time before 31st March 2021. The rules vary depending on what you need a holiday from (e.g. payday loan or car finance) and your lender.
The effect of coronavirus on income has been huge, but there are options available to you. Whether it’s agreeing a repayment plan or reducing interest, it helps to start the conversation early and see what can be done to ease your burden.
What other help is out there?
The average UK employee has enough savings to last them just 32 days on their current lifestyle if their income stopped. How would you pay your bills if you couldn’t work due to illness?
The pandemic has highlighted the need to safeguard for the future and save for a rainy day, as many of us have had to deal with a loss of earnings (even if temporary).
Legal and General offer Income Protection Benefit, where you’ll receive a regular monthly benefit which is paid out until you return to work. You’ll also receive support from a dedicated rehabilitation service.
How has the pandemic changed the housing market?
Despite all the uncertainty and restrictions, people are still looking to move. In fact, coronavirus has shifted people’s priorities, with many looking to move out of the cities. People are looking for more space, gardens and outdoor areas. The pandemic changed what is meant by ‘best place to live‘.
With remote working the new normal, this also plays a part. What makes a town good to work from home are now priority criteria when buying. Buyers are now looking for:
- Plenty of green spaces
- Fast broadband
- Space for a home office
Will property be penalised after the pandemic?
The Big Budget is on its way, set for 3rd March 2021, will this mean more taxes in the pipeline?
Temporary measures, such as the stamp duty holiday, will have to be paid for somewhere. It’s likely property may take a hit, affecting areas such as inheritance tax and Capital Gains Tax (CGT). These may be used to close the pandemic-related deficit.
Need more advice?
We’re in this pandemic together. To try and help you navigate this difficult time, we’re keeping our fingers on the pulse and sharing top tips from expert Phil Spencer regularly.
Got a property question you need answering? We’re running a live Q&A session with Phil Spencer on Thursday 11th February from 5-6pm. Get your question in before then using #AskPhilMoveiQ and he’ll do his best to provide some guidance!