The Government issued clarification and further guidance on 26 March to ensure movement restrictions are in place to combat the spread of COVID-19. With the government confirming that the coronavirus lockdown will continue until at least 7 May, these restrictions continue to apply.
The original guidance provided was vague, and was only supported by a statement from the Cabinet Office Minister Michael Gove, who said that the conveyancing process should be paused where possible.
The Housing Ministry guidance contains detailed guidelines about what the movement restrictions mean for homebuyers and renters. They stop short of an outright ban on moving whilst the restrictions are in place, but do place a very firm emphasis/requirement on doing everything the parties can to avoid moving during this period (with a few exceptions).
The guidelines make clear that there is no need to pull out of transactions (but clearly expectations about the timeframes for getting transactions from start to finish will need to be adjusted by the parties).
- Vacant properties – subject to the guidance below about home removals, transactions that involve vacant properties can still continue.
- Used properties – if you are buying a “used” property that is vacant (e.g. due to probate, or because the previous rental agreement has terminated, and there are currently no occupiers) then the parties can still proceed to complete the purchase (subject to compliance with home removal restrictions).
- Newbuild properties – if these have not been lived in, purchase of such properties can also be completed, so parties with new developments, or properties which have been newly handed-over by builders, can (subject to complying with home removal restrictions and social distancing requirements) still proceed with these transactions.
- Occupied properties – the current presumption for occupied properties, is that the transaction should not proceed. So for properties where contracts have not been exchanged, these should be paused. If contracts have already been exchanged, then all parties are being encouraged to do all they can to amicably agree an alternative date to move, when movement restrictions are no longer in place.
- “Critical” home moves – the new powers acknowledge that there may be transactions where new dates cannot be agreed, so there is an exemption for vital home moves. However, it is not currently clear how much investigation or enquiry will be carried out if parties are found to be moving home during the restricted period, to assess whether or not the home move is critical.
- Conveyancers – despite likely difficulties in find removal firms during the lockdown period, the Government does want conveyancers to support the process generally by trying to ensure that transactions involving unoccupied properties continue if they can.
Conveyancing transactions can still be progressed as normal up to and including exchange of contracts. However, unless the property in the transaction falls within one of the groups mentioned above (i.e. where proceeding to moving will not breach the restrictions), the Government states that all parties should work to delay the exchange of contracts until after the period where stay-at-home measures to fight coronavirus are in place, or should include explicit contractual provisions to take account of the risks presented by the virus.
Whilst we can assist with drafting such provisions to assist with transactions proceeding to exchange, our view is that the provisions will leave the parties in the transaction in a very uncertain position as to:
a) when the transaction might be able to proceed, and
b) whether the transaction will ultimately proceed at all.
In the circumstances (except where proposed transactions fall within the groups mentioned above, which can still proceed during the restricted period), it might be preferable to progress transactions to the point of exchange, but not actually exchange contracts until restrictions are lifted.
However, if a party to a transaction has a mortgage, such a party may need to exchange contracts despite the uncertainty which that might bring to both seller and buyer as, whilst UK Finance have indicated that they will work to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months to enable them to move at a later date, it is not clear whether this applies to parties who have not yet exchanged contracts, and/or whether they will give this support to parties who exchange subsequent to the guidance being issued/restrictions being imposed on 26 March 2020.
The new advice is clear that these can still take place subject to following guidelines:
- Movers should honour their contractual obligations already entered into to move people, provided that they can do so safely for all parties (and assuming that the date for the move cannot be changed)
- Current Government guidance (as at 26 March 2020) states that work can be carried out in people’s homes, if the tradesperson is well and has no symptoms of coronavirus
- Government guidelines on social distancing (2-metre distance from others), and washing hands with soap and water often for at least 20 seconds, must be followed
- No work should be carried out by a person who has coronavirus symptoms, however mild.
Parties can still progress certain conveyancing transactions of unoccupied properties, if they wish to (and the government wants to ensure that these do progress) provided that they can be progressed under current social distancing guidelines.
Transactions involving occupied properties that have exchanged contracts should be delayed if at all possible, and those that progress to a point that is ready for exchange can exchange, but provisions should be put into place so that completion is delayed until the restrictions are lifted.
For parties who are involved in the conveyancing process in other ways (e.g. as landlord, management company etc.) there will be less opportunity for having a direct impact on whether the seller and buyer in the transaction wish to proceed.
However, parties should consider on a case-by-case basis what they can do to support the government guidance in relation to such transactions, and the parties involved in them (particularly where anyone involved in the transaction has symptoms, or is self- isolating or shielding from the virus).
The full Government guidance can be read here.
This is a general briefing note that is not intended to be relied upon. For its application to particular transactions, we recommend that specific legal advice should be obtained.
For further support and advice relating to the impact of COVID-19, please view our COVID-19 Advisory Service page.