The Blackadders offices are closed due to COVID-19 but the residential property teams across Scotland are busy working from home to try to keep transactions on track and answer clients’ many questions.
Below are some of the most frequently asked questions at present but this is a rapidly evolving situation so it is always best to contact your solicitor for an update on the current position.
Q: Can I still purchase a property during this time?
A: In theory, yes, you can still make an offer. Most solicitors and estate agents are still working remotely. However, viewings will not be possible at this time and you should think very carefully about submitting an offer if you have not viewed the property.
Q: What is the current guidance from the government about moving home?
A: Where the property being moved into is vacant, then you can proceed but you must follow the guidance on social distancing. Where the property is currently occupied, all parties are being encouraged to do all they can to amicably agree alternative dates to move, for a time when it is likely that stay-at-home measures against coronavirus will no longer be in place.
Q: Can I conclude missives without a date of entry?
A: It is not advisable to conclude missives (i.e. enter into a binding contract) without a date of entry because there would be no effective means of enforcing such a contract. Instead a number of solicitors are at present issuing missive letters in draft form to enable the terms other than entry date to be agreed. There are other steps that can be taken to progress the transaction too, for example, looking at the title deeds, checking where funds are coming from and drafting the disposition.
Q: What will happen to house prices?
A: The honest answer is that we just don’t know at the moment. Prior to Coronavirus the market in and around many areas of Scotland was competitive. As a seller in these areas you could probably expect your property to go to a closing date and a sale price in excess of the home report was likely to be achieved. At the moment there is very little movement in the market but we expect things to move again once the current restrictions are lifted.
Q: Are mortgages still available?
A: Yes but if the loan to value is more than 60% then most banks and building societies will have to put applications on hold. One reason for this is the lack of availability of necessary valuations. Not all lenders accept the home report. Another reason is staff shortages and available members of staff are receiving lots of calls from existing mortgage customers requesting payment holidays. Mortgages with a loan to value of less than 60% are less problematic because desktop valuations may be permitted but you should still expect the application to take longer than usual.
Q: What will happen to interest rates?
A: Interest rates are at an historic low. This will benefit anyone on a mortgage deal which goes up and down in line with the Bank of England base rate. If you are on a fixed rate then it will make no difference to what you pay each month. Interest rates are unlikely to rise until the crisis is over and even then it is likely that any increases will be small and gradual.
Q: Does my mortgage offer still apply?
A: Yes. Banks are continuing to release funds when necessary but they are asking that as much notice is given as possible since they are short staffed at present. You should consider carefully whether or not to complete your property transaction during the current restrictions as in most cases to do so will be in breach of the current guidelines issued by the UK and Scottish governments. Check your offer of loan to see when it expires and, if necessary, speak to your lender about getting an extension.
Q: Does my Home Report still stand despite the delay?
A: Yes. The only issue which might arise is if you accept an offer then the buyer’s lender may ask for the home report to be refreshed if it is more than 3 months old.
Q: What is the Land Register, why is it closed and what does that mean?
A: The Land Register of Scotland is one of the main records of land ownership in Scotland. It is one of many public registers which are maintained by Registers of Scotland. In light of the current situation the Registers of Scotland’s offices in Glasgow and Edinburgh are closed but a number of their staff are working from home. The closure of the offices has also resulted in the closure of the application record. Only applications which can be submitted electronically can be presented for registration at this time. While that means that solicitors can apply for the usual advance notice in anticipation of sale/purchase transaction no other documents can be registered at this time. That means that the record of land ownership cannot be updated and any associated mortgage paperwork cannot be registered either. Registers of Scotland are working on a “digital solution” which, it is hoped, will be up and running shortly. In the meantime emergency legislation has been passed which extends the validity of an advance notice until 10 days after the application record is fully re-opened.
Q: What is an advance notice?
A: An advance notice is applied for usually around a week before the anticipated date of entry. It givesa level of protection to the person or persons named in the advance notice as no-one else can be given a better title than them. Normally an advance notice is valid for 35 days so the expectation is that the application for registration will be made before the protected period expires. The current closure of the application record has meant that applications for registration cannot be submitted at present. Emergency legislation has now been passed to extend the validity of advance notices until 10 days after the application record re-opens.
Q: When we come out of lockdown are further delays likely due to the backlog?
A: Hopefully not. Most solicitors are still working from home and they are trying to keep transactions moving as much as possible so that when the restrictions are lifted people can start moving as quickly as possible.
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