Reflections of a Residential Property Lawyer – my hopes for the property market
News article published on: 22nd April 2020
As I sit at my desk and the early morning sun is streaming in through the windows and I gaze out at the blossom on the hawthorn trees in the garden, I reflect on where we are post COVID 19 outbreak and what the housing market looks like now and what is in store for the future once things return to some form of normality. Clearly this has been a history defining moment that has affected everyone in so many different ways. Grief and financial hardship have cut like an indiscriminate scythe through the world population. Things do look very grim indeed and it is difficult to take any positives from this especially when the press magnify and intensify every new sad blow that this virus has caused.
Current state of property market
To discuss the state of the property market at this time seems somewhat unfitting but property is a stable part of the UK economy and we need to see it moving in order for everything to fall back into place in a post pandemic world.
Currently, with all the government restrictions in place in respect of social distancing, the market is very quiet. The quietest I can ever recall. Transactional numbers have dropped off a cliff and there is very little new work. Broadly, the restrictions have led to a shutdown effecting all elements of the market, from banks providing mortgages, through to surveyors and estate agents shutting down to removal companies not taking on new work.
Current guidance on house moves
My job right now is to provide advice to my clients that do still want to attempt to move in these difficult times and try and find out the best and safest way to do this. This means thinking very carefully before committing to exchanging contracts and mentally stress-testing the contract to check that it will cover all eventualities now likely, however unlikely they seemed just a few weeks ago.
The Law Society has sent us guidance on advising our clients on house moves. They suggest amending contracts and adding clauses to those yet to be exchanged to allow more time for completion to take place in the event of a COVID-19 situation arising. This will be a sensible proposition for a lot of transactions, but not for all. I am finding that each case needs to be assessed to ensure that we achieve the best outcome for the client.
I am impressed at the extent to which lawyers have pulled together to allow transactions to take place and take a pragmatic view on operations so we can still get the job done for our clients. But, let’s be clear, the lockdown needs to end as soon as it is safe and possible to do so for some economic normality to be restored. The longer the lockdown then the higher the risk that the economy will be more permanently scarred. Experts have said that if the lockdown is relatively short then there should be a bounce back, albeit maybe not immediately. If the lockdown remains for longer then it may take longer for all elements of the economy to recover.
The future for the residential property market post lockdown
The purpose of this article was to seek some positives going forward so we have something to work towards with the property market. As I see them, these are as follows:
- Interest rates are now at levels never seen before. They are unlikely to rise because the Bank of England will be forced to hold them down given soaring government debt. Once the mortgage market reopens, the rates available will be low.
- Pre-COVID-19 there was a massive demand for property. The taps had been turned on post Brexit and things were looking as rosy as they had been in a long while. That demand should still be there when we are out of this.
- We are all becoming used to working from home and indeed it maybe that our working habits are changed permanently as a result of this. In due course, country properties could outperform city ones as people decide that they no longer need to commute to work.
- And those city dwellers should take comfort in the fact that metropolitan property has always followed an ultimately upwards trend however many blips there may be on the way.
- If you are a buyer then there may be an opportunity over the forthcoming months to purchase a property at a more realistic price during the recovery period.
- There is a clamour from property experts calling for a stamp duty holiday when restrictions are lifted that could be very useful to any buyer. Although I am not confident that the government is in a position to deliver this.
The property market is based on sentiment and the anticipation of an event, it dislikes uncertainty and drives down confidence. We need to remind ourselves that the market was blossoming earlier this year and confidence was high. Like the hawthorn trees in the garden, it will blossom again.
Blog post written by Simon Nosworthy, head of Property Law.