Frozen U.K. Home Market Leaves Buyers Wondering Where to Go
Updated: Apr 15, 2020
The property market is deeply ingrained in the national psyche, but the pandemic is reaching everything.
Jerome Reback was planning to move into his new semi-detached home in northwest London in less than two weeks with his wife, five children and two dogs. He spent much of Friday looking for somewhere to rent and store their furniture.
With about a quarter of the world in lockdown, the order to stay at home has taken on a new dimension for one of Britain’s favorite pastimes: property. The government effectively froze the housing market last week because of coronavirus, urging transactions and mortgage offers be put on hold.
Reback’s problem is that he agreed to complete the sale of his existing five-bedroom home on April 6, but hasn’t exchanged contracts on the purchase of the new one. The sellers have now decided they don’t want to commit to moving because of the pandemic, he said.
“It feels anxious, stressful and difficult,” said Reback, 58, a management consultant. “I can’t enter any contracts to purchase anything because people won’t do that now.”
While people move to pricier or cheaper homes all the time, few countries hitch their economic prospects onto the real estate market like the U.K. The Conservative government has made home ownership a core policy, calling it one of their “most fundamental values” in last year’s election campaign.
Instead, with Prime Minister Boris Johnson self-isolating after testing positive for the virus, sales volumes are headed for a cliff and more than 70 billion pounds ($87 billion) of lending commitments are outstanding.
Property values may decline as much as 10% this year, according to Lucian Cook, head of residential research at broker Savills Plc. The government is encouraging those living in a home to agree to stay put until there’s clarity on when Britain will start getting back to normal. On Monday, Johnson ordered all non-essential stores to close along with schools, bars and restaurants and residents to remain at home for an initial period of three weeks.
“We have talked to the mortgage lenders and we have agreed we’ll look to extend those mortgages to a date at which completion can take place,” Business Secretary Alok Sharma said on Friday. “People will understand that at this time they should, where it’s at all possible, move their dates for completion but also their dates moving into new homes.”
Interrupting the housing market shows just how disruptive the pandemic is to national life. Read More