UK Residential Property Transactions FAQs- COVID-19
In view of the outbreak of the COVID-19 and the subsequent self-isolation/social distancing directives which have been imposed on the United Kingdom, the UK Government has recently issued informal guidance on UK residential property transactions.
If you have recently exchanged on a property, or are thinking about exchanging, please see below some FAQs:
Q1: I have already exchanged contracts - will completion be able to take place?
A: There is no offcial Government guidance on this yet but a Government spokesperson has said the following:
"Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus."If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus. Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being."
Practically, it is now likely to be difficult to actually move house the British Association of Removers has told members "The Member should only complete any moves that are underway and immediately cancel or postpone any move that has not yet started." The Law Society state that if you are due to complete on a sale or purchase within the next few days, and all parties are able to proceed, which may be difficult given the position with removal firms, there's currently nothing to prevent you doing so.
Q2: I am due to exchange contracts this week - what should I do now?
A: As stated above, the current Government advice is to delay moving to a new house while emergency measures are in place to fight coronavirus. However, not all residential transactions involve moving house. Completions are able to proceed in certain circumstances, for example buying a property as an investment and the transaction either involves a sitting tenant or where the property is vacant. The guidance also allows for exchange of contracts to take place where the completion date is significantly into the future. However, each situation will be different and dependent on its own facts.
Where contracts have not yet exchanged, any existing provisions for force majeure may no longer be sufficient. Therefore your solicitor should consider adding a special clause to the contract to cover possible delays due to COVID-19 (particularly where the completion date is likely to be within the next 3 to 6 months) together with a long stop date after which the parties can rescind the contract.
Where contracts have already been exchanged, your solicitor should be reviewing your contract to ensure that you are protected against any unforeseen breaches which may result from COVID-19. If the contract does not provide for any protection, your solicitor should be negotiating a variation of the terms with the seller's solicitor.
Q3: What is the best way to get contracts and deeds signed during lockdown?
A: The Land Registry's current stance is that a wet ink original is required for registration. We await further updates as to how or whether the Land Registry will be changing their practice in light of the current situation.
Q4: Has the Law Society issued any guidance for residential property?
A: The Law Society published updated guidance on 25 March 2020 on COVID-19 and residential conveyancing transactions on (click here)