The coronavirus outbreak has put the UK housing market on hold, but what does that mean for people managing property from overseas?
At the start of 2020, the future was beginning to look a little clearer for property investors and prospective house buyers and sellers. A decisive election result in December 2019 saw Boris Johnson's Brexit withdrawal agreement passed, and demand in the housing market started to tentatively pick up.
According to the UK House Price index, house prices in January 2020 had increased by 1.3% on the year before – not a dramatic upturn, but a sign of growing confidence as buyers were offered more certainty on the UK's future relationship with the EU.
For those managing UK property from abroad, especially those based in the EU, it was particularly important to know what that relationship would look like, and whether it would change the value of their property and the process of selling it.
But, with the outbreak of coronavirus now putting around a third of the world's population into lockdown and paralysing the global economy, those details are now far from certain.
Here's what you need to know if you are managing UK property from overseas and we take a look at what could happen to house prices as the market slowly emerges from the lockdown.
How will COVID-19 affect house prices?
This question is at the forefront of many property owners' minds, but unfortunately, it's just too early to say with any certainty what impact the virus will have on house prices.
Right now, lockdown restrictions mean the housing market is essentially frozen. House sales are expected to fall dramatically this year, with Zoopla predicting a 60% decrease in the second and third quarters of 2020, but that doesn't necessarily mean prices will crash too. (Zoopla indicates a fall in the number of sales of up to 60% over the second quarter of 2020, continuing into the third quarter).
One study by Knight Frank said house prices could fall by 3% in 2020, but bounce back by 5% in 2021. Those predictions are based on the assumption that the UK economy will shrink by 4% in 2020, and grow by 4.5% in 2021.
It all depends on how long the crisis goes on for, how long lockdown measures need to be in place, and how serious the overall economic impact is.
What has the UK Government said about selling property?
Homebuyers have been strongly advised that where possible, they should delay moving into a new house while the lockdown is in place.
The lockdown measures mean most people have been asked to stay at home, so you should not invite visitors to your property – that includes viewings, appraisals by estate agents, or visits from advisers.
As a result, many property sellers will need to put their plans on hold for the time being.
It is technically still possible to go ahead with the process of selling a property, however, but current limitations mean it could take much longer than usual.
Can you still put your property on the market?
You can put your property on the market during this time, and while it is not possible to hold physical viewings, there are some things you might be able to do remotely.
Some estate agents are carrying out digital viewings, for example, and now that some potential buyers have more time to spend browsing property websites from home, there may even be more interest in these than usual.
Now could be a good time to line up a buyer, before going ahead with the transaction after the lockdown has been lifted. It also gives you some time to get your paperwork in order and gather together all the information you'd need to show your prospective buyers.
Can you accept offers and carry out the transaction?
You can still accept offers on your property under lockdown, and if nobody is living in it, you should be able to exchange contracts remotely and go ahead with the transaction.
If the property is occupied, the Government has asked that all parties work to delay exchanging contracts until the end of the lockdown, or include explicit provisions in the contracts that take into account the risks of the virus.
If you have already exchanged contracts and there is no way to delay moving, those involved must follow social distancing guidance when doing so. There are specific instructions for estate agents, conveyancers, surveyors and removals firms that will need to be followed.
Above all, your priority should be protecting people's health and preventing any risk of spreading the virus, so if it's at all possible for you to delay the sale's completion, it will usually be best to do so.
If your mortgage is up for renewal and you would like LG Financial to review it, or you would like LG Financial to help you with the potential purchase of a new property, please do get in contact with us.
You can also discuss your financial requirements if you wish to access funding so that your business can overcome the current COVID-19 crisis. You can call Jessica Silva on +44 (0)20 7841 2910 or email her at: jessica@lgfinancial.co.uk
You might also like:
How to claim a three month mortgage holiday
I live abroad but run a business in the UK
Your accounting software solutions