SIMON LAMBERT: How do you deal with a property market where people aren’t allowed to leave the house?
How do you deal with a property market where people aren’t even allowed to leave home, let alone go look at one to buy?
That’s the problem giving estate agents, mortgage brokers, banks and building societies a headache right now – and leaving buyers, sellers and those due to move home scratching their heads.
People aren’t allowed to view properties, valuations and surveys are off, and those due to complete on a new house will struggle to move home but are locked into their purchase.
Spring is the time of year when the property market sees a rush of prospective buyers and sellers, but this year instead of trying to sell their house, people aren’t meant to leave it
We’re not quite three months into 2020, but it seems like a long time ago that estate agents were keen to big up the New Year property market with talk of a Boris Bounce.
Despite the obvious hype after the election, agents and property industry commentators were onto something.
As Britain went back to work in January, the property market had a definite swagger in its step.
Properties that had been on the market for ages went under offer, new homes were listed and sold quickly, and those wanting to view properties found estate agent’s weekend diaries were fully booked.
With prospective sellers having previously sat on their hands due to Brexit, agents had a shortage of properties and were encouraging people to get their home listed now if they wanted to sell.
Some did, but many thought they would instead wait for the traditional spring pick-up, when the market sees a rush of activity just before Easter.
Now instead of trying to sell their house, they’re not allowed to leave the house.
As with many elements of the coronavirus crisis, this is an unprecedented peacetime situation.
Even during the financial crisis, when banks and building societies pulled mortgages en-masse, it was still possible to view and buy a property if you could find the money.
I was at school during the early-1990s property market collapse – so am too young to remember much of it, although I recall friends whose families were hit hard – but even in that long slump, properties still got bought.
It’s tough to imagine many will be going under offer in the next month or so, although I bet a few brave souls do try to take advantage of a near complete lack of competition.
Property listing site Zoopla predicted today that housing transactions will drop by 60 per cent over the next three months and individual spring months could see an 80 per cent drop in agreed sales compared to last year.
It also reported that ‘fall-throughs’ on agreed sales were 60 per cent higher last week than the week before, although newly-agreed sales are still outstripping them by four to one.
Property listing Zoopla reported today that interest in homes for sale online had understandably plummeted over the past week
Predicting the future is a mug’s game, but it seems fairly likely that the coming month is going to see lots more people pulling out of sales, with some voicing concerns over where prices will be after lockdown compared to when they had an offer accepted.
They at least still have a choice, whereas a greater issue exists for two other sets of buyers.
Most pressing is the one faced by those who have exchanged contracts and are due to complete in the next three weeks of lockdown, or after that when it is suspected it will continue.
They can theoretically move home, but removal firms are cancelling jobs and it’s not clear if lockdown tightens, whether moves will be banned anyway.
There are also buyers and sellers who are about to exchange contracts, but once that’s done they are locked into the sale, the price, the completion date and if they pull out will owe the other party compensation.
It seems as if in this entirely new situation, the property market needs a fresh idea as soon as possible.
Perhaps the Law Society and solicitors need to come up with some form of pause agreement that means that buyers and sellers get the assurances and flexibility they need and a wave of sales don’t fall through.
We are already hearing talk of the possibility of both parties agreeing to extend completion and special ‘complete when practical’ clauses, but the anecdotal evidence that I am hearing is most people’s solicitors are simply saying ‘don’t exchange’.
That’s wise advice in the face of uncertainty, but if we want the property market to pick up anywhere near where it left off, buyers and sellers need more clarity urgently.