How the property market freeze is hitting buyers and sellers.

‘I’m trapped in self-isolation so I may lose out on a home and £37,000’: how the property market freeze is hitting buyers and sellers

The government has halted almost all house sales during the coronavirus lockdown. Here’s what it means for those in the middle of a purchase


The property market is grinding to a halt due to the coronavirus lockdown, after the Government effectively halted property transactions to discourage people from non-essential moves.

As a result, buyers and sellers are getting left in the lurch – with some being left homeless.

According to analysis by Savills, the restrictions mean that total transactions from now until September could fall by up to 40pc, with only 566,000 property sales in 2020, down from its previously forecast of just over one million. Lucian Cook, of Savills, said: “We project price falls in the region of 5-10pc in the short term.”

Sales agreed last week were already half the level of the week before, according to Richard Donnell of Zoopla, a property website.

Data by Twenty7Tec, a mortgage technology firm, showed that the volume of searches on March 26 fell 24pc compared with the previous Thursday, while the total mortgage value handled last week was £1.5bn less than two weeks ago.

Behind the numbers are thousands of people whose house moves – and lives – have been left up in the air, leaving many in painful financial situations and others with nowhere to live.

Trapped in self-isolation and unable to complete

For one 47-year-old man in the North East who requested to remain anonymous, the situation is extremely problematic.

He has had two bouts of cancer and suffers from an autoimmune disease called POTS, which means that “if I stand up for five minutes, I pass out”. He spends time in a wheelchair.

He was planning to move into a home in a new-build development that had a garage space that would be ideal for his rehabilitation exercises. His condition is aggravated by stress, so he had arranged to buy in cash so that he could work through the moving process slowly.

He exchanged contracts, paid a £36,000 deposit (in addition to his original £1,000 holding fee), and move-in day was set for 27 March.

Then the coronavirus outbreak became severe. “I am in the shielding group,” he says, “how can I go in person to the bank to transfer the funds?”

He asked to delay the sale but the developer refused. According to the contract, the sale must be completed by March 31. On Friday, the developer’s lawyer contacted him to say that if the sale did not complete by Tuesday, he would forfeit his deposit.

The government has since announced a housing market freeze, but allows for purchases to continue when they are legally obliged to and when those involved can’t agree to delay.

According to the law, the buyer is stuck. “For me and my partner it was a dream home,” he says, “but it is literally a life or death situation.”

Will my Help to Buy purchase still be viable after the crisis?


Stephanie Douglas, 25, is a first-time buyer. She and her partner reserved a new-build property on the Help to Buy equity loan scheme in a London development in September. They were expecting to exchange contracts when the development completes in June/July.

Except it may not: the developer has halted construction for three weeks because of the lockdown, which could well be extended.

Ms Douglas and her partner are currently renting and their lease ends at the end of April. They had been planning to move in with her partner’s parents, but they and Ms Douglas herself are in the vulnerable category who are supposed to be self-isolating for 12 weeks. This is no longer an option.

For now, they have two bigger problems. The government has asked lenders to extend mortgage offers by three months for buyers who have exchanged contracts, but Ms Douglas and her partner have not exchanged. Their offer is due to expire in September. “After that, will the same rate still be there?” she says. “I know that mortgages are being taken off market, and will they still have the risk appetite to lend to us?”

And then there is the question of price. The valuation was done before the coronavirus outbreak and house prices are now likely to fall. The fear of getting into negative equity is compounded by the Help to Buy scheme, with which most properties come at a premium.

“The premise is that the government only wants to lend on what the property is worth at completion,” says Ms Douglas. “When we’ve completed I highly doubt the value will be what the valuation was a few months ago. Will the government still lend on that? It’s an equity loan. If we are in negative equity, they will be in negative equity.”

The deal is on hold, but it’s an uneasy wait

Louise Redfern, 46, is currently renting in Dorset with her two sons, who are aged four and eight. She sold her house last year and put a £275,000 offer on a property in early January. She was due to exchange this week, though was worried about potentially becoming furloughed, and had been unable to find income protection insurance.

Louise Redfern
Louise Redfern CREDIT: John Lawrence

She is in a small chain. “The agent phoned me this morning and they confirmed everyone is happy to sit tight.”

So for now, things look OK. She is not considering renegotiating due to the market uncertainty, she says, as house prices had already been falling, and the vendors had already cut their asking price by £10,000 to £15,000. “At this point in time I’m not looking to reduce my offer, I don’t want to jeopardise anything.”

But being on hiatus is uncomfortable. “The worst case scenario is that someone in the chain pulls out,” she says. “My rent is a lot higher than my mortgage would be.” Currently, she is paying £1,000 per month, but her mortgage would be £250 per month less.

If the chain falls through, her worry is being stuck trying to buy in a stagnating market where barely any homes are transacting even after the lockdown is over. “I just want to have a permanent home for myself and my boys,” she says.

Welcoming the property market freeze

James Boal, 33, has just begun the initial stages of buying a new-build home in London on the shared ownership scheme. So far, he has paid a £200 reservation fee to buy a 50 per cent share of a home and is going through the affordability checks. He was expecting to get approval on Monday to move forward with the sale.

James Boal had just begun a house purchase through the government's shared ownership scheme
James Boal had just begun a house purchase through the government’s shared ownership scheme CREDIT:  Geoff Pugh for the Telegraph

For him, the housing market freeze is welcome. “I was getting increasingly concerned about parting with more money during the coronavirus outbreak,” he says.

Is he thinking about renegotiating the price? “I haven’t because I don’t know if it is possible with shared ownership properties.”

For now, he is taking a long-term view. “I’m not buying to flip it, I’m buying for the long term,” says Mr Boal. But it is the immediate logistics of conducting a move during a pandemic that concern him. “If there isn’t an agreement to extend the timeline of the sale then I might have to pull out.”

Paused downsizing to help furloughed children

Michael Rouse, 69, a retired teacher from Doncaster, has just pulled out of a house purchase because of the outbreak. He and his wife had intended to downsize from their five-bedroom house and had an offer accepted 10 days ago on a bungalow for £235,000. Three days later, they retracted it.

“We wanted out because we don’t think any houses will sell,” said Mr Rouse. “And what if the value of our current house halved?”

They worried that they would have paid out for their new home but would have then been unable to cash in on the downsize.

Their finances are already facing extra pressure as they may need to support their children, whose incomes have fallen as a result of the coronavirus outbreak. One of their daughters has been furloughed and will be receiving the Government’s grant for 80pc of her salary. “Except half of her income is bonus, so really she is on 40pc,” Mr Rouse said.

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