How house buyers are slashing offers and blaming the virus

Buying and selling properties has been near impossible during lockdown, with around 450,000 transactions suspended. 

But with restrictions now partly lifted, estate agents are seeing a huge rise in enquiries. Yet the impact of coronavirus is still being felt in the property market – from nervous sellers to buyers trying to scoop a possible bargain.

Dog trainer Joe Nutkins and husband John, a community support officer, were looking forward to selling their bungalow in Clacton-on-Sea, Essex, and moving to a larger home nearer Colchester where they both work.

Having put their property on the market at the end of last year, they accepted an offer in mid-March, meaning they could start their own property hunt in earnest. But within a week, Britain was in lockdown, their buyer had withdrawn their offer – and everything ground to a halt.

‘We’ve been stuck in limbo,’ says Joe. But even now that property viewings and valuations have resumed, Joe, who suffers from myalgic encephalomyelitis, is horrified by the thought of prospective buyers tramping through her bungalow. 

‘I just don’t understand how that is being allowed,’ she shudders. ‘Even though the guidelines have eased, it doesn’t necessarily mean it’s OK. I don’t want strangers coming round my house – how many houses have they been round before mine?’

Mark Hayward is chief executive of estate agent trade association NAEA Propertymark. He says he has been hearing similar concerns from other sellers. ‘They really do not want strangers coming into their property – and they also don’t want to encourage people to travel to areas which have seen low infection rates, such as the West Country.’

Mary Beeton, head of residential sales at estate agent Hamptons International, agrees. She says: ‘There are a lot of people who don’t want to have viewings in their homes. Some don’t want to go back to normal, while other people are desperate to.’

When lockdown came in at the end of March, the property market all but stopped. Some matters carried on such as mortgage applications and legal paperwork, but a ban on physical viewings, valuations and moving house meant that many transactions were placed on hold.

Government data shows there were half the usual number of house sales last month (nearly all set up weeks earlier) compared with March or April last year – and ten per cent fewer than the previous low in January 2009 in the wake of the financial crisis.

The lockdown acted as a hard brake on the property market. ‘The lack of valuations and high loan-to-value mortgages prevented many, especially first-time buyers, from doing anything,’ says Nick Morrey of mortgage broker John Charcol

Some deals did go through. Tom Smith of Fine and Country estate agents in Berkhamsted, Hertfordshire, says he was able to oversee an exchange and completion of a former doctor’s surgery valued at £1.5million – even though the buyer, from New York, never set foot in the property.

But now that valuations and viewing are possible in England once again, estate agents are reporting a boom in business, particularly with many people looking to move out of London – to be nearer family, to move to a bigger property suited to home-working or to one with more outside space. 

‘There’s a lot of pent-up demand, thanks to eight weeks of lockdown,’ says Hamptons’ Beeton. ‘There’s also a demand overhang from last year and the ending of worries over whether a Brexit deal would be struck or not.’

Online property portal Zoopla recorded a 139 per cent surge in website traffic the morning the property market reopened, with demand for details on properties in Oxford up a massive 332 per cent. Yet traffic was still down on the period just before lockdown. 

Similarly, Rightmove reported 11,000 new property listings after reopening, but listings are still 65 per cent down on the same period last year. Viewings are now being carried out with social distancing in mind. 

Vendors temporarily vacate the property leaving internal doors open to reduce the need for viewers to touch anything. Masks, gloves and hand sanitisers are used and tours are limited to one person at a time – with a gap of 15 minutes between viewings to air the house and clean surfaces. Most buyers are initially viewing properties online.

‘Virtual viewings have increased ten-fold since lockdown and will continue to be popular even after the end of lockdown restrictions,’ says Beeton. 

Vendors-turned-film makers have been guided on best practice, says Hayward. ‘We’ve had to explain to sellers that consumer protection regulations still apply, which means they have to show everything, not just the good bits.’

Coronavirus did more than delay house sales. Agents are reporting a jump in buyers trying to renegotiate, even after agreeing a price.

‘Sellers are being asked to drop their prices, which is really disappointing,’ says John Charcol’s Morrey. ‘Buyers justify this by saying property prices are going to fall, but there’s just no evidence for this.’

Beeton has also witnessed prices being renegotiated. She says: ‘We’ve exchanged on lots of properties over the last eight weeks and many buyers have tried to renegotiate. Interestingly, the reduction they achieved was really low – just 1.4 per cent in one London area.’

NAEA’s Hayward says he isn’t seeing evidence of a wider trend to renegotiate, but he is aware of it happening. ‘Sellers are proving resistant to that opportunistic, predatory approach,’ he says. ‘Before lockdown, sales were going well and there is currently a lack of supply in the market. So, if you do try to renegotiate on price, then it’s worth asking yourself what else are you going to buy.’

Elizabeth Parker and husband David [not their real names] have experienced first-hand this new trend towards renegotiation.

Wanting to move to the Kent coast, they put their Victorian four-bedroom home in South London on the market in January for £1.45million and received an offer close to that – which they accepted – a few weeks later. This meant they could make an offer on a home in Margate. But days before they were due to exchange, the buyer dropped their offer by another £100,000, claiming coronavirus meant the value of their home had fallen.

‘What makes it worse is that there’s been no change in their circumstances – he’s a banker – and they haven’t dropped the price of their flat which is just a few minutes away,’ says Elizabeth. ‘They were just using a dreadful situation to their advantage and it felt like they were trying to blackmail us.’

The Parkers said no and saw not only their own home sale fall through, but their intended purchase in Margate. ‘It’s been incredibly frustrating and stressful,’ she says.

For those still keen to sell, lockdown has given home-owners a chance to get their house into tip-top condition. Meanwhile, for buyers, top of the list has been getting their finances in order. ‘Having a mortgage approved and knowing what your budget is puts you in a strong position when you make an offer for a home,’ says John Charcol’s Morrey.

If you want to move house next year and your current mortgage deal is coming to an end, Morrey recommends transferring to a loan with your current lender where there are no early repayment charges. Hayward says taking into account the ‘new normal’ is now crucial when choosing a property.

He adds: ‘People are realising they might be working from home for a long period and thinking: ‘Do I really need to be within commuting distance of London?’ I recently spoke to someone who is moving from London to Yorkshire.’

If you are looking to sell, then now is a great time, he adds. ‘The market needs new stock so now is a good time,’ he says. ‘But be realistic on price. There is a lack of supply but that doesn’t mean prices are going to shoot up.’