COVID19: UK Government suspends property market till further notice

The housing market was halted on Thursday night by the Government after financial institutions said they could no longer operate properly.

Ministers are discouraging buyers from going ahead with house sales and purchases unless they have ­already exchanged contracts as part of wider efforts to slow the spread of the coronavirus, saying no one should move unless absolutely necessary. ­

As a result of the pandemic, homeowners trying to sell their properties face a year of misery as the number of buyers dwindles, estate agents close their doors, banks withdraw deals and house prices falling.

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Banks and building societies have agreed to extend mortgage offers where completions have to be delayed as a safety precaution.

Grainne Gilmore, head of research at Zoopla, commented: “The clarity provided by the government announcement is welcome for buyers, sellers and agents who are in the middle of the sales process.

“Agents continue to support their buyers and vendors remotely. But, now that there is some leeway on mortgage offers – with a three month extension from lenders – this will enable some buyers to press pause, and to re-start their purchase once the current social distancing rules are relaxed.”

What does it mean if you’re buying?

You should only consider going ahead with your move in the immediate term if you have already exchanged contracts.

If you have not yet exchanged contracts, the government are advising you to delay doing so.

See the source imageBanks and building societies have agreed to extend mortgage offers for up to an additional three months to enable customers to move at a later date without losing the deal they had lined up.

If your circumstances change during this period or the terms of the house purchase alter significantly, meaning that continuing with the mortgage would put you into financial hardship, lenders have pledged to work with you to manage your finances as a matter of urgency.

What it means if you are selling?

Putting your property on the market will be more challenging than usual, as you are not allowed to have visitors to your home.

As a result, you will not be able to have estate agents come to take photos or carry out a physical market appraisal, while Energy Performance Certificate assessors are also not allowed to visit you.

If your home is already on the market, you can continue to advertise it for sale, but people cannot come to physically view your property.

Importantly, you are still allowed to accept offers on your property during the current period.

In fact, the number of sales agreed between March 16 and March 22 were only 4% lower than a year earlier.

Source: Zoopla Property News

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Covid-19: UK property market to be suspended as sales drop significantly

UK house buyer interest has slumped as people stay at home to try to limit the spread of the coronavirus, according to property listings websites.

Zoopla predicts housing transactions will drop by up to 60% over the next three months.

Meanwhile, an increasing number of sales that had been agreed before the lockdown are falling through.

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The government has advised homebuyers and renters to delay moving as much as they can.

“Would-be homebuyers paused major decisions and took stock of the unfolding events in the UK and around the world, even before [restrictions] announced by Prime Minister Boris Johnson,” Zoopla said.

Demand in the week to 22 March slumped 40% on a week earlier, its figures suggest.

The property listings site said the UK housing market had a strong start to the year before the coronavirus outbreak crushed demand.

The pandemic has since led to a “rapidly increasing” proportion of sales falling through, as would-be buyers “reassess whether to make a big financial decision in these shifting times”.

Sales were still being agreed, it found, but at a 4% slower rate than at the same time a year earlier.

The Financial Times has reported that bankers have been urging government ministers to suspend the housing market.

They are concerned about the impact of the pandemic on valuations but they are also worried about issuing loans due to uncertainty about the effect the virus will have on the economy, the paper reported.

In response to the crisis, UK Finance, which was formerly known as the British Bankers Association, said lenders would extend mortgage offers for people who were due to move house during the lockdown.

“Current social distancing measures mean many house moves will need to be delayed,” Stephen Jones, who runs the group, said in a statement.

“Where people have already exchanged contracts for house purchases and set dates for completion this is likely to be particularly stressful,” he said.

“To support these customers at this time, all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months to enable them to move at a later date.”

The government has told people “there is no need to pull out of transactions”, instead encouraging them to “amicably agree alternative dates to move”.

The sentiments identified by Zoopla echo a previous announcement from rival Rightmove, which said the slowdown in the UK housing market had been “significant”.

“The number of property transactions failing to complete in recent days and likely changes in tenant behaviour following the announcement of the renters’ protections by the government may put further pressure on estate and lettings agents,” it said, referring to the recent ban on evictions.

The government said on Wednesday that home buyers and renters should delay moving if possible while emergency measures are in place to fight coronavirus.

“If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus,” a housing ministry spokesperson said.

“Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being.”

Meanwhile, there were reports on Thursday that mortgage lenders had started to temporarily restrict some products for certain customers.

Source: BBC News

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UK Budget 2020: Low interest rate & spending on housing may boost property market

The Government unveiled its first Budget since the General Election, amid increasing coronavirus pressures.

The Budget came hours after the Bank of England’s announcement of an emergency cut in the base interest rate to shore up the economy following the outbreak.

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The cut, from 0.75 per cent to 0.25 per cent, takes borrowing costs back down to the lowest level in history, and may help the housing market.

Just 27 days after taking over the Treasury, the new Chancellor, Rishi Sunak, announced a dramatic increase in infrastructure spending, including new housing.

Stamp Duty

A Stamp Duty surcharge of 2% will be introduced for overseas non-residents who buy residential property in England and Northern Ireland. This will start from April 1 2021.

The Government said the measure “will help to control house price inflation and to support UK residents to get on to and move up the housing ladder”.

There were no other changes to Stamp Duty charges; a disappointment to many potential buyers.

Interest Rate

The reduction in the bank rate will benefit homeowners on variable rate mortgages; however, these represent a minority with over 90% of new mortgages now fixed rate.

For those on variable rates, it normally takes up to two months for the change in bank rate to filter down, but the Government will put pressure on financial institutions to implement it faster.

It’s important to remember that it is up to the banks’ discretion as to how much of the cut they pass on to consumers, which could stymie potential benefits.

Spending on housing

The Affordable Homes Programme, intended to ‘help more people into homeownership and help those most at risk of homelessness’, will be extended with a new multi-year settlement of £12 billion.

This marks a £3bn increase on the current five-year Affordable Homes Programme, which is worth £9 billion and is due to end in 2021.

The Chancellor also announced £1.1 billion worth of allocations from the Housing Infrastructure Fund to develop almost 70,000 homes in nine different areas, including Manchester, South Sunderland and South Lancaster. This was announced in addition to a new £400m for new housing on brownfield sites.

Source: Zoopla Property News

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TA DenEco Consultancy – www.deneco.co.uk

Coronavirus set to slow UK property boom

Property Industry figures are worried public concerns about coronavirus will have an adverse effect on business, after the number of reported cases reached 115 yesterday.

The market has had a busy start to the year, but there are fears the virus will put the breaks on activity.

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Jonathan Sealey, Hope Capital’s chief executive, said: “Over the past few months it has felt as though we were experiencing a real sea change in the market as the political arena became less of a focus.

“We have definitely seen the busiest start to any year so far as people started looking forward to a more stable environment.

“Unfortunately, that may well be up in the air again as nervousness surrounding the COVID-19 outbreak takes hold.”

And Richard Pike, Phoebus Software sales and marketing director, said: “We’ve started the year well but there is one black cloud that is hard to ignore, and it is one that is already having an effect on the world’s economy.

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“How the coronavirus effect will translate down the line into the housing market is anyone’s guess, but it is unlikely to have no effect at all.”

One commentator speculated whether the virus fears could push the regulator towards loosening mortgage affordability rules.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “While we’re yet to see the impact of uncertainty linked to coronavirus on the housing market, if lending continues to slow – the time might be coming for the regulator to consider a gentle easing of restrictions around affordability.”

Source: PropertyWire

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Thinking of buying a property?

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk