The UK’s housing market will have to rely on virtual showings effective this week
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The UK government announced yesterday that in-person showings to homes that are for sale or about to be on the market would violate the coronavirus social distancing orders implemented last week and should not be carried out until the social distancing restrictions are eased.
As the announcement states, “There is no need to pull out of transactions but we all need to ensure we are following guidance to stay at home and away from others at all times…There should be no visitors to your home. You can speak to [real] 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 government has also strongly encouraged those in the process of a real estate transaction to, “do all they can to amicably agree alternative dates to move, for a time when it is likely that stay-at-home measures against coronavirus will no longer be in place.”
Homes that are currently unoccupied are exempt from the ruling since they are unlikely to be a place where new residents could catch COVID-19. There is also a clause that provides some wiggle room if moving is unavoidable due to contractual obligations.
The ruling came in response to a plea from lenders for the government to intervene in order to prevent a sudden plummet in the housing market. With the worry that appraisal values could drop drastically or buyers could be approved based on current income that may not be reliable in the coming months, lenders have stopped approving many mortgages practically overnight. At least two of the country’s largest banks, Barclay’s and Lloyd’s, have stopped providing mortgages unless the buyer has at least a 40% deposit. Though many of them are allowing a longer amount of time for the approval process.
This also comes at a time when lenders are swamped with applications for a ‘mortgage holiday’ that could provide up to three months of forbearance without penalty for those who are suffering financially due to the coronavirus. Applications have surged, delaying the application process for people who were applying for mortgages and leading to uncertainty over whether they would be approved.
The directives are expected to be in place for the same duration as the social distancing orders handed down last week.