HOW CAN THEY MOVE?
My daughter and her husband are due to complete on their house sale and the purchase of a new home on April 6. Exchange of contracts took place in February and this date was agreed by all four parties in the chain. They have been told the money will come through on April 3 and the completion will go ahead as planned.
However, the removal company, to which they have paid a deposit, has closed down because of the coronavirus outbreak and it seems removal firms are not considered an essential service, so they have no one to move them. It’s too big a job to do themselves, even if they were able to hire a van. What should they be trying to negotiate?
They are the only people in the chain affected because they are moving to an empty house and the two couples below them are moving from smaller properties and can handle the move themselves.
Lynne Punchard, via email
The latest government advice recognises that, once you have exchanged contracts, you have entered into a legal agreement to buy that home. The government also states that if the property you are buying is unoccupied you can continue with the transaction. It adds: “Removers should honour their existing commitments where it is clear that the move can be done safely for the client and your own staff, and it is clear that the moving date cannot be moved.”
Obviously during the move everyone involved must follow Public Health England advice on staying away from others to minimise the spread of the virus, and this assumes that all parties are well. It’s also worth noting that the police emergency powers are disapplied for critical home moves such as these.
Nevertheless, a number of removals firms have pulled out of agreements, so the first step in your case would be to call some removals firms and explain that, in line with government guidance, you’re keen to move. If you really can’t find a removals company that is willing, law firms have agreed a standard contract clause to defer a transaction even after contracts have been exchanged.
Devised by the Law Society, Conveyancing Association and others, and with support from the government, there is a formal process required to effect a deferral of the completion date. This will involve your conveyancer exchanging agreements on your behalf with the other party to delay the move until after government restrictions have been lifted. Get in touch with your solicitor. And if your daughter is buying with a mortgage, she should check whether she can get an extension of the mortgage offer, which most lenders have agreed to do for three months.
Angela Kerr, director, HomeOwners Alliance
Our policy is to undertake only critical removals, probably best defined as people who need to move to carry out roles as frontline key workers, those whose personal safety is under threat from domestic violence, or those who will become homeless or destitute as a consequence of their inability to move. We have speedily developed procedures designed to maximise social distancing for all concerned, with customers asked that they not be on site during the removal or situate themselves in a closed room for the duration.
If your daughter and her husband don’t fall under the definition of a critical removal, we would advise that they attempt to come to an agreement with any parties in the chain to find a new date that goes beyond the lockdown period, which is likely to be extended. Since the lockdown period was announced, we have found most parties have been able to rearrange their moving dates because the majority of customers are empathetic to their buyers or sellers.
Charles Rickards, finance and marketing director, Master Removers Group
SHOULD I ABANDON MY PURCHASE?
I have launched a bid to purchase a flat with a proposed move date of May 1, 2020. The move is now uncertain so I feel inclined to ask my solicitor to cease any further work in this matter. Could you advise me if I would be within my rights. I have not instructed searches or a surveyor’s inspection.
Adele Timlin, via email
Provided that you have not exchanged contracts to buy the flat, you can ask your solicitor to cease any further work. You are not bound to complete a sale at the agreed price until contracts have been exchanged. Once the crisis is over, you are also well within your rights to renegotiate the purchase price.
Mark Loveday, barrister, Tanfield Chambers
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SHOULD WE REDUCE OUR OFFERS?
A few weeks before coronavirus impacted the UK, I started the process of buying my first property. I’ve had a mortgage offer accepted, conveyancing is being finalised and surveys have been completed. I’m yet to exchange and I’m concerned that I might end up paying too much for the property with a potential drop in property prices on the horizon. What would you recommend I do with regards to exchanging and completing? And if property prices are to drop, how much of a percentage reduction would you recommend I negotiate off of the property?
Nick, via email
We were about to exchange on a property which has now been put on hold due to Covid-19. When things get moving again, should we reduce our offer? I read that the market expects a 10 per cent downturn on property prices.
Lyndsay, via email
Both the government and I would urge you to pause and not to proceed to exchange of contracts — there are legal, practical and financial reasons not to. The property you want is very unlikely to be sold to someone else in the meantime because no one can physically view it. Committing legally to a rigid completion date in the future would be risky and potentially expensive, and you could find that you have paid more than the property is worth. I expect prices to slide by 5 to 10 per cent by the time we come through this, but it could be more.
Henry Pryor, independent buying agent
My advice to anyone in your position is to sit tight until there is more information to make an informed decision. Contact your lender or solicitor and see how long the mortgage offer is valid for; most are for three to six months. Many lenders are extending offers they have already issued.
If you are in the middle of a house purchase, it may be wise to pause the process
GARETH FULLER/PA WIRE
If you think renegotiating the price is the way forward, this will depend more on the vendor than your perception of the future market. Try to establish how motivated the vendor is by speaking to your agent. In some situations honesty is the best policy. Just let them know you are concerned about potential price drops. The vendor may be concerned about you pulling out. We recently renegotiated a 15 per cent discount from an agreed purchase where both sides had different concerns. It was simply a case of finding a common solution.
Henry Sherwood, managing director, the Buying Agents
Given what is happening with coronavirus, it’s very easy to focus on price, but there are several factors to take into consideration. There is obviously a moral element involved here. You have already agreed an offer with the vendor, and you are on or close to the point of exchange.
Although the FTSE 100 is down 17 per cent at the time of writing, this does not mean that property values will drop. There isn’t a market at the moment, and prices are based on comparable sales. It is therefore impossible to make a judgment as to what may or may not happen in the near future in terms of prices.
If you are buying a property that you intend on living in for the next ten-plus years, then over the long term the price you originally paid becomes less relevant because it will balance out.
Is it a one-off that you are purchasing, or are there others in the same development or street that can be bought in a few months’ time? If what you intend to buy is unique, then by reducing your offer you risk losing it if the vendor or developer takes offence. Over the past 40 years I have seen a lot of vendors become so upset at their buyer dropping the price that they will not sell to them at all. However, if there are many of the same properties, you risk little because a similar home will be available sooner or later.
You also need to think about the personal situation of the vendor. For example, are they selling out of choice or need? If the latter, they might accept a reduction.
If you do decide you want to renegotiate on a deal, make sure you present a detailed and coherent argument to the estate agent, backed up with evidence. A well-written rationale will soften the blow and give you a better chance of having it accepted.
Jonathan Harington, country specialist, Haringtons Property Buying Agency
Holiday homes
OUR SECOND-HOME INSURANCE IS RUNNING OUT
We have a holiday home in Devon that we visit frequently, with our home insurance requiring that the property isn’t left empty for more than 60 days at a time, a common requirement of most second-home policies. Given that we’re now prohibited from visiting our house because we live in Hampshire, we’ll soon be in breach of this requirement, but can’t do anything about it. I’m worried about contacting my insurer because it could just void the policy. What do I do?
Robert Stephenson, via email
While nothing has been issued by the Association of British Insurers on this point, we have heard of insurance providers reviewing their policies to accommodate new government restrictions. For example, unoccupancy conditions usually found in holiday home policies require empty properties to be inspected every 14 days, but many have been edited to state that this applies at all times “other than where government measures prevent such visits”. I suggest you contact your insurer about this issue and hope it will take a pragmatic approach.
Angela Kerr, director, HomeOwners Alliance
Your property is normally covered as long as you don’t leave it empty for more than 30 days (60 for some policies). However, if your property is empty for longer and this is because of the coronavirus outbreak (for example, you are stuck abroad or staying with family), some insurers will still cover your property, but you will need to contact your insurer to let it know that your property is empty.
Other insurers are looking at everything on a case-by-case basis and taking a sensible approach where appropriate, so it’s worth getting in touch with them to seek the appropriate advice.
Spokesman, GoCompare
