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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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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

What must a mortgage lender do if a borrower is in arrears

The Financial Conduct Authority (FCA) considers that a reasonable period for repayment of arrears or a shortfall will depend on the borrower’s circumstances. In some cases, it can mean spreading the payments over the remaining mortgage term.

The lender must not attempt to process more than two direct debit requests in any one calendar month

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A mortgage lender must also establish and implement clear, effective and appropriate policies and procedures to ensure the fair treatment of customers whom the lender understands, or reasonably suspects, to be particularly vulnerable.

If a borrower is in arrears, the lender must consider whether one or more of the following actions would be suitable to help resolve the problem

  • extend the mortgage term;
  • change the mortgage type;
  • defer payment of interest due on the mortgage or sums due under a home purchase plan;
  • treat the payment shortfall as if it was part of the original amount – know as capitalisation and effectively adding the shortfall to the capital owing;
  • make use of any government forbearance schemes to help borrowers with problems.

Please contact your lender as soon as possible if you’re experiencing financial difficulties to get a suitable solution.

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

 

Covid 19 Financial impact: Pension freedom

Over 55 and in financial difficulty due to Covid 19, you can take the opportunity of pension freedom as solution to Covid 19 financial impact.

Pension freedom allows personal pension planholders to take as much cash as they want from their pension fund from the age of 55. This can be an attractive option for those in mortgage difficulty, but there are two key factors to consider:

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  • Only 25% of the fund can be taken tax free, with any excess added to income for the year. This could result in a large (and unexpected) tax liability, which, in turn, could lead to less cash than expected.
  • The planholder’s income in retirement could be significantly reduced as a result of using the pension fund in this way. In addition, because they cannot take cash from their fund before the age of 55, they will have only limited time to rebuild their pension fund for retirement.

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Thinking of buying a property?

Need help with residential and commercial property purchase/finance in the UK from start to finish, Please Contact me

Selling or renting your property in Greater Manchester? Get same day EPC for £45 only

Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

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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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

UK Property Key Players

Buying or selling a property in the UK required various process and professions. key players in a property transaction, including buyers, sellers and paid property professionals such as real estate agents, financial specialists, surveyors and legal practitioners.

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The main property key prayers are:

  • The middleman – The estate agent may be paid by the vendor, but they need to work with you too to make sure their client’s interests are protected and a good agreement can be reached. The agent should be your first stop when it comes to negotiating on price and striking a deal.
  • The money – In theses days of stricter lending criteria and great deals, it is important to research the best mortgage deals for your circumstances. You’ll need to provide your lender with all the information needed to make sure the process goes smoothly, and be ready to chase if getting your formal offer takes longer than expected.
  • The groundwork – The minimum requirement for mortgage lenders is generally a valuation – this basic report merely confirms the property price is right and that the property security for the mortgage loan. This is not a survey and if you need to carryout a survey, you will have to employ the service of a surveyor. The surveyor’s main role is to assess the physical state of the property. The depth of details you receive will depend on the level of service you choose.
  • The brains – The solicitor or conveyancer commissions detailed searches to make sure there are no dark secrets lurking in the property past, legally speaking. This may relate to restrictive clauses in the lease of a leasehold property, rights of way or contamination due to previous use of the land the property is built upon, or any number of other problems with a property’s title.

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Thinking of buying a property?

Need help with residential and commercial property purchase/finance in the UK from start to finish, Please Contact me

Selling or renting your property in Greater Manchester? Get same day EPC for £45 only

Dennis Bebo – MSC, BSC, DEA, CeMAP

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

Pls Comment, like and share

Thinking of buying a property?

Need help with residential and commercial property purchase/finance in the UK from start to finish, Please Contact me

Selling or renting your property in Greater Manchester? Get same day EPC for £45 only

Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk