The impact of the COVID-19 pandemic upon society has been unavoidable in recent months.
All aspects of our lives have been affected and no sector has been left untouched with the property market being no different.
Whether it is a seller concerned they will not be able to get their property on the market or a first-time buyer worried their milestone first purchase will be delayed or fall through, many parties have questions during this uncertain time.
Louise Godfrey, Partner in the Conveyancing department, addresses some of the frequently asked queries she has received from clients concerning the government’s Help to Buy scheme.
Impact of COVID-19 on the housing market
It is estimated COVID-19 has resulted in 450,000* property transactions being stalled since mid-March.
However, the partial lifting of lockdown in England on 13th May, has seen the housing market reopen for business and the removal of barriers to the undertaking and completion of property transactions as long as government guidance on social distancing is observed properly.
Obviously, this is very good news and means:
- estate agent and conveyancer offices can open
- viewings are permitted
- removal companies are re-started with immediate effect
However, there may be a more deep-rooted lag to the market. The impact of which will become apparent in the coming weeks and months particularly for the first-time buyer market, which is an area we have received a considerably high number of queries.
A reduced mortgage lending market, with the maximum amount being able to be borrowed only 75% (LTV), means those feeling the negative effects most will be the first-time buyers.
First-time buyers wanting to take advantage of the reopened property market could be facing on average a £12,000 gap in their finances, as banks are offering just a handful of low deposit mortgages.
Help to Buy scheme
Launched in April 2013 the Help to Buy scheme has aided first-time buyers to take that all important first step onto the property ladder.
One of the most common questions we are receiving from clients has been ‘Is the Help to Buy scheme still taking new applications during lockdown?’.
The simple answer is yes, but naturally consideration has to be given to the movement restrictions in place, meaning there is still a significant number of people working away from their normal workplace and this may cause the process to alter slightly.
Those applying for the scheme are urged to take advantage of being able to send as much of the application paperwork as possible via the online channels rather than by post.
Impact of lockdown on house purchasing process
The aforementioned relaxing of restrictions on 13th May has seen the housing market begin to come back to life and take some form of normality.
The wheels for many people wanting to move are back in motion and slowly but surely chains of house movers will begin to make preparations for the move to their new home.
The annual summer frenzy may be one that is not in the forecast for 2020 but there is still business to be done. At present we cannot predict the long-term market picture but for the short-term with restrictions on movement having eased it is back to what we know.
Mortgage lenders have been given the green light to, where possible, visit properties in order to carry out valuations, whereas prior to 13th May these would have been conducted using desktop valuations.
Help to Buy extension
It has been confirmed the Help to Buy scheme has been extended from 2021 to 2023. An extension of the scheme makes complete sense at this time. Builder and consumer confidence could struggle post-lockdown and this will certainly boost both.
Construction jobs are not just vital to the housing market, but our economy too, and maintaining these is crucial to economic stability and recovery. In our current world of uncertainty, any certainty is extremely welcome.
Our lives have seen much modification and this is likely to continue, but the extension of the Help to Buy scheme breathes some certainty and reassurance into the property market.
The extension means there will be more time to prepare for necessary changes. It will also allow borrowers who have signed up to the scheme recently to continue with their purchase, which may have been delayed due to the lockdown.
Overall, to all those in the house purchasing and selling process the key information is that the market has not stagnated instead it has altered slightly. Each case is unique and requires bespoke advice and if you require support during this challenging time, please contact any member of the Conveyancing team.