Updated on 10/11/2020
We understand that you might be concerned if you’re currently in the middle of a property transaction. So our solicitors have answered some common questions below.
If you have any questions relating to your transaction, please call us on 0370 1500 100, or contact us online.
General conveyancing questions:
Buying a new build property:
Lease extensions and freehold purchase (enfranchisement):
Stamp duty holiday
What types of transactions can still go ahead?
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Can I still exchange contracts for my purchase?
There’s been no legal change that stops you exchanging contracts, or completing the purchase or sale of property.
However, every case is individual, and there will be other factors (for example whether you need a mortgage or if the property is already vacant).
Once you’ve exchanged contracts you’re bound by your obligations under the Law Society’s “Standard Conditions of Sale”. This means that if you exchange and are then unable to complete the
transaction (for any reason), you’ll be liable to pay interest and related costs incurred by the other party. You could potentially lose your deposit too.
To stop this from happening, your solicitor may recommend that you add extra terms to the contract. Or they may suggest that completion of the contract happens at the same time as exchange. This is known as "simultaneous
exchange and completion".
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What if I’ve exchanged contracts, but can’t move due to the lockdown?
If you’ve exchanged contracts you have to comply with its terms. If you can’t complete your purchase you may have to pay costs incurred by the other party. You could even lose your deposit.
However, these are unprecedented times. Speak with your conveyancer – you may be able to negotiate with the other side to see whether the contract can be varied.
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Will I have problems getting a removal company?
Because of the lockdown and the increased number of transactions, you may find it difficult to get the remover you want. It's a good idea to contact the remover as early as possible, and keep them informed of your likely moving dates.
Removal companies need to comply with social distancing and Government guidance. They may ask for additional facilities for their employees, such as a specific area for washing hands, or that you and your family wear face masks. Make sure you know their requirements ahead of the moving day.
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What delays can I expect with my conveyancing?
Many solicitors and conveyancers are continuing to work from home. This can sometimes lead to delays, but there are many other factors which may affect how long your transaction takes. For example:
- Land Registry – the Land Registry is still working through a backlog from the lockdown and may have delays in answering enquiries.
- Searches – we’re experiencing delays in getting searches. These are needed for property purchases and by mortgage lenders.
- Mortgage lenders - need more time to deal with enquiries and to release money. Physical surveys or valuations (which are required for some mortgages) are delayed due to high demand. In turn this means mortgage offers can be delayed or postponed.
- Leasehold purchases -conveyancers require a Management Company or Landlord to provide information relating to the lease and the building. However, some management companies are dealing with backlog and there may be delays in providing this information.
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Can my remortgage still go ahead?
There are currently no restrictions on remortgaging properties. As these transactions don't involve people physically moving home, it's unlikely they will be affected by local or national lockdowns.
However, there are significant changes to the mortgage products on offer, and recent government announcements means that further changes may soon be with us.
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I’m waiting for a mortgage offer, is this being affected by the lockdown?
Mortgage lenders are facing increased numbers of mortgage applications, so the issuing of your mortgage offer may be delayed. This increased demand has happened following the end of the first national lockdown and the introduction of the Stamp Duty holiday.
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Is the situation the same in Scotland?
Some of these answers apply equally to Scottish transactions. However, it’s important to bear in mind that there is a separate legal system in Scotland.
Please contact our Scottish conveyancing team if you have any questions.
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What happens if I haven’t exchanged contracts and the value of the property decreases?
There’s no obligation on either party to complete a transaction until contracts have been exchanged. This means that a buyer could back out of the purchase, or negotiate a lower price if the
property value has decreased.
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I’m planning to sell my property when the lockdown is over, is there anything I can do now?
Yes – this is a good time to get your paperwork in order and prepare for your sale. You can instruct your solicitor to ensure the legal title is in order and this may make the transaction go more smoothly when you’re able to proceed.
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I’m buying a new build and exchanging with completion ‘on notice’. Can a developer serve the notice during the lockdown?
Exchanging a contract for a new build purchase “on notice” means that a developer can serve a notice telling you the property is ready, giving you a set amount of time in which to complete the
transaction.
There’s nothing to stop a developer from serving such a notice at this time, so long as the property is ready.
If you receive notice you should carefully consider whether you’re able to complete the purchase. Speak with your solicitor if you anticipate any problems.
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Can I move into a completed new build house?
There's no legal restriction preventing you completing on a new build property.
However, any moving arrangements would need to follow the rules on social distancing and Government regulations and guidance.
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What happens if I’ve exchanged contracts for the purchase of a new build house and construction is delayed?
You need to look at your contract closely and take advice from your solicitor.
Most new build home contracts will include a "target completion date" by which the developer hopes to complete the sale, together with a "long-stop" date which will be the final cut-off date for completion. This gives the developer the option to delay completion from the original target completion date. The long-stop completion date is often a period as long as 12-24 months after the target completion date.
New build home contracts usually have to comply with the Consumer Code for New Homes. This allows developers to delay their building works where reasonable. It’s likely that the current outbreak and social distancing gives developers reasonable cause for some delay in completing works.
The Consumer Code requires developers to give buyers a termination right if there's been excessive or unreasonable delay (this may not be the exact term used in your contract). However, it’s
likely that the developer complying properly with the law and guidance relating to the current outbreak would not be found to be unreasonably delaying the works.
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What happens if I’ve exchanged contracts for the purchase of a new build house, but I’m unable to complete the sale of my current house?
It’s important to understand the terms of your sale contract (for your current home) and the purchase contract (for your new home). The government has not introduced any legal changes on how
those terms work, and has not prevented them from being enforceable.
What they are doing is providing guidance to the conveyancing profession, to the property industry and the development industry. The government is clearly requesting that everyone involved takes
a reasonable approach and delays completion/moving dates where possible.
If it’s genuinely not possible for those in the chain to agree to delay completion dates, then it appears from the guidance that this justifies house moves going ahead.
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How are lease extensions and freehold purchases being affected?
Lease extensions and enfranchisement (freehold purchase) claims are continuing with no specific government guidance relating to them.
However, surveyors may be handing a backlog and be unable or delayed in completing surveys. You may wish to speak with your surveyor to see if this will affect your transaction.
As part of your claim you may be required to apply to the First Tier Tribunal or County Court. At the moment these institutions are holding video or telephone hearings. They are also dealing with a substantial backlog, which may cause delays in getting a hearing date.
Lease extension and freehold purchase claims have to run to tight deadlines (for example to provide deposits, to serve counter notices and to make tribunal applications). Your solicitor should
advise you if there is any difficulty meeting these deadlines.
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Will I be able to start a lease extension claim?
There’s nothing to stop you starting your lease extension claim.
In fact, the term of your lease will continue to decrease. It's important to make sure you know the length of your lease, as properties where leases drop below 80 years will be more expensive to extend.
To start your claim you’ll need to serve a notice on your landlord.
The notice must include a reasonable premium you’re prepared to pay. This premium would be based on advice from a surveyor who specialises in this field. Normally the surveyor would inspect the
property, but in the circumstances they may be happy to provide a desktop valuation and proposed premium.
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Do landlords get extra time to respond to lease extension claims?
No, the law remains unchanged in this area.
If you think you’ll encounter difficulties in meeting these deadlines, you must speak with your solicitor for further advice.
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Can I still enter into a voluntary lease extension?
Yes, by entering into a voluntary agreement you may sidestep the requirement for a valuation.
You should speak with your solicitor to ensure you understand the risks involved in entering a voluntary lease extension.
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What is the stamp duty holiday?
On 8 July 2020 the Chancellor announced a stamp duty land tax holiday, for property purchases up to £500,000. This means you'll only pay stamp duty on the amount of the purchase price over £500,000 (subject to a 3% surcharge if you own more than one property).
The stamp duty holiday will end on 31 March 2021, and you must complete your transaction before that date to take advantage of the reduction. At present there's no indication that the stamp duty holiday will be extended.
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Does the 3% stamp duty surcharge still apply for second homes?
Although there’s currently a stamp duty holiday, this only applies to the standard rates, and not the additional 3% charge for people who own second homes.
The 3% surcharge remains in place if when you complete your purchase, you’ll own two or more properties anywhere in the world, and both are worth £40,000 or more. It’s paid on top of the standard stamp duty rate. This means that if you own more than one property, you’ll pay between 3% and 15% stamp duty, depending on the value of the property.
Different rules and rates may apply if you’re purchasing in the name of a company.
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