What does England’s new lockdown mean for the property market?

Secretary of State for Housing, Robert Jenrick, tweeted that the Housing market will remain open in light of Thursday's new lockdown measures.

Secretary of State for Housing, Robert Jenrick, tweeted that the Housing market will remain open in light of Thursday's new lockdown measures.

Secretary of State for Housing, Robert Jenrick, tweeted that the Housing market will remain open in light of Thursday’s new lockdown measures.

The deep freeze that the property market was plunged into by the first lockdown in March will not return, as England finds itself told to stay home again.

England’s property market can continue to operate with viewings and valuations permitted during November’s lockdown, the secretary of state for housing, Robert Jenrick, has confirmed.

But while the rush to beat the stamp duty holiday deadline may continue, the order to stay at home could seriously dent confidence, curtail buyers’ appetites for making offers and stall the property mini-boom that has seen house prices jump. 

With England being placed into a second national lockdown from this Thursday until 2 December, Jenrick tweeted that renters and homeowners will still be able to move during this period.

He also said estate agents, construction sites, tradespeople and removal firms should all continue to operate, albeit while following covid safety guidance.

The decision, which has been welcomed by experts across the industry, marks a change of approach compared to the first lockdown.

In March, the UK government effectively suspended activities within the property industry with estate agents closing their doors and in-person viewings temporarily banned.

House builders closed construction sites, and many home purchases were put on hold, with surveying firms stopping on-site valuations.

Mark Hayward, chief executive of NAEA Propertymark, said: ‘We welcome the news that the housing market is to remain open throughout this second lockdown period, and it is essential that all agents continue to play their part in reducing the spread of the virus through following all relevant guidance.’

This is Money has answered all your questions about what is and isn’t allowed from Thursday.  

Can people still view my property?

Estate agents in England will remain open, enabling prospective buyers and renters to continue attending viewings.  

Alistair Elliott, senior partner and group chairman of property consultancy Knight Frank, told This is Money: ‘We will make decisions on our own operations, ensuring the wellbeing of our people, our clients and customers, whilst continuing to operate in accordance with latest guidance.’

Jeremy Leaf, a north London estate agent, said: ‘While our offices will remain open, we will be working a rotational policy once more, trying to reduce the spread of the virus by minimising face-to-face contact as much as possible.’

Will surveyors be allowed to value my property?

Yes, within the usual social distancing guidelines. 

David Hollingworth, of L&C Mortgages, said: ‘Lockdown two should not have anywhere near the same effect on the property market as the first time round when the whole market was effectively shut down overnight. 

‘From a mortgage point of view one of the key issues was the inability to conduct physical valuations of property, preventing surveyors from visiting properties and enabling lenders to progress applications. 

‘That saw lenders consider how they could best utilise automated and desktop valuations to help cases move forward but there will always be situations where lenders will need a valuation to be conducted.’

He added: ‘Of course valuers will now be well used to working in a Covid secure manner and so should hopefully avoid the building backlog that we saw in April. 

‘That’s important as we head toward the end of the year with continued strong demand for mortgages and home moves.’ 

Zoopla's index shows annual house price growth running at 3% and how regions were faring

Zoopla's index shows annual house price growth running at 3% and how regions were faring

Zoopla’s index shows annual house price growth running at 3% and how regions were faring

Will I still be able to buy and move house?

Yes. Unlike last time England went into lockdown, this time around government won’t ban house moves, so long as social distancing is observed.   

This should be seen as good news for home buyers in England wishing to taking advantage of the stamp duty holiday, which is scheduled to end on 31 March 2021.

That said, research carried out by Legal & General Mortgage Club suggests that window may be closing, with buyers typically facing a four month wait to complete on purchases. 

Kevin Roberts, director at Legal & General Mortgage Club, warned they’re seeing unprecedented demand from those looking to buy, and that, together with a backlog of valuations and conveyancing work and lenders’ staff working from home, is putting massive pressure on how long it takes to process a purchase.

Simon Gammon, managing partner at Knight Frank Finance, reiterated the need for buyers to take quick action or risk missing out.

He said: ‘Lenders are grappling with both the effects of the pandemic and the busiest mortgage market since 2007, so it’s taking longer to do everything.’

The lockdown property market freeze saw sales plummet and then rebound strongly

The lockdown property market freeze saw sales plummet and then rebound strongly

The lockdown property market freeze saw sales plummet and then rebound strongly 

Is there more help for borrowers? 

Should you take a mortgage holiday? 

Mortgage broker Habito has built a tool that shows you the financial impact that taking a mortgage payment holiday will have on the amount you owe your lender.

You can check what taking a mortgage holiday will mean for you here.

Martijn van der Heijden of Habito said: ‘Any homeowners considering taking a mortgage holiday for the first time should know that this is in no way a ‘holiday’.

‘Interest will continue to accrue each month, and this will need to be repaid to their lender – either at the end of their mortgage or when their mortgage payment holiday ends. It’s a great tool for people who need it, but if your income is unlikely to be impacted, it’s better to continue to make your payments, as normal.

‘Finally, it’s also important to note that today’s news should not be interpreted as an automatic extension to any payment holiday that is currently in place. Lenders will be providing information on how customers can apply, from Monday.’

The Financial Conduct Authority and UK Finance, the lender trade body, confirmed on Saturday that mortgage payment holidays would be extended for up to six months.

Andrew Montlake, of mortgage broker Coreco, warned that while extending the mortgage deferral scheme is a ‘sensible move’ it is important for people to remember that this is not a ‘holiday’.

He said: ‘The interest is deferred and will lead to higher monthly payments in the future.

‘This is a need to have rather than a nice to have, and whilst it may not appear as an issue on your credit report, some lenders may take this into account if you are looking to remortgage or purchase a new property in the near future.’

>> Read more about mortgage payment holidays and how to save money 

Can I get a mortgage in lockdown?

Lenders have been restricting the number of mortgages available to those buying with a small deposit for several months now. 

Brokers say this is likely to continue.  

‘Unfortunately for many first-time buyers, the higher loan-to-value products look set to continue to be a casualty of this as lenders also mull over the potential risks to the economy caused by increasing unemployment and an inevitable slowing in house price growth,’ said Montlake. 

‘It is incredibly frustrating to see those most in need of a stamp duty break unable to take advantage of it.’

He added that it was possible November would see a slowdown in the market once more as delays and uncertainties within chains cause them to collapse. 

‘That said, there are an awful lot of people who are still able to move as their jobs are mostly unaffected, so there is no reason to see a fundamental change unless mortgage lenders and valuers become even more cautious,’ he said.  

House prices rose 5.8% in the year to October, the fastest rate of growth since January 2015

House prices rose 5.8% in the year to October, the fastest rate of growth since January 2015

House prices rose 5.8% in the year to October, the fastest rate of growth since January 2015

Will house prices fall?    

Following the first lockdown there was much talk of an impending property crash.

But those predictions, including from the Office for Budget Responsibility, have so far proved unfounded.

UK house prices have reached record highs during the Covid era with Nationwide reporting last week average house prices year-on-year have risen 5.8 per cent.

A functioning property market during the second lockdown may well see a continuation of this ‘mini-boom,’ experts say.  

Estate agent Jeremy Leaf said: ‘We have been busy and expect to continue to be busy. We are not seeing any signs of previously-agreed sales being cancelled.

‘Many people wanted to move because of the experience of lockdown the first time around and that aspiration hasn’t changed, if anything, this lockdown will accentuate that need.

‘The desire to take advantage of the stamp duty holiday, if possible, also remains and will continue to focus the mind.’ 

However, anecdotal evidence in the Royal Institution of Chartered Surveyors report and from agents on Twitter in recent months has seen many report a marked decline in the appetite to buy in areas that went into local lockdowns, even though viewings and purchases could still go ahead. 

Montake is optimistic about the future resilience of the housing market, but says house price inflation will tail off.

‘The property market has proved to be resilient time and time again in the UK, with the fundamental reasons why people need to or want to move unchanging,’ he said. 

‘Coupled with an overall shortage of property although I suspect we will see house price growth ease, I do not expect a big house price fall anytime soon.’   

 

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