UK property market: Questions asked by buyers and seller

The coronavirus crisis is affecting buyers and sellers alike. An estate agent talks through the hurdles faced by both parties

Spring and summer are often cited as the best time to buy a property, with the warmer weather encouraging more people to put their homes up for sale. But with the Government having all but shut down the UK’s housing market, buying and selling is challenging during the lockdown – although not entirely impossible.

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Here are the questions being asked by buyers and sellers:

Can I still complete?

The Government advises buyers and sellers to “where possible, delay moving to a new house while measures are in place to fight coronavirus”.

However, solicitors are not banned from continuing completions and the Government has accepted some may still have to take place. For those who need to move for reasons such as death, divorce or debt, and for those who want to move perhaps to be in a better school catchment area for their children, there are still some possibilities.

What if I’m looking to buy?

If you are looking to buy, things look great on the face of it. The Bank of England has slashed interest rates to a record low of 0.1 per cent in response to the crisis, meaning mortgages are more affordable than ever as repayments will, in theory, be lower.

However, many lenders have withdrawn tracker mortgages offering the best rates. Savings the banks are making are not being passed onto consumers. Larger deposits are also now required. Nationwide Building Society, one of the UK’s biggest lenders, recently withdrew mortgages with a loan-to-value (LTV) ratio above 75 per cent from sale.

Paul Broadhead, head of mortgage policy at the Building Societies Association, says: “Lenders and borrowers are facing unprecedented conditions. The temporary move away from higher LTV products across the whole market reflects prevailing uncertainty and the fact that physical valuations are on hold. Lenders are focusing on supporting their existing borrowers that have been affected by Covid-19, often with fewer staff available to work.”

What if I need a mortgage?

A downside for buyers is that you have to have 100 per cent of the property’s value in cash to now be in with a chance of securing a property. Assuming you have seen a house you liked before the restrictions came into effect, estate agents are unlikely to put any offers forward where a mortgage is required.

Mortgage valuation surveys are unable to take place during the lockdown because mortgage companies cannot send a surveyor out in person to ensure a property has not been overvalued by an estate agent. This is good news if you are a cash buyer and puts you in an even stronger position with less competition from other buyers.

However, sellers should be aware that cash-rich investors often expect a price reduction, with some offering as much as 30 per cent below the asking price.

What if I’m selling?

If you are looking to sell, it may still be possible. Some agents are making the most of technology and offering virtual viewings and video valuations, with vendors taking their own photos to market their properties.

This sounds great, but it isn’t. Unless you are a professional photographer with a wide-angle lens camera, it’s unlikely you will be marketing your property to its full potential.

It is also doubtful the valuation will be as accurate without the agent having visited. Every property is unique. And while virtual viewings are great for the casual viewer at home who doesn’t have to leave the sofa, they are not so helpful for vendors deciding how keen and motivated a buyer really is.

If an acceptable offer is made, there is even less certainty than usual when it comes to trusting that someone will see the process through to conclusion from sale agreed (subject to contract) to exchange/completion, as they have yet to set foot inside the property.

Some estate agents, such as Purplebricks, charge a fixed fee whether the property sells or not. It is worth noting that according to research firm TwentyCi, Purplebricks received an estimated £18m from 21,380 vendors whose properties were withdrawn having failed to sell in 2019. With actual viewings currently impossible, who knows what their figure for 2020 will be.

Property prices: Where next?

House prices were flat in March, the first time they did not rise in five months, according to the latest data on the UK property market.

Halifax, who compiled the figures, said the housing market began March in recovery mode as political uncertainty about Brexit had passed. Prime Minister Boris Johnson’s election victory had also boosted confidence in the market.

But by the end of the month, the UK was in different territory as coronavirus swept across the country and the property market ground to a halt as the UK was put into lockdown.

Halifax said it was too early to accurately assess the long-term impact of the virus on the UK housing market.

When will the market recover?

Problems with physical viewings and mortgages will make moving house difficult in the short term.

But once the coronavirus crisis has blown over, and the barriers on movement have been lifted, the market should bounce back fairly quickly. After the lockdown is finished, the artificial restrictions on the free market will be released, causing a flood of supply and demand from sellers and buyers.

If furloughed employees are able to return to their place of work on their full salary, consumer confidence will likely be restored. Pent-up demand will hopefully encourage lenders to increase supply of affordable mortgages.

The property market may return to normal sooner than many currently envisage.

 

By Rupert Gray – an estate agent working in the Greater London area

Source: inews

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Buying a property: Do I need a survey?

The Key to a happy home purchase is knowing what you are buying. Estate agents and mortgage advisers won’t tell you if you need a survey or not. It is not their job to tell you what advice you need to get before buying. It is up to yo to make seek professional advice.

All you need to know about survey;

A property survey is a detailed inspection of a property’s condition. The surveyor inspects the property and tells you if there are structural problems like unstable walls or subsidence. They will highlight any major repairs or alterations needed, such as fixing the roof or chimney chute. The amount of details that shows up in a survey will depend on the type of survey you chose. The minimum requirement for mortgage lenders is generally a valuation – this basic report merely confirms the price is right and that the property is adequate security for a loan. This is not a survey.

The next level up is HomeBuyer’s Report, which will tell you of major issues that could affect the value of the property. and may advise more specialist reports need to be carried out for woodworm or damp, for example. The most comprehensive report is a building survey, which involves an in-depth assessment of the house and should uncover any issues that are likely to need your attention, including the need for more special reports.

Surveys are a key part of the buying process and can potentially make or break a deal. You shouldn’t underestimate the importance as your property survey will highlight any issues in the house before you legally purchase it.  Often in most cases the buyer would negotiate with the vendor to reduce the price of the property by the amount required to fix the issues identified in the survey.

For property investment in the UK from start to finish, Please Contact me

Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk