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House prices and Covid-19

Most of the non-essential parts of the British economy have been put on hold by the coronavirus lockdown and the housing market – core as it may seem to many of our lives – is no exception. With moving during the lockdown period being heavily discouraged by the government (see below) and many lenders now refusing to lend to those with anything less than a 40% deposit, property website Zoopla reckons that the number of houses sold in the UK will fall by at least 60% in the next three months.

There are several factors behind the move – the shutdown has reduced banks’ capacity to process loans, surveyors are unable to value properties as easily and estate agents can’t show people around homes. On top of that, it’s hard to value a house when transactions have dried up and there are no comparable deals going through, and it’s hard to write loans when job security across almost all industries and seniority levels is suddenly in question.

So for now, the property market is effectively frozen. Price data will be virtually meaningless in the coming months, as pretty much the only deals being done right now will be between those who are forced to sell and those who are cash buyers. Agents and sellers who were hoping for a “Boris bounce” – which we did indeed seem to be getting for a short while at the start of the year – have now had their hopes dashed.

Beyond the lockdown

So what happens when the lockdown is over? A lot depends on the state of the economy – and also the level of restrictions on movement that remain. On that front, estate agents argue that there will be plenty of “pent-up demand” from both buyers and sellers, given that mortgage approvals in February hit their highest level since 2014. Samuel Tombs at Pantheon Macroeconomics also notes that cheap funding available to banks from the Bank of England should mean the mortgage market remains open and rates stay low once the worst of the crisis is past, even if the riskiest loans are no longer on offer.

But this might be wishful thinking. House prices are indeed largely dictated by the price and availability of credit (in other words, interest rates and banks’ willingness to lend). But unemployment is another huge factor and while the government has made great efforts to protect incomes and jobs and mortgage holidays are widely available (see page 32), some forced selling is almost certain. Meanwhile, a key source of demand in some areas – mini-Airbnb empires in tourist hotspots – will also suffer as holiday landlords who were burned during the lockdown sell out.

In the longer run, interest rates are unlikely to rise because the Bank of England will be forced to hold them down, given soaring government borrowing. In time that could result in inflation, which would make property appealing as a “real asset”. But that may take time – Capital Economics expects house prices to fall by just 3% this year, but notes “there are many risks that could undermine this forecast”, a larger-than-hoped rise in unemployment being the key one.

That said, if you are keen to move, then look to the shires. In relative terms at least, if there is any wider shift to working from home more regularly, you’d expect country properties to outperform city ones, while towns and villages once deemed to be on the fringes of commuting range of London and other big cities might also see a benefit.

What if I’m buying or selling a house right now?

The first point to make is that you should not move right now unless you absolutely have to. If you’re a seller, there’s no need to take your house off the market – people have lots of time on their hands to browse – but just don’t expect any viewings.

If you hope to buy but you haven’t yet exchanged, the easiest thing to do is simply to put the process on hold. You might be inclined to try to negotiate a lower price and carry on regardless (making sure the completion date is for later in the year), but bear in mind that unless the seller absolutely has to move, they will probably simply pull out. Holding off and picking up later (when the market impact will also be more visible to all involved) makes sense.

As for those whose transactions are already in motion, moves to a vacant property can go ahead (but stick to social-distancing guidelines during the removal process). However, for those moving to occupied houses, the government has advised buyers and renters that while there is no need to pull out of deals, everyone should “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” are behind us. This is the case even where contracts have been exchanged (and thus the transaction is legally binding).

So what does that mean? Post-exchange, failure to complete can leave both buyers or sellers (depending on who fails to move) liable to penalties, so you are basically dependent on everyone being reasonable. Mortgage lenders have said that they will extend the life of mortgage offers for up to three months, so as long as all parties can agree alternative dates, your lender shouldn’t be an issue.

If it proves impossible to delay a move, it can go ahead, but everyone must observe social-distancing measures. Note too that the lockdown will create lots of extra logistical problems. Approving paperwork and moving money may take longer due to lower levels of staffing. Physical documents are still required at various stages of property deals, so that may hold things up. And finding removal firms who are still taking on jobs right now is another challenge.

The key – as with any property transaction – is to maintain clear lines of communication, particularly if you are part of a chain, and to have a back-up plan should the deal fall through. Good luck.

By John Stepek

Source: Money Week

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The UK housing market and coronavirus: The chances of recovery in 2020

With stock markets crashing all over the world due to the coronavirus pandemic, there are fears that the UK housing market could also be badly hit. To understand the chance of this happening, we need to look at the current situation and what might happen next.

The situation before March

The country’s housing market was motoring along nicely before the coronavirus outbreak caused havoc. Figures from Nationwide Building Society show that British house prices increased by an annual growth rate of 3% in the month before the lockdown was imposed. This was the fastest rate in two years.

This was due to a monthly rise is 0.8%, which followed on from 0.3% in February. The annual growth rate in February was 2.3%. The average house price in the UK rose to £219,583 in March. The surge had been led by booming cities such as Manchester and Liverpool but most areas have seen good growth recently.

The different ways the market has been affected

The impact of the coronavirus can be put into different categories.

  • Lockdown measures mean that potential buyers are unable to view properties that they might be interested in.
  • The huge effect on the economy means that many people are unemployed or facing an uncertain future. Around 950,000 new welfare claimants applied in the second half of March, according to the Department for Work and Pensions.
  • Banks have made it more difficult for people to borrow on new mortgages. Some have withdrawn high loan to value deals and others don’t take overtime or bonuses into account as salary.
  • Official government advice is to avoid property transactions.
  • Many people have decided that buying a new home isn’t a priority.

These factors all add up to give us a UK housing market that is grinding to a standstill. To put it simply, the whole market has stopped and will remain that way until life gets back to normal.

The sort of price falls we can expect are unclear

There is no doubt that house prices will be affected by this period of uncertainty and economic gloom. The main issue is that it is extremely difficult to predict any figures. With virtually no transactions going through just now, there is a lack of data to base future estimates on.

The British economy is set for a deep recession. The last time this happened was in 2008, when housing prices crashed through the floor. In fact, it was so drastic that by 2017 property prices in a quarter of UK towns were still below their 2007 peak.

It is feared that the 2020 slump could be even worse than what happened in 2008.On the other hand, the more optimistic predictions suggest that it may just be a short-term wobble, like the way that Brexit affected property prices. It has also been pointed out that the severe economic damage down by the swine flu in 2009 didn’t stop house prices from soaring in the following year.

The chances of recovery in 2020

Very few analysts want to make predictions in this situation, particularly since we don’t even know how badly UK house prices will be hit.

However, the main hope is that overall economic weakness doesn’t tend to depress the UK housing market for long. It is possible that it bounces straight back as soon as the lockdown ends and people get back to their normal lives again.

The fact that interest rates are so low is sure to be a factor. Anyone who has the cash and the stability to buy a house might see this as being a great time to do so. Therefore, it is unlikely that we see the market standing still for too long.

In the best case scenario, prices will fall in the short term and recover by the end of 2020, but there are still too many unknown factors to bet on this being the case.

By Robert Bell

Source: Invezz

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UK house prices growth ‘grinding to a halt’

UK house prices rose three per cent last month just before the coronavirus outbreak hit, according to Nationwide figures released today.

But the bank warned housing market activity is “grinding to a halt” as the coronavirus lockdown stops buyers and sellers from viewing properties.

Banks have also withdrawn mortgages or made it tougher to secure mortgages, also dampening UK house prices.

Coronavirus means outlook ‘highly uncertain’

“Housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus,” Nationwide’s chief economist Robert Gardner said.

“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months.

“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.”

The UK is facing a severe economic retraction as a result of the coronavirus crisis. The government has closed all shops save supermarkets, pharmacies and banks.

And people are able to leave the house once per day to exercise, while maintaining two metres distant from others.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.,” Gardner added.

The value of British homes rose 0.8 per cent on a monthly basis in March, up from February’s 0.3 per cent change. And its three per cent annual growth rate outpaced February’s 2.3 per cent growth.

That left the average UK house price at £219,583 in March.

UK house prices growth ‘meaningless’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, called today’s UK house prices figures “academic” in light of coronavirus.

“However, they do raise expectations that when restrictions begin to ease, hopefully relatively soon and without too much damage to the economy, there is every chance that activity will pick up nearly where it left off,” he added.

“We are finding that only those industries particularly badly affected by coronavirus are having to pull out of transactions, such as those working in the travel, hospitality or entertainment industries.”

But Lucy Pendleton, founder director of independent estate agents James Pendleton, painted a darker picture. She said UK house prices were now “irrelevant” with the coronavirus outbreak. Pendleton has put more than half its estate agents on furlough, and last week house sale numbers slumped 84 per cent.

“It wasn’t so long ago that commentators talked of Brexit uncertainty putting transactions on ice but that feels like ancient history now,” she said. “Covid-19 has brought brutal new meaning to a frozen market.”

Lenders back away from mortgages

Mark Harris, chief executive of mortgage broker SPF Private Clients, added that “lenders remain keen to lend”.

That is despite some having to pull back from high loan-to-value deals. Nationwide yesterday tightened measures on mortgage applications and no longer takes bonuses and overtime pay into account.

Nationwide also pulled its mortgage offering for low-deposit borrowers earlier this week.

Lloyds Banking Group, which owns includes Halifax and Scottish Widows and is the UK’s largest lender — has capped lending at 60 per cent of loan to value.

And Barclays has put a cap on how many mortgage applications it will accept from brokers. It has also limited high loan to value mortgages.

“In most instances this is a temporary move while they get to grips with the inability to carry out valuations, plus redirect their staff to deal with mortgage payment holiday enquiries,” Harris said.

UK house prices ‘will recover quickly’

“The only silver lining to this situation is that political uncertainty and underlying economic weakness play no part in this chaos,” Pendleton added. “The housing market will come roaring back to life as soon as the lockdown ends, aided by interest rates that are significantly lower than when it began.”

However, it is unclear how long the coronavirus lockdown will weigh on UK house prices.

“This crisis has ripped staff and customers from our hands,” Pendleton added. “Coronavirus has broken the spirits of businesses on a scale not seen since the financial crisis. It is an incredibly testing time but we must come out the other side, and come out fighting.”

By Joe Curtis

Source: City AM

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Coronavirus and the London property market

As the coronavirus outbreak and UK lockdown continues, many are left asking what this will mean for the property market. It’s too early to tell exactly how it will fully impact the sector and economy moving forward. However, the UK property market is robust and has shown its resilience during uncertain times in recent years.

Many professionals in the property industry have stated they believe house price growth will slow down as fewer properties will be going on the market and less transactions will likely take place. However, a major crash in prices is not expected as many believe the market will pick up pace after a period of uncertainty, similar to after the Brexit referendum.

Most buyers and sellers are still proceeding with sales that started before the outbreak of coronavirus. The majority of people are investing in property for the long-term, which means buyers, landlords and investors will be less impacted by short-term fluctuation in property prices.

London property still seen as a safe haven

Even though the short-term future of the property market is uncertain, sales are continuing to be agreed. Property, especially in London, is still being viewed as a safe haven as shares and stock investments have taken a massive blow since the coronavirus outbreak and have shown to be extremely volatile investments.

Prior to the government response to coronavirus becoming more drastic, the UK property sector as a whole had the strongest start to the year for four years. The London property market was also the strongest it had been since prior to the vote on Brexit as asking prices reached the largest annual rise since May 2016, according to Homes & Property.

Rightmove’s House Price Index for March revealed the average price of a property in London reached £638,826, which is an impressive 5.1 per cent annual increase. This is likely due to supply still not keeping up with demand. Additionally, the index also revealed the number of sales agreed in the capital grew by 34.4 per cent, and it even took 15 fewer days for properties to sell once they were put up for sale.

The private rental sector is showing growth, too. RICS have predicted rents in the UK to rise by 2% this year – and up to 3% per annum by 2025. Other property experts state that the Coronavirus isn’t negatively affecting rent prices, which are only down 0.2 per cent on the previous month.

Rising demand from prospective tenants is keeping rents high as supply remains relatively low. A large number of private landlords who have empty rental properties are now scrambling to find longer-term tenants, and are still able to advertise on rightmove and zoopla, with online letting agents Portico making this available at an extremely attractive price.

In short, London’s market fundamentals are considered solid. Even though the fast-paced market will likely slow down due to the coronavirus outbreak and lockdown, the sector is expected to bounce back after a period of uncertainty.

Technology is keeping the property market moving

As physical viewings of properties have been banned following Prime Minister Boris Johnson’s lockdown announcement on 23 March, the market is naturally expected to slow down. However, more and more estate agents are adapting to the measures by offering virtual property viewings through “walk through” video tours and Facebook Live events.

With millions of people working from home, there has been a substantial increase in virtual viewings. Property portals, such as Rightmove and Zoopla, are also seeing surges in search numbers on par with the figures for Christmas and Boxing Day.

To keep the sector moving, the market as a whole is adapting quickly as many property professionals are using a range of technology and proptech to be able to continue transacting, despite the coronavirus lockdown. In addition to virtual viewings, appointments are still being done through video conferencing tools, FaceTime and WhatsApp and contracts are able to be signed electronically.

Record low interest and mortgage rates make borrowing more affordable

The Bank of England lowered the base interest rate from 0.75 per cent to 0.25 per cent on 11 March, and then it was further lowered to 0.1 per cent on 19 March. This is lower than it’s ever been before and means it’s a great time to get a mortgage or remortgage your property as borrowing is likely to be more affordable.

Borrowers with tracker mortgages should be seeing their mortgage rates drop. If you’re looking for a mortgage, over a dozen lenders have promised to cut their standard variable rates by 0.5 per cent. More banks and building societies are expected to drop their rates in the coming weeks.

Which? found that the cheapest fixed-rate mortgages haven’t seen significant drops as they are already at historic lows. However, average mortgage rates are continuing to fall, and there are a significant number of products available.

Because of this, it could prove to be a great time to buy a property and lock in these record low rates. This means mortgage repayments will likely be more affordable and could provide you the opportunity to borrow more and get more for your money. Additionally, these low interest rates could also fuel property price growth once the crisis surrounding coronavirus is over.

To cut your interest costs further, it’s also recommended to get an up to date online property valuation on your property. Your lender will then need to recalculate your loan-to value ratio (LTV). A lower LTV usually means you’ll receive a better interest rate and have access to a wider selection of lenders.

Get ahead of the competition

The government has recently urged both buyers and renters to delay moving house if possible as it’s important for people to stay at home and away from others during the coronavirus outbreak. However, this could still be a smart time to get ahead of the competition if you’re interested in buying or investing in property.

The property buying process could take longer than normal, and you might need to delay completion depending on how long the coronavirus lockdown lasts. However, you can still get the ball rolling and invest in property with record low interest and mortgage rates. And as the UK, including London, is in a housing shortage, there is still expected to be strong demand for property and rental properties moving forward.

Source: London Loves Business

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Government rules out rent breaks for tenants

The Government has ruled out introducing rent holidays during the coronavirus pandemic.

Crossbench peer Lord Taylor of Warwick had posed a written parliamentary question asking the Government if there were any plans to issue a rent break for tenants affected by the coronavirus as part of its package of measures amid the virus outbreak.

But responding on the Government’s behalf in the House of Lords, Baroness Bloomfield of Hinton Waldrist, appeared to rule this out.

She said: “Emergency legislation has been taken forward as an urgent priority so that landlords will not be able to start proceedings to evict tenants for at least a three-month period.

“As a result of these measures, no renters in private or social accommodation need to be concerned about the threat of eviction.

“As such, the Government does not believe a ‘rent holiday’ is necessary at this stage.”

The National Residential Landlords Association (NRLA) has backed the Government’s stance, adding that the buy-to-let payment breaks on offer to landlords should also benefit tenants as it should only be used where renters are having trouble making payments.

Ben Beadle, chief executive of the NRLA, told EYE: “The Government has been clear.

“The buy-to-let mortgage holiday is not a green light to all tenants not to pay their rent.

“It enables landlords to provide flexibility where tenants are genuinely struggling to pay their rent as a direct result of the coronavirus outbreak.

“A comprehensive package of measures has been put in place to support incomes, including increasing the Local Housing Allowance and the Universal Credit standard allowance to support tenants to continue paying their rent.

“This should be accessed as much as possible before any talk of deferring rent payments.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Can you still invest in UK property during the coronavirus crisis?

Never in the history of the UK property market have we seen such a turnaround in sentiment. In January UK house prices were rising after the Conservative election victory and the expected resolution of the Brexit furore which had been dogging the country for the best part of four years.

Bank of England data has indicated that over 73,000 new mortgages were approved in February – a six year high which is now looking relatively meaningless as an indicator for UK property investment.

March will NOT be reflecting such positive sentiments: according to forecasts from Zoopla, we can expect a 60% decline in residential property sales in the months ahead as the entire UK residential sector goes into deep freeze. For those planning to buy UK property as an investment, especially overseas buyers watching the pound plummet against other currencies, the big question is how to get into this market while it is so cheap?

At the time of writing, the UK is in lockdown with the government advising buyers and sellers to avoid moving. It also means that it is extremely difficult if not impossible to arrange property viewings.

Housing stock still available for property investors

According to life tenancy specialist MacBeale, there is still housing stock available for investors who are looking at houses purely from an investment perspective. However, these are agreed deals which were negotiated prior to the coronavirus arriving in the UK.

Life tenancies are long term investments where the owner of the property is able to acquire it at a considerable discount, but is not able to actually live in it until the life tenant has died or gone into permanent care. They already have considerable discounts attached which are still larger than any discount that could be achieved from the current economic circumstances in the UK.

“All the existing stock price will remain unchanged as the formula for the discount is based on age against open market value,” explains Paul Beale, Director with MacBeale in the UK. “We are already looking to get new property via the secondary market from banks and insurance companies. These won’t be new life tenancies created from the open market, rather they will be existing stock which will be brought back to market.”

Beale thinks that UK house prices are currently holding steady as there are few forced sellers. This may change depending on how long the lockdown continues and its consequent negative impact on the British economy, with knock on impact felt in UK housing prices in Q3-4. With sterling now very weak, however, he reports increased interest in UK property again from overseas buyers, especially from East Asia. “We see this trend continuing,” he adds.

Overseas investors will also be aware that the latest UK budget has introduced a 2% surcharge for foreign buyers of UK property, which will take effect next year. This, coupled with a weaker pounds, is creating a fairly small window of opportunity for anyone living abroad looking at UK residential property as an asset class.

Source: The Armchair Trader

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Coronavirus: what it means for your mortgage or your rent

We’re officially in lockdown and many of us are seeing the coronavirus crisis take its toll on our income. So, what happens about paying your mortgage? Here we answer all the big questions.

Can I stop paying my mortgage?

The government has announced that homeowners should be offered three-month payment holidays if they are struggling to make their mortgage repayments as a result of the coronavirus. But this doesn’t mean you can simply cancel your direct debit.

“Homeowners are unknowingly putting themselves into arrears by cancelling their mortgage payments without speaking to lenders first,” says Will Kirkman on ThisisMoney.co.uk. This can have an impact on your credit score.

If you need to take a mortgage holiday, contact your lender before you stop repayments, but don’t rush to the phone. “Amid claims that borrowers are waiting up to ten hours on the phone to speak to someone, many lenders are now asking borrowers to submit applications online to free up their helplines, or to only call if they are vulnerable or facing immediate difficulty,” says Kirkman.

What happens to my debt if I take a mortgage holiday?

Any repayments you don’t make now will need to be made at a later date. “It is likely the lender will spread outstanding payments out over the remaining term of your mortgage, so borrowers will see an increase in their monthly mortgage payments,” says Patrick Collinson in The Guardian.

That means, for example, that someone with a £200,000 25-year mortgage at 2.6% interest who takes a three-month payment holiday would see their repayments increase from £907 a month to £920 for the rest of the term.

Alternatively, your lender may let you extend the remaining term of your mortgage, so your monthly repayments stay the same. You may also be able to make an overpayment later on to clear what you haven’t paid now.

What are the alternatives to a payment holiday?

Simply stopping your mortgage repayments isn’t the only option if you are struggling during the coronavirus outbreak. You could ask your lender about options to reduce your bills for a few months. This could be switching to interest-only payments, deferring your interest payments or extending your mortgage term.

Can my home be repossessed?

If you do fall behind with your repayments, you cannot lose your home. The Financial Conduct Authority (FCA), the City regulator, has instructed banks and building societies not to repossess homes during the crisis. Nor can they charge fees for payment holidays granted owing to the crisis, says Collinson.

Can I stop paying my rent?

Yes. The government has acted to protect tenants as well as homeowners. “Emergency legislation will stop social and private tenants being forced out of their homes for at least three months,” says Martina Lees in The Times. But the situation “does not mean you can live for free”, says Lees. “Arrears will mount up – you’ll have to repay [the money] eventually.”

The housing minister has said the government expects landlords and tenants to work together to come up with an affordable repayment plan once the crisis is over.

I’m a landlord. Can I stop my mortgage repayments?

The government advice on payment holidays includes buy-to-let landlords whose tenants can’t pay their rent due to coronavirus. If you need to stop making repayments on your buy-to-let mortgage you should speak to your lender.

If you have insurance, it should cover rent arrears. Alan Boswell, one of the biggest landlord insurers, told The Times that existing rent guarantee policies will cover missed rental payments caused by the economic dislocation we are experiencing.

Has my lender cut my interest rate?

Late last week the Bank of England cut the base rate to an unprecedented 0.1%. Unfortunately, many banks are failing to pass this cut on to customers. Research by ThisisMoney.co.uk found that just 13 banks and building societies out of 87 had trimmed the rates they charge borrowers.

Under normal circumstances, “a drop in the base rate will see a corresponding drop in a lender’s ‘standard variable rate’”, says Kirkman. But the majority of lenders have kept their standard variable rates at the same level as before the central bank’s original cut on 11 March.

If you have a tracker mortgage the rate drop should mean your repayments fall slightly. But anyone thinking about switching to a tracker could struggle. Nationwide no longer offers any tracker mortgages at all.

By Ruth Jackson-Kirby

Source: Money Week

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Savills: COVID-19 will affect all aspects of UK housing market

Savills predict the coronavirus pandemic to affect all areas of the UK housing market according to their latest data.

The research by Lawrence Bowles and Lucian Cook at Savills, details that general uncertainty will weigh on consumer sentiment.

They also predict to see restrictions on people’s ability to go about their day-to-day business to impede normal estate agency, mortgage and conveyancing processes.

Looking to the stock market, Savills anticipates stocks to fall and therefore people to feel less secure about their personal financial situation.

In addition, the estate agency believes the coronavirus pandemic will have a negative impact on earnings, employment and wealth of a generation.

The government has provided support for the economy and businesses, including liquidity injections, grants and low-cost loans.

As a result, Savills believes this should help to reduce some of pandemic’s impact, as well as aiding in enabling a swift economic recovery and limit the number of households forced to sell.

By Jake Carter

Source: Mortgage Introducer

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Homebuyers left in limbo as coronavirus puts property market on ice

Families are being frustrated in their attempts to move home as coronavirus puts a freeze on the property market.

As part of measures to prevent the spread of coronavirus, Housing, Communities and Local Government Secretary Robert Jenrick has urged people to rearrange and delay moving properties to stop the spread of coronavirus.

Covid-19 has also meant restrictions for non-essential workers, such as removal van drivers, broadband installers and gas assessors making moving arrangements difficult for many.

Lewis Jones, an electrical engineer from Newport, was told by the developers of his new-build home that they would not delay his completion date, despite the fact he was unable to move due to the current restrictions.

I’m paying for a house that I may not be able to move into for some time

The lack of removal men, and the health risk of moving has left Mr Jones, 34, unable to move, meaning he now has to pay bills at his rented property as well as his new home until he is able to make the move.

“I’m frustrated with the Government as they should put a stop to this to protect people and avoid unnecessary travel,” he told the PA news agency.

He argued that the developers “could be more lenient”, adding: “I’m paying for a house that I may not be able to move into for some time.”

Stuart and Kedma Woodmansey from Hull and their six-month-old son Jacob are unable to move because they can’t get a gas safety certificate due to staff self-isolating.

The security consultant and his wife, a 39-year-old carer, were due to leave their current property next Wednesday to move to Market Weighton.

“It could be a month before we are able to complete and our house is all boxed up.”

The couple remain positive, however, with Stuart saying: “I can understand the worry and feel frustrated but it’s bad timing. We have to find a way around it as does everybody else.”

Source: Express & Star

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Housing market is ‘suspended’ as banks tell Government valuations are ‘impossible’

Banks are calling for the whole housing market to be suspended during the crisis and this morning The Times front page lead story said it had already happened.

It splashes with the headline: “Virus prompts No 10 to suspend housing market”.

The Times headline and story comes after mounting pressure from lenders to put the market on ice. The Times today concludes that the housing market is suspended anyway, with viewings cancelled, instructions to people to delay moving, and mortgage finance drying up.

The Daily Mail’s front page splash headline is “Don’t move home”. Its story says that the housing market is “all but frozen”, calling it a shut-down, and says banks have been lobbying for a full freeze on the property market.

Today’s Telegraph business section carries the splash: “Government suspends the housing market”. The paper says that the housing market “was halted last night by the Government after financial institutions said they could no longer operate properly”.

Today on BBC’s Radio 4 broadcast a similar report this morning, and the Financial Times is covering lenders’ concerns.

But an agent last night warned against banks trying to undermine the market rather than support it, and called on the Government to ignore lenders’ demands.

Banks pressing to freeze the market have expressed concern to ministers about the impact of the pandemic on valuations.

They have also expressed concern about giving credit when the economy is in freefall.

Lenders have told ministers that it has become impossible to survey properties.

UK Finance, the trade body for lenders, has written to its members saying it is seeking urgent clarification over the future of the market, “particularly as physical property valuations are no longer possible”.

One property lawyer, Laura Conduit at Farrers, told the Financial Times that banks will have to decide whether they can rely on valuations using videos of properties.

She said: “We haven’t got a clue what the value of anything is.”

Agent James White, of Yorkshire agent Belong, told EYE last night: “Time and time again, whenever there is a wobble in the property market, the banks can be relied on to undermine it.

“This time around, the market needs the full support of the banking system in order to avoid a collapse in confidence and house prices.

“If they implement a complete stop, who knows what will happen to house prices and repossession numbers?”

He added: “Given that the underlying fundamentals of low interest rates, steady demand and excellent employment levels created stability before the coronavirus pandemic, surely it is in everyone’s interest not to add to the woes of the economy and property market.”

Some lenders, including Lloyds and Barclays, have pulled many of their products, and some will only lend to borrowers with deposits of at least 40%.

Lenders have also said that their call centres are clogged with anxious home owners requesting mortgage holidays.

All told, tens of thousands of borrowers are said to be looking for payment breaks, but some are said to be pushing for breaks that they do not really need

Yesterday, Nationwide launched a dedicated coronavirus support page in order to free up phone lines and reduce waiting lines for customers including vulnerable people genuinely needing a payment break. www.nationwide.co.uk/support/coronavirus

One broker, Mark Harris, chief executive of SPF Private Clients, said: “Lenders are throwing all their resources into dealing with payment holiday requests.

“But in the same way that people are stockpiling food they don’t need, there are selfish borrowers who are asking for payment holidays when they don’t need them.

“This is blocking the phone lines for those who do. Borrowers should ask themselves: can I pay the mortgage this month? If the answer is ‘yes’, then keep off the phone to your lender and let those who do need a payment holiday get through.”

He added: “Borrowers may be worried that there is a funding crisis. There isn’t – the banks are awash with liquidity.”

However, he said that not all banks are set up for staff to work from home, and that call centres are operating on skeleton resources.

By ROSALIND RENSHAW

Source: Property Industry Eye