It is not the best time now for the UK property market whose expected growth is being threatened by the global health emergency posed by coronavirus pandemic.
Unlike Nigeria where property buying is cash and carry, property buying in the UK is driven largely by mortgage. There, and in other economies too, including South Africa, people don’t save or use cash to buy homes. They simply take mortgage which they get once they apply to the banks.
Now, the whole world is under siege with the severe impact of coronavirus pandemic spreading. The UK banks are also catching the bug and have therefore stopped mortgage lending, throwing the entire housing market into confusion and chaos.
Like other European countries, UK is locked down. So, economic fears and a lack of staff because of self-isolation and the lockdown have led to lenders not giving out home loans to buyers.
Government is urging people not to move homes. Danyal Hussain of the Daily Mail quotes cabinet office minister, Michael Gove, as saying amid a country-wide lockdown with restrictions on movement and socialising, that people should cancel plans to exchange house contracts or rent somewhere new and stay home.
Gove suggested that those who already have exchanged contracts should complete their moves to their new houses. But moving companies are cancelling jobs amid the pandemic, leaving people unable to move in.
“But one of the things I would stress, if at all possible, people should stay in their current homes.” Gove stressed.
Henry Pryor, a buying agent, agrees, saying, “the easy advice is don’t go through with it; getting a survey will be impossible. Finding a removals company who can guarantee to be available in six weeks time will be harder still.”
Among lenders, Barclays have set a limit on how many applications it can deal with on a daily basis, due to staff shortages. Buy-to-let lender, Together, will not be lending during the crisis, while West Bromwich Building Society has limited its lending.
In a related development, Virgin Money has put all valuations on hold while Pepper Money said self-employed borrowers are now subject to underwriter review and discretion. Estate agents up and down the country are also feeling the effects of the government policy.
The good news however at a time like this is that homeowners who are facing financial difficulty because of the coronavirus pandemic have been offered a vital lifeline.
They were told last week that they would be able to take a so-called mortgage holiday where they can suspend repayments for up to three months.