Implications of Coronavirus (COVID-19) on the Property Market
As the world works hard to fight the coronavirus outbreak, the expectation is that its effects on market confidence will be short lived. Most of those involved in the residential market, with long-term views, will remain undeterred throughout this period. History has certainly shown that while markets do take a fall during an outbreak, they are usually resilient and bounce back relatively quickly.
Furthermore, as the Bank of England lowered the base rate again on 19 March, many people could be spurred to take advantage of cheaper borrowing and wish to remortgage their properties now. In addition, with the Chancellor's announcement that a 2% stamp duty hike would come in to force from April 2021 for foreign property investors, we could also see an influx of buyers rushing to get ahead. If we follow previous economic trends, the market should prove resilient in the long run.
Please be assured that during this time our Property team are working hard to ensure your transactions are proceeding as smoothly as possible.
If you are considering embarking upon the sale or purchase of a property and are somewhat hesitant in view of the current circumstances, our advice would be to get the ball rolling now – you can still proceed as you will not be legally bound to sell or buy until you exchange contracts. It can take weeks to get to that stage anyway, so get started now and assess your options in the coming weeks/months.
We are reviewing each transaction on a case-by-case basis and advising our clients appropriately for what would be best for their situation. We are already drafting extra clauses to help our clients proceed with their transactions without disruption to the usual conveyancing process. For example, in normal circumstances, if a buyer was unable to complete due to any reason then they would be at risk of losing their deposit. We are negotiating clauses with solicitors on the opposite side so that if due to any COVID-19 related reason the buyer is not in a position to complete, then the buyer can simply walk away and get their deposit back. We have so far been successful in negotiating such clauses for our clients so exchange of contracts can still be achieved at this time.
Rent for Residential and Commercial lettings
New measures introduced by the Government mean that both residential and business tenants cannot be forced out of their premises if they miss a rent payment in the next three months. Landlords will not be able to exercise the right of eviction or forfeiture for non-payment of rent. However, this only puts a pause on the Landlord's right and does not waive the breach by the Tenant if they do not pay their rent. Tenants are still liable to pay their rent and Landlords will still have a right to forfeit after 3 months. Landlords and Tenants need to review the terms of their leases now to see what options they have. Negotiations between Landlords and Tenants are very important at this stage to ensure that businesses can survive but at the same time try to protect the Landlords' income stream. We would be happy to advise on negotiations and wording for any rent concession arrangements
At Portner, we are operating a policy of 'business as usual' as far as practicable given the circumstances, and we are advising clients on their individual needs and guiding them through the process and any problems they may encounter.
What we will say is please do not let coronavirus halt or derail your property transactions. Our specialist team at Portner are here to help. If you have any questions at all about a property transaction, whether you are buying, selling or remortgaging or as a landlord or tenant, please do not hesitate to contact us at [email protected] and [email protected] or give us a call on 020 7616 5300.