As I was fortunate enough to feature in last week’s Sunday Times, I thought I would share my thoughts on the property market and what’s going on in the average property chain in London.
As I mentioned, it would seem that a summer property slowdown is upon us. After the surge of property transactions over the Spring and rising house prices, we appear to be experiencing a backlog that slows down property transactions.
New mortgage regulations are delaying conveyancing
Buyers and sellers are facing potential delays on several fronts. First of all, the new mortgage regulations are undoubtedly delaying conveyancing transactions. We are finding that in some cases it is taking up to 2 months for the mortgage offer to come through and buyers are being required to jump through more hoops to get their mortgage approved in the first place.
Buyers should consult their broker/lender at the earliest opportunity, ensure that they have all of their financial information to hand, and expect to spend at least a couple of hours running the numbers. Despite the delay that the new regulations are causing, they are at least likely to lead to a more stable property market as there will be fewer instances of borrowers overstretching themselves.
Valuers are overloaded
Valuers have been so inundated with work that it can take 4-6 weeks from the point of paying the valuation fee for the valuation survey to actually take place. As most lenders use the same (larger) firms of surveyors, changing lenders is unlikely to make any difference. We would suggest that buyers book and pay for the valuation at the earliest opportunity to ensure that it is not the cause of subsequent delays.
Local authority searches can cause long delays
Despite most of the standard searches (drainage & water, and environmental) being available within 24 hours, local authority searches can take much longer and it really depends on which local authority you are buying in. At one point this year, one of the London boroughs had a lead time of 8 weeks for a local authority search which caused significant delays for everyone in the chain. Buyers should request that their solicitors commission the standard suite of searches as soon as they have received the Contract pack from the seller’s solicitor to ensure that the results are returned in good time.
Are sellers really ‘chain free’?
Many sellers are marketing their properties on the basis that they are chain free – claiming that they can move in to temporary accommodation in order to allow the sale to go through quickly. However, it is often only once they have found a buyer that they are commencing their property search and dragging their heels on the sale in order to give their onward purchase time to catch up. By this point, their buyer will have invested time and money and so are less likely to pull out. Unfortunately there is not much that a buyer can do in this situation other than insist on transparency on the seller’s circumstances from the outset.
Short leasehold issues in London
We are finding that a large number of the leasehold properties we are dealing with in the Central London area have leases that are too short for mortgage purposes and so the leases are having to be extended as part of the sale process. We are also finding that we are having to regularly deal with defective leases where, for example, they do not contain the correct repairing or insuring obligations on the part of the landlord. Both lease extensions and corrections to defective leases can add considerable work and time to a transaction and in the event that either is needed, both sellers and buyers should highlight this to their solicitor at the earliest opportunity.
Does your solicitor come recommended?
The transaction can only go as quickly as the slowest person involved in the transaction allows. It is worth taking the time to ask estate agents, friends or family members for recommendations on the right solicitor to act on your behalf. Moving is a stressful process and choosing the right legal team can make a considerable difference to how smoothly and quickly the transaction goes from start to finish.