Buyers and sellers of property are staying at home, causing problems for people desperate to move. As activity in the housing market hits a Covid-19 slowdown, individuals face an anxious wait to see whether their property transactions can be completed.
Following the decisive victory for the Conservative Party in December, the market had only recently regained momentum. But the so-called ‘Boris bounce’ has proved to be only too fleeting due to the outbreak of the virus.
In accordance with Government advice to stay at home, potential buyers have cancelled viewings, with the result that home owners are finding it difficult to sell. One estate agent estimated that viewings had plummeted by 75pc and fully expected the figure to fall further.
Those who have already agreed a sale are at risk if they are part of a property chain in which other sellers may be struggling to find a buyer. People who have doubts about their future income may also have concerns about buying new, more expensive homes. Many freelancers and those with short-term contracts have already suffered a loss of income.
Fall in inquiries and viewings
Jeremy Leaf, an estate agent in north London, said that it only needs one person in a chain working in the travel or entertainment business who feels uncertain as to the future, and this straightaway creates a problem.
Mr Leaf added that many would hold off until the situation regarding the coronavirus became clearer. But he warned that if demand drops, property prices are likely to fall proportionately, and in that case, renegotiation will come into play, although it is too early for that to happen yet. He said that virtual property viewings using video calls were still taking place.
The agent explained that individuals have many reasons for moving house which are still pertinent and can be for reactive and proactive reasons. For instance, to relocate for career reasons, raise funds or expand a buy-to-let portfolio.
However, the general level of inquiries has decreased and the number of viewings has dropped by 50pc-75pc compared to what would be expected to be seen at this time of year.
As some people may need to sell urgently, there could be bargains for those willing to enter the market currently. But because of the deteriorating state of the economy, buyers will struggle to turn a quick profit on a property. Mr Leaf advised taking a longer-term view, such as buying a family house near a school in a good location.
Advantages of an offset mortgage
Many existing home owners are concerned about their future financial situation. However, options exist to release equity from property which can be used to build an emergency fund. Generally, people should have sufficient cash in the bank to cover from three to six months’ outgoings.
Mark Harris, of mortgage broker SPF Private Clients, said many people are considering offset mortgages. He explained that such a mortgage could be a good option for those remortgaging, as the savings can be retained but used to offset against the mortgage and reduce the amount of interest paid, and crucially, enable access to the funds in case of an emergency.
Mr Harris acknowledged that offset mortgages have slightly higher interest rates than standard loans, but believed the additional cost is worth it for many home owners. He added that cash is king or, at the least, a great comfort to have it in the bank in these uncertain times, when we don’t know how long this situation will persist,
Landlords have come under increasing pressure to help tenants who are struggling to pay rent. The offer of a three-month holiday from mortgage payments has been extended to include property investors as well as owner-occupiers.