Buyers and Sellers of Residential Property
Both the Government and the Law Society have produced guidance on the issues faced by buyers and sellers of residential property. The Law Society stipulates that their guidance should be read in conjunction with the Government advice on home moving, with nothing in their guidance intended to contradicting that advice.
A summary of the Government guidance is as follows:-
- Parties involved in home moving are encouraged to adapt and be flexible to alter their usual processes.
- There is no need to withdraw from transactions, but all parties need to follow guidance to stay at home and socially distance themselves, self-isolate or shield, with the priority of the health of the public and individuals being the priority.
- Where the transaction involves a vacant property, you can continue with the transaction, subject to following the Government guidance on home removals. Removers are encouraged to honour their existing commitments where it is clear that the move can be carried out safely for all parties, and the move cannot be prevented from going ahead. Removers work on the basis that current Government guidance (as at 26 March 2020) states that work carried out in people’s homes can continue, provided the tradesperson is well and has no symptoms or coronavirus. All parties must maintain a 2m distance from others, and wash their hands with soap and water often for at least 20 seconds or using hand sanitiser gel if soap and water is not available.
- Where the property involved is currently occupied, the Government urges all parties to do all they can to agree an alternate date to move i.e. in the future when lockdown measures will no longer be in place. There is an exemption, from the emergency enforcement powers given to police, for critical home moves.
- If contracts have already been exchanged, and the property is currently occupied, then all parties need to work together to agree a delay in completion or an alternative resolution.
- If the move is unavoidable for contractual reasons or the parties are unable to reach an agreement, then the advice relating to non-occupied properties and removers applies.
- If an extension to the completion date can be agreed, then consideration needs to be given to various issues including how to formally vary the agreement to document the new completion date and the impact on the mortgage amongst other things.
- UK Finance have confirmed that all mortgage lenders are working to find ways to enable borrowers, who have exchanged contracts, to extend their mortgage offer for up to three months to enable them to move at a later date. Of course if the borrowers’ circumstances change before the new completion date or house prices change significantly and therefore continuing with the mortgage would cause the borrower to face financial hardship, lenders will work with borrowers to assist them as a matter of urgency.
- With regards to documenting the variation, the Law Society have produced a useful precedentworking document.
- Residential property solicitors will need to ensure that mortgage lenders put any agreement to extend the mortgage offer in writing, and consider the obligation to renew searches given the delay in completing. Buyers will need to be advised of the additional costs.
- Any move into an occupied property or otherwise should involve a deep clean, which goes without saying. The Government has issued advice for decontamination of a new home which is detailed.
- Those who have not yet exchanged contracts and the transaction involves an occupied property, need to think about whether they wish to proceed to exchange, and ensure that they have incorporated a suitable clause in the contract to deal with the issues raised by coronavirus.
- With regards to homes not yet on the market, there should be no visitors to your home so you will need to deal with estate agents remotely and start to gather all of the information that any reasonable purchaser will require as part of the conveyancing process. We can help you with this and host that information online for potential buyers to access via a portal.
- Where the property is already on the market, it can continue to be advertised, but viewings cannot take place. Your estate agents may have facilities that allow remote viewings to take place. Offers can be accepted, but clearly the process will take longer.
The Law Society’s guidance is more focused on the detail that residential property solicitors will need to consider. The main point is amending existing contracts, and how to document that and the clauses required to deal with the eventuality that completion may need to be delayed more than once as the situation and updates from the Government change frequently.
- Every case is to be treated on an individual basis and any clauses or processes will always need to be amended or tailored to individual needs.
- To comply with the statutory requirements to make a land contract enforceable (section 2 of the Law of Property (Miscellaneous Provisions) Act 1989), a written agreement to vary the contract will need to be exchanged. Parties will need to agree to e-sign the agreement to vary the existing contract, given that the majority, if not all, firms are working from home.
Residential Landlords and Tenants
With regards to lease extensions and enfranchisement matters, everyone should note the following points:-
- Statutory deadlines such as counter notice deadlines and those to avoid deemed withdrawal etc will still need to be met. The legislation does not provide for the parties to be able to extend deadlines.
- In terms of directions and hearings, the First-tier Property Tribunal – London Region has suspended all hearings and directions until 29 May 2020. New hearing dates and directions are anticipated to be issued after that date. Other regions of the Property Tribunal have not yet suspended directions or hearings to date but some may try to determine cases on paper depending on whether parties agree.
- With regards to service of notices, particularly landlord’s counter notices, the practical method in ensuring deadlines are met is to agree that the other party will accept service by email. From experience, most parties are being cooperative, given the current situation. You should obtain written express agreement to both the agreement to accept service by email and acknowledgment of receipt of the notice so as to avoid a dispute at a later stage.
- The terms of leases continue to drop, and therefore tenants cannot delay in making claims. Professionals in the industry can agree work arounds to ensure that claims proceed i.e. service by email, valuers and landlord clients accepting that desktop valuations are necessary.
General issues to consider
Issues to consider when embarking on the conveyancing process and dealing with lease extensions/enfranchisement transactions during these times:-
- Problems in providing certified ID.
- Delays in obtaining searches as the relevant search providers and local authorities may be closed or short of staff.
- Signed documents may take longer to be returned, depending on the impact on Royal Mail. Already special delivery is no longer guaranteed by 1pm.
- Mortgage offers and mortgage valuations may be delayed given that surveyors cannot access properties, and mortgage lenders are operating under pressure given the Government’s mortgage holiday proposal.
- The availability of mortgages is also an issue given that a lot of lenders have removed mortgages that a lot of first time buyers would utilise, instead concentrating on the 60-75% LTV market. The availability of workmen to deal with essential works in the property and to make it habitable, or the availability of basic personnel such as removal companies to deal with the actual move could be an issue.
- For lease extension/enfranchisement matters – valuers being unable to access the properties for inspections.
- Banks may start to reduce banking hours, which will mean that parties need to consider making payments well in advance. For example if possible, monies should be sent the working day before completion to avoid delays on the day.
How we can help
Winckworth Sherwood LLP has invested a great deal in IT and our systems generally, so we have the ability to work around the majority of issues to ensure that transactions continue to progress. We provide detailed advice tailored to each matter.
If you wish to discuss any of the issues relating to the sale or purchase of residential property or a lease extension or enfranchisement transaction then please contact Mark Vinall.