London property market halted by coronavirus: Government tells home buyers and sellers to pause purchases until Covid-19 crisis passes

Everything from mortgage lending to home moves has been affected by the Government's latest advice.
Daniel Lynch

The housing market has been frozen after the Government told home buyers to put purchases on hold and asked estate agents to close branches during the coronavirus lockdown.

Amid legal uncertainty, cutbacks in mortgage lending and public health concerns, buyers and sellers are being asked to delay home moves if at all possible.

The Ministry for Housing, Communities and Local Government advised buyers with a scheduled move to delay for as long as the stay-at-home measures to tackle Covid-19 are in place, even if they have already exchanged contracts.

Housing Secretary Robert Jenrick said “parties should show pragmatism” to delay a move, especially if any members of the chain are isolating or being shielded - but he allowed that if moving is unavoidable, advice on social distancing must be followed throughout.

UK Finance, representing more than 250 firms across the banking and finance industry, said mortgage lenders will support the halt on home moving by extending mortgage offers for up to three months.

Stephen Jones, chief executive of UK Finance, said: “If a customer’s circumstances change during this three-month period, or the terms of the house purchase change significantly and continuing with the mortgage would cause house buyers to face financial hardship, lenders will work with customers to help them manage their finances as a matter of urgency.

“Lenders recognise that many people looking to move into their new homes are facing significant stress and uncertainty due to the impacts of coronavirus. It is clearly not appropriate for people shielding or self-isolating to move home. Therefore, where chains contain people in these groups, lenders, conveyancers and other professionals are working together to enable these customers’ moves to be delayed.”

Meanwhile, many lenders restricted new lending to 60 per cent of the purchase price – meaning buyers would need a 40 per cent deposit – while some temporarily suspended all new mortgage applications.

Prospective sellers who have yet to receive an offer on their home were advised to sit tight until restrictions are lifted, and to use the period of lockdown to prepare themselves as much as possible to sell once restrictions lift.

In-person viewings have been banned in favour of virtual video tours, with estate agents, surveyors and lenders instructed not to enter properties for viewings, valuations or appraisals.

“You can speak to estate agents over the phone and they will be able to give you general advice about the local property market and handle certain matters remotely but they will not be able to start actively marketing your home in the usual manner,” the Housing Ministry said.

The new official advice followed requests for clarity from estate agents, home buyers and vendors on what social distancing means for them, after Cabinet Office Minister Michael Gove said people should not be moving house.

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