Covid-19 has had a huge impact on the property market since it began, leaving many home buyers, vendors, landlords, tenants and estate agents with questions.
Home England recently issued advice for the Help to Buy market and Sam Bulman, a Conveyancer in the Residential Property team at Cartmell Shepherd solicitors has made sense of it, providing the following useful update:
“Homes England has issued advice for Help to Buy: Equity Loan customers on how they can proceed with purchasing a home during the Covid-19 outbreak.
It says that many people are worried because the situation seems so uncertain. In response, it has published a document containing the answers to some frequently asked questions. These are some of the main issues covered:
Section 1 – Moving home now
I’m using a Help to Buy: Equity Loan to buy a home, can I still go ahead during the lockdown?
Yes. Help to Buy homes are newly built and unoccupied, so it’s possible to continue buying a home during the lockdown.
Section 2 – Authority to Proceed
Will my Help to Buy: Equity Loan Authority to Proceed remain valid if I can’t move during the lockdown?
Some mortgage lenders have committed to keeping existing mortgage offers open for three months. If your main mortgage lender has agreed to this, your Authority to Proceed will remain valid for the same period.
My Authority to Proceed is based on a valuation carried out before the lockdown. What happens if the value of the house I’m buying falls?
The Government will continue to honour Help to Buy: Equity Loans agreed with home buyers before the lockdown. We won’t need a revaluation if your main mortgage lender is happy to proceed.
Section 3 – Valuations
Will you accept desktop valuations instead of onsite valuations during the lockdown?
Yes. If your main mortgage lender is using a desktop valuation to support its mortgage offer, that is acceptable for Help to Buy.
I want to repay my Help to Buy: Equity loan but the surveyor can’t come to my home to do a valuation report, what can I do?
As a temporary response to coronavirus, we’ll accept desktop valuations to support our customers. This means you can get a Royal Institution of Chartered Surveyors (RICS) surveyor to provide a desktop valuation. You’ll need to meet certain requirements for the desktop valuation.
What are the requirements for a desktop valuation?
A desktop valuation can be carried out without a surveyor visiting your home if it meets these requirements:
· The surveyor must be approved by the Royal Institution of Chartered Surveyors (RICS). You can find an approved surveyor on the RICS database
· The surveyor must be independent of the estate agent looking after the sale of the property (if applicable).
· The surveyor must not be related or known to you, to avoid any conflict of interest.
· The survey must be provided on headed paper of the surveying company or approved sur-veyor (if they’re a sole trader), signed by the RICS surveyor, and addressed to Homes Eng-land. It needs to be in PDF or another non-editable document format.
· The surveyor must list at least six comparable properties and sale prices. These properties must be like-for-like in terms of type, size, age and within a two-mile radius of the property be-ing valued, as per RICS guidance. If six properties aren’t available, the surveyor must explain the reasons why they aren’t comparable.
How long will the desktop valuation be valid for?
Desktop valuation reports are valid for three months from the date of the report.
Section 4 – Reservations
I’ve reserved a new home off-plan on a development site, will it be ready on time?
Currently, some Help to Buy house builders continue their work on sites. Others have stopped for safety reasons and are only offering residents essential maintenance services. Each house builder is taking their own approach, so you’ll need contact your house builder to find out more.
I’ve reserved a home and have the go-ahead for a Help to Buy: Equity Loan, but I’ve lost my job due to the lockdown. Can I pull out of the deal?
Depending on your circumstances, house builders have the option to partly refund the reservation fee of up to £500 if you need to cancel. They’ll follow the reservation terms and conditions and can charge for any reasonable costs they may have incurred.
Contact your house builder to understand your options. If you’ve already agreed a mortgage with a lender, you need to contact them to explain your change in circumstances and to discuss next steps.
Section 5 – Completions
My Authority to Proceed with a Help to Buy: Equity Loan has expired, and I’m worried I’m going to lose my home. What can I do?
Don’t worry. We’re in exceptional circumstances and we understand your position. Get in touch with your Help to Buy agent and ask for an extension on your Authority to Proceed. This will allow your home purchase to continue. You should check that your mortgage offer will remain valid if a new completion date is agreed. All mortgage lenders are working to find ways to extend their mortgage offer by up to three months to help customers who’ve exchanged contracts to move later if necessary.
I’ve exchanged contracts on a new home and have a Help to Buy: Equity Loan agreed, will I be able to complete my purchase?
If you’re due to complete, your solicitor needs to request a Confirmation to Developer form from your Help to Buy agent. The completion can’t take place without this, so you’ll need to contact your solicitor to find out if this has been requested. Lenders will work to extend a mortgage offer for up to three months for contracts that have been exchanged for house purchases, new-build purchases and buy-to-let purchases. If you’ve exchanged contracts and are concerned about your completion date and the need to extend your mortgage offer, please contact your lender.
Section 6 – Payment holidays
I’m struggling to pay my mortgage and equity loan interest as I’m not working due to coronavirus, am I eligible for a payment holiday?
On 17 March 2020, the Government announced mortgage lenders had agreed to support customers experiencing personal financial difficulties due to coronavirus with three-month payment holidays, and other options. This means you won’t have to make any monthly mortgage payments for a set amount of time. Before cancelling any direct debits, please contact your lender to ask for a payment holiday on your monthly mortgage payments.
If you’re struggling to pay the interest fees on your Help to Buy: Equity Loan, you can also apply to put these payments on hold for up to three months if you:
· Have contracted coronavirus;
· Need to care for a family member who has coronavirus;
· Are a permanent, temporary, full-time employee or contractor and had your working hours re-duced either temporarily or permanently;
· Are a business owner or self-employed and your business has been affected.
If you took out your equity loan in April 2015, you’ll start to pay interest fees from April 2020. Apply now using this online form to see if you’re eligible
I’m due to make my first interest payment in May. Due to the current circumstances, can I take the payment holiday?
Yes. If you’re due to make your first interest payment in May or June 2020, you’re entitled to request a three-month payment holiday/delay.
What happens at the end of my payment holiday?
When the payment holiday ends, your equity loan payments will return to the normal monthly amount. The important thing to remember is that the amount you owe will increase by the interest amount that has not been paid during your payment holiday. Also, during your payment holiday, interest will continue to be added to your account at the same rate that is in your loan agreement.
Section 7 – Remortgaging
I am in the middle of remortgaging and this involves a legal Deed of Postponement, will you accept an electronic signature on this during lockdown?
Currently the Land Registry continues to require a ’wet signature’ on deeds, so we’ve put in place a manual process to do this. However, given the current situation it’s taking longer than usual, but rest assured that we’re still completing all legal requirements for deeds. If you’re concerned about whether your lender will need a wet signature for mortgage documentation you should contact them directly.
We shall keep clients informed of developments as they occur.”
Please contact Sam if you require any further information on the above or if you need any other guidance with regards to buying or selling a home. Sam can be contacted by calling 01228 514077.