194: Is the property market back open for business?
As is now clear, the impact of the COVID-19 pandemic on the UK residential property market was and remains severe; almost the entire market came to a standstill as viewings, surveys and valuations all became very difficult to carry out as a result of the restrictions on movement imposed to curtail the spread of the virus.
The standstill lasted for over seven weeks, until on 13 May the government bought in new regulations with the specific aim of easing restrictions on movement in relation to moving home. This note discusses those regulations and their implications.
The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020
In a previous blog post, Tristan Ward set out the problems caused by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020. Those regulations provided that no person could ‘…leave the place where they are living without reasonable excuse…’. Even though those regulations contained a specific exemption for actually moving home where reasonably necessary, and most activities necessary to prepare for and achieve a sale were also permitted when dealt with by people doing their jobs and observing social distancing, actual viewing of a property by potential buyers was not permitted, and so the UK residential property market came to an almost total standstill.
Since the residential property market is such a significant economic multiplier / driver for the economy, the government considers it essential that activity is restarted; Knight Frank estimate that the 500,000 delayed transactions in 2020 will deprive the Exchequer of well over £4 billion in lost stamp duty land tax this year. There seem to be plenty of buyers waiting: Knight Frank report that on 5th May the total potential spend of all buyers registered with them was £52 billion in London alone. This is a 20% increase on the £43.5 billion registered on the same day in 2019.
The Health Protection (Coronavirus, Restrictions) (England) (Amendment) (No.2) Regulations 2020
In order to allow more normal activity, the government has now passed the Health Protection (Coronavirus, Restrictions) (England) (Amendment) (No.2) Regulations 2020 (the ‘Amended Regulations’) which are supplemented by revised guidance (the ‘Guidance’) from the Ministry of Housing, Communities & Local Government.
The Amended Regulations expressly provide that the following are all reasonable excuses for leaving homes when such activities are in connection with moving home, or renting a property:
- visiting estate agents or show homes;
- viewing properties;
- moving home; and
- visiting a residential property to carry out activities required for the sale of that property (surveys, valuations, removals and so on).
The provisions to the effect that people may leave home in connection with moving house expand those in the previous regulations. Provisions to the effect people may gather in public places where reasonably necessary to facilitate a house move, are carried over.
It is clear that the aim of the Amended Regulations is to provide an express and clear legal framework to allow all activities associated with moving house to restart. The way is open for buyers to view properties with certainty that every part of the purchase process may proceed.
The Amended Regulations are supplemented by the Guidance, which gives useful suggestions about the practicalities. It is also explored below.
The Guidance relates specifically to ‘…people moving into homes in the private or social sector’ (there being no equivalent yet for the commercial property market), makes it clear that individuals who want to move home may do so, and sets out how the Amended Regulations should be put into practice. It is also clear that moving home during the ‘lockdown’ still presents quite a challenge, and that moving home would be foolish where you or a member of your family is currently suffering from, or recovering from COVID-19.
The Guidance is very detailed, and sets out steps and procedures recommended to be observed when viewing properties, carrying out surveys, during the buying and selling process generally, and during the move itself. Much of the advice is repeated throughout for each of the steps involved, and is now oddly familiar after almost two months of the pandemic.
While the Guidance is not a statement of the law itself, it is well worth reading if you are considering, or are in the process of moving home: it is clear and comprehensible so it makes no sense to explain it here in detail. I will however paraphrase what is recommended to allow a safe and successful house move:
- search for properties online, and use virtual viewings if possible. Only actually visit properties if you are seriously interested in them;
- vendors should vacate their property if possible to allow in-person viewings, and make sure that contact surfaces are thoroughly cleaned afterwards;
- purchasers should wash or disinfect their hands before and after a viewing, take care not to touch the property if possible, maintain an appropriate social distance and avoid any contact with the vendors if they are present;
- surveyors and estate agents should follow the separate guidance on professionals working in other people’s homes and should maintain an appropriate social distance while in someone else’s home;
- solicitors should draft the contract paperwork to take account of the risks associated with committing yourself to a move, where self-isolation could prevent you from doing so; and
- those who are extremely vulnerable or in a high risk group should think very carefully about whether it is possible to move home safely, and may wish to seek medical advice before committing themselves to a move.
As soon as the Amended Regulations came into force there was palpable relief across the residential property market, as it became clear that the necessary legal framework to allow potential buyers to leave their homes to view properties themselves had been put in place. The Guidance reassures buyers, sellers, landlords, tenants and others involved in the market that what they are doing is legal, and is very helpful in explaining how that can be achieved.
Although this is excellent news I think it is fair to say that the floodgates aren’t quite open yet, because people will still be understandably nervous about the social interaction necessary for a house move, notwithstanding the new regulatory framework. There is also a considerable backlog of valuations, surveys and viewings to get through before we are up to the full speed of the ‘new normal’. Neither can we yet fully understand the long term impact on the wider market as a result of the damage done to the first time buyer sector, since high loan to value mortgage products have all but disappeared.
As for the new normal of the residential property market, my sense is that the market will find its feet fairly quickly and that vendors, purchasers and professionals will be cautious enough, imaginative enough, and thoughtful enough to find a way of moving home that works well, and keeps everyone safe.