It’s fair to say that the Coronavirus (COVID-19) pandemic has seriously shaken up the UK property market in 2020. According to the Royal Institution of Chartered Surveyors (RICS) house prices and sales continued to fall throughout April and May, although sales picked up again in the latter half of the year thanks in part to the Stamp Duty payment holiday. What’s more, we aren't alone as the pandemic has the potential to hugely impact property markets all over the world.
With unemployment, business failures and income worries rife, many of us will certainly be feeling cautious regarding whether we should buy or sell a home.
But many are hopeful that as restrictions ease, so the housing market will bounce back.
Work out how much it will cost you to move
Most mortgages these days are portable. This means you can take your mortgage with you when you move house. But if you're 2 years into a 5-year fixed-rate mortgage, for example, you might have to pay extra fees to move.
The same goes for if you need to borrow more on your current mortgage to afford a larger property.
Borrowing more money may mean you no longer get the same rate because the loan to value (LTV) will have changed.
Check the terms and conditions of your mortgage or speak to your lender if you're unsure.
You may not always have a choice to sell your property. For example, if you're relocating. Your mortgage lender will not care why you're moving though, only how it affects the deal you have.
Look at how you could save that money elsewhere, like lowering your budget for your next property.
Selling a property comes with a raft of charges to consider, including:
Estate agent fees
Stamp duty (only if you are buying another property)
Outside of the current stamp duty holiday, stamp duty is likely to be your biggest extra cost. To get an idea of how much this will be, you need to know roughly how much your next property will cost (you do not have to pay stamp duty on the house you're selling).
The other fees vary depending on your provider, conveyancer and estate agent.
It’s worth spending a bit of time and effort making your house desirable to buyers and it doesn’t have to cost a lot.
What’s more, as many estate agents are expecting a sharp rise in enquiries for properties with outdoor space since the Coronavirus lockdown, this could be a good place to start.
However, before you make any cosmetic changes, it’s worth fixing any structural damage first. Not only will this improve the property, it will stop potential buyers from using structural repairs as a bargaining chip in price negotiations.
The better shape your house is in, the easier (and more quickly) it will sell.
Increase your property’s “kerb appeal” by:
Tidying the garden or mowing the lawn
Clearing the driveway (and polishing your car if it will be there during viewings)
Sanding and repainting any wooden window frames or doors/garage door
Cleaning the windows
Fixing any loose guttering or broken exterior pipes
Moving the bins out of the way and putting up some hanging baskets for colour
For the inside of the property:
Declutter and organise – make it look light and airy
Ensure the kitchen is spotless and surfaces are clear
Make sure each room shows its purpose...so no home office/exercise equipment /drying laundry in the dining room
Try to ensure you have beds in each of the bedrooms (particularly if rooms are small)
Deep clean, including carpets
Paint rooms in neutral colours
Hang mirrors in hallways and small areas to make them look lighter
Place a few houseplants or vases with fresh flowers around to freshen the place up
Your house can look lived-in, but you want prospective buyers to be able to see themselves living there, not you. For this reason, try to ensure everyone else is out when viewings will take place. Make sure the place smells fresh and clean, too – buyers are unlikely to be impressed by a “damp dog” odour.
You do not have to make major changes to your property to sell it. But if you have plenty of room for an extension, applying for planning permission regardless may make your property more attractive to potential buyers.
If you do not have to move and have decided it's too expensive anyway, why not concentrate your efforts in improving the home you have?
Clear out any clutter and decide what your priorities are. Could you remodel the existing living space? Or extend to accommodate your growing family?
If you have decided to sell, you’ll need to market your property in the best way possible.
According to Zoopla, the gap between the asking and selling prices is 3.9%.
Use online property portals to see how much similar properties have sold for in your area, and do this before you get estate agents to value your home. That way, you’ll know how accurate their estimates are. Invite at least 3 agents so you can calculate an average that you're comfortable with.
Try to price your property realistically. It's tempting to go for the highest valuation, but an over-inflated price could mean your house stays on the market for longer (and needs a price reduction to sell).
It's equally damaging to price your property too low. While it will sell quickly, you will reduce your profit, as well as what you can spend on a new property.
Regardless of how you market your property, you need really good pictures to show it looking its best.
There are a few ways to sell your property. The main ones are:
With a high street estate agent
With an online estate agent
High street estate agents are the most expensive option. They tend to offer the most comprehensive service and will manage the valuation, advertising, paperwork, viewings and price negotiations for you, but calculate their fee as a percentage of the sale price, which at 1.5% (inc. VAT) or higher can often be hefty.
The sale of a £500,000 house would earn an estate agent £7,500, for example. However, as most work on a “no sale, no fee” basis, if your house doesn’t sell you pay nothing.
Some agents are better than others, so you can be affected by who you are assigned, and agents can be uncomfortably pushy when wanting to finalise a sale.
You may also decide on a multi-agency agreement, where several estate agents act for you, but only the agent that sells your profit will receive a commission. However, as you’ll pay a higher fee to go multi-agency (and they all advertise in the same places) this might not be worth the extra cost.
Always ask family and friends for recommendations regarding their own experiences with agents and check their industry credentials.
Look for ‘For Sale’ signs in your area to see which agencies have experience in selling your type of property.
Once you’ve chosen an agent, consider going to view a similar property on their books to see if you’re happy with their selling technique.
Finally, make sure you haggle over the fees they will charge you – and ensure that any quoted commission rates are inclusive of VAT.
Online estate agents are becoming more popular with sellers due to their competitive charges. But like buying flatpack furniture, you will pay less upfront but must be prepared to do a lot of the work yourself.
Online agents will usually carry out the valuation, take the photos, create the floor plan and advertise your property online, listing it on all of the main property websites (Rightmove, Zoopla, PrimeLocation etc).
You can then choose to pay more for an agent to host viewings and conduct price negotiations, or save the money and do it yourself.
Online agent fees typically range from £99 to £1,500, depending on where you are and how much of a service you require. As this is a flat fee, and not affected by the value of your property it can be a frugal option for those with more expensive houses.
However, you must still pay the fee regardless of whether or not your property sells.
Selling your property privately means you avoid estate agent fees altogether.
However, as individuals cannot post their property ads on online property portals like Zoopla, this will affect how many prospective buyers will see your property.
Private sales are good if you already have a specific buyer lined up and are comfortable handling price negotiations yourself. It also helps if you have a good relationship with the buyer.
When selling a property, even privately, you’ll need a conveyancer or solicitor to handle all the legal paperwork.
The buyer's conveyancer will conduct the searches on your property. They'll also register the property with the Land Registry under the new buyer's name and arrange stamp duty payment on completion.
Their conveyancer will liaise with yours to get the sale agreed and finalised.
You can use the same conveyancer to handle your house sale and the purchase of your next property.
How do you know what's a good offer and what isn't? Your estate agent should be able to tell you, but you should have a minimum amount in mind. Your estate agent will tell you if it's realistic.
Keep an eye on how much other similar properties have sold for in your area so you know what's going on in the market. Things might have changed from when you first put it up for sale.
Try not to take low offers too personally, and be realistic about what you can get right now. Brexit has created uncertainty and the property market has all but ground to a halt. The market is currently in the buyer's favour, not yours.
Any offers should come via your estate agent, unless you're selling privately. They must relay every offer to you, even if they know you'll reject it.
When you receive an offer you're happy with, tell your estate agent. They'll tell the buyer whose offer you've accepted.
Be prepared for the buyer to ask for you to take the property off the market. They'll want to protect themselves against gazumping.
Gazumping is where you've agreed a price with a buyer, but a new buyer offers you a higher amount. If you then go with the higher price, the new buyer will have 'gazumped' the original buyer.
Gazumping is not illegal, but it's not encouraged. You may make more profit, but it could slow down the whole process, impacting how soon you buy your next property.
Once you've accepted an offer, you can start looking for your next property. Most sellers will not consider you as a serious buyer without one.
The house sale is not legal until you and the buyer exchange contracts.
The buyer will need to be happy with the searches and survey outcomes to go ahead with the sale. If the survey reveals problems but the buyer is still interested, you may have to deduct the cost of repairs from the agreed price. This is common practice and helps you push the sale through.
You exchange contracts via your conveyancers. As soon as you sign the contract, you are legally bound to go ahead with the sale - you cannot back out now, even if someone comes along with a better offer. If you do back out, you'll have to pay huge fees that may cancel out the higher offer anyway.
As you're selling your property, you'll have moved house before. The biggest issue this time around is that you'll need to time it right with the move into your next house.
You'll know ahead of time when this will be because the completion date is laid out in the contracts.
Of course, there could be delays. If this happens, you may end up having to put some of your possessions into a storage facility.
Unless you've decided to DIY the whole thing, you'll need a removal company to help you move. Again, the service you get depends on how much you are happy to pay. Services can involve:
Transporting pre-packed boxes from one place to another
Packing the boxes up for you and transporting them
Supplying the packing materials, packing the boxes and transporting them
As moving house is so expensive, you may prefer to do as much as you can yourself. But the cheapest option could cost you more in time. It depends on what your priorities are.
It’s important to take the completion date seriously and ensure you have moved everything out by the time you complete as the new owners will need to collect their keys.
Ensure you have also:
Paid any final utility bills (take photos of all meters in case of any problems)
Redirected your post and provided the new owners with a forwarding address
Handed over all keys to the estate agent
And that's it.
Congratulations on selling your home!
The Financial Conduct Authority (FCA) confirmed that homeowners whose finances have been affected by COVID-19 can apply for a 3-month mortgage payment holiday, which can be ‘topped up’ to a total of 6 months.
Homeowners unable to make their mortgage payments who have yet to apply for a payment holiday have until 31 March 2021 to do so. Mortgage payment holidays ease the burden of having to make monthly payments at times when you may be struggling to make ends meet. The holiday will not appear on your credit file and won’t affect your credit score, however lenders will still be able to find out about it.
You should only take a mortgage payment holiday if you really need to. This is not free money – it is simply extending the term of your mortgage by 3-6 months. Your home loan will continue to build up interest during this time, meaning the total amount you will pay back over the term of your mortgage will be higher.