Coronavirus Update

As you are aware the situation as regards moving home is very unclear at the moment and changing almost by the hour.

We remain committed to helping all our clients through this difficult time and offering our help and advice where we can.

We are keeping a constant eye on announcements and guidance and pressing the relevant authorities for clarity for everyone involved.

Since the government announcement on Monday placing the UK into what is essentially lock down, save for specific and essential reasons, clients have understandably been concerned as to what this means for them.

The most recent statement that we have been able to obtain is as follows:-

A Government spokesperson said: "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.”

Coupled to this, the Removals trade body (BAR) has stated to its members as follows:-

“The Member should only complete any moves that are underway and immediately cancel or postpone any move that has not yet started. It is evident that our collective and absolute priority now must be on ensuring the safety of the staff and customers of our Members, and of course their respective families, and so all parties must now make every immediate effort to remove the risk for mover and consumer alike at the very earliest opportunity. There will of course be many more questions asked and answers needing to be given over the next few days, but it is imperative that we react now to that very explicit instruction from the PM and we strongly encourage everyone to comply with the instructions issued by the PM, and the subsequent recommendation made by the BAR, and to keep safe and well.”

This has been followed by Britannia, one of the largest removal companies in the country informing us through a buyers’ solicitor today:-

“Unfortunately our removal provider, Britannia are unable to fulfil any further removals for the imminent future.  Britannia have been informed by The Ministry for Housing that no moves should go ahead and there’s even talk that a formal suspension of the UK Moving industry by Government is imminent from Friday “

It seems clear from the above that the position is one of uncertainty to put it mildly.

What this means for you moving house

There are special legal considerations for clients who are entering into contracts for the sale and purchase of properties.

As I am sure you know, once you have exchanged contracts, all parties are contractually bound to complete on the agreed completion date. If you were unable to complete on time, whatever the reason, including Coronavirus as things stand, you would be in breach of contract.

The implications of this can range from payment of interest under the contract for a late completion (calculated by the contractual interest rate which is usually 4% above the Bank of England’s base rate which is then applied on the price and divided by 365 to give a daily rate of interest payable for every day that you are late in completing) to potentially the loss of the 10% deposit (for buyers), and other reasonable costs which might flow from the breach of contract.

At present the advice from the Law Society and the profession generally remains that it is not a viable option to insert clauses into sale/purchase contracts to cover the Coronavirus – not least because such clauses cannot protect everyone in a chain and such clauses become ineffective if one person in the chain would not agree.

Possible solutions

1.         If you have exchanged contracts

The advice is that a delay should be sought from all parties in the hope that everyone wishes to follow the Government advice and stay safe and protect others and the NHS. Such a delay could take many forms and would be a matter for negotiation on a case by case basis. We can assist with this and will do our best to negotiate something that everyone can accept, but there are not guarantees as there is no obligation on parties to agree to amend the contract. Any such delay will require compromise from everyone, but it is important to bear in mind the seriousness of the situation and the reasons why everyone needs to work together in these challenging times.

If that is not possible then you will need to see whether or not it is all practical to move – ie check removals can and will work and that you are comfortable with your health risks and the risk to others. We do not feel that we can advise any party to assume these risks given the seriousness of the situation and would urge everyone to agree a better and safer solution.

2.         If you have not yet exchanged contracts

We have now reached a time where there are delays, for example in lenders releasing mortgage funds, Surveys, return of searches, other parties’ solicitors not being fully operational and removal companies not be able to do their job. With co-operation, there are ways in which these issues can be resolved, but the legal position remains that the contract is the contract and binding regardless of the reasons for any failure to complete. 

Given the above and the fact that we simply do not yet know how long this situation will last, you may want to consider whether it is in your best interests to commit to exchange of contracts at the moment. Clearly the desire for certainty and to lock in parties and prices is commercially attractive, however this must be set against the unknown risk in the future of mortgage offers being withdrawn or not renewed, the lockdown being maintained or even strengthened, removals not being possible and of course additional costs being incurred.

Before deciding then it is critical that you check with all of those involved in your conveyancing transaction prior to exchange of contracts, (agents, conveyancer, financial adviser/lender, removal men etc), and work with your agents to keep lines of communication open.

Overall the best general advice is that if you have not yet exchanged you should not do so until the lockdown period has concluded. If you have exchanged then seek agreement to delay completion in a way that everyone can accept.