Impact of Coronavirus on buying and selling homes
Scotland has had a public register of the ownership of land since the 17th Century. That register is the corner stone of the conveyancing process in Scotland. It creates certainty and is the repository of the real rights on which land ownership in Scotland is based.
Technological advancements, particularly in the last ten years, have made updating a previously registered title an almost instantaneous process. However, for the first time in living memory, we are dealing with such extraordinary global circumstances that, in common with other public bodies, the Land Register of Scotland (the body responsible for updating and maintaining the Land Register) has closed its doors and, as of 24th March 2020, suspended the process of dealing with applications to alter the Land Register and record updated and new titles for an unspecified period.
It is not only the parties to the transaction that require access to the Land Register. Any mortgage lender requiring a security over the property will insist on that security being registered in the Land Register immediately. That technical difficulty is in addition to most high street lenders now having withdrawn most mortgage products from the market, a development that will bring back memories of the difficult times that followed the 2008 credit crunch.
In addition, the Law Society of Scotland, the body responsible for the regulation of the legal profession in Scotland, has issued guidance suggesting that conveyancing in Scotland is all but impossible under the present restrictions.
The conveyancing process (the technical aspect of a house purchase usually carried out by solicitors) is only one part of the process of buying or selling a family home. The present restrictions have had an equally devastating impact on the process of marketing and valuing domestic properties. Even if it were possible for surveyors and other valuers to regularly attend at properties to conduct their usual inspections, the absence of any ongoing transactions deprives that industry of an important resource in assessing the value of any individual property.
For many people thinking of either buying or selling a domestic property, this will simply be one more thing to add to the list of things to be done when the world returns to a more recognisable normality. However for many this interruption will have come at a precarious stage in their own transaction or at a time when personal or financial circumstances required a transaction to take place. A notable consequence of the downturn in the property market following the 2008 credit crunch was an increase in separated couples remaining under the one roof as domestic sales stalled.
It may be the case that the UK, including Scotland, is more adversely affected by this stall in the domestic conveyancing market than other European neighbours. Scotland, along with the rest of the UK, has a high proportion of owner occupiers and ownership of a principal residence has long been the ambition of Scots.
While all of the adverse factors referred to above create uncertainty in the housing market – an uncertainty that not only will interrupt transactions taking place, but will have an unknown impact on the value of property as these restrictions are lifted), they do not necessarily mean that, with the appropriate advice and assistance, you cannot take steps to position yourself in the housing market or take advantage of the future release of these restrictions and the property market springing back to life.
Many estate agents are taking the decision to continue to market properties, particularly online. The requirement, imposed by the Housing (Scotland) Act 2006, to have a Home Report including a survey and Energy Performance Certificate (both of which ordinarily require the attendance of a qualified professional at the property), may require to be reconsidered if the restrictions imposed at present continue for any significant period of time, if new properties are to be allowed on to the market.
Most solicitors regularly engaged in domestic conveyancing have come across individual cases where for one reason or another a transaction has been unable to settle as anticipated but where both parties remain committed to that transaction taking place. Constructive and imaginative solutions are often designed to overcome immediate practical problems caused by a failure of a transaction to settle and, particularly where the cause of the disruption is not the responsibility of either party, such solutions often focus on minimising the financial fall out of the disruption. For example, where a property is vacant and when not occupying a property on the timetable anticipated would cause, in particular, a purchaser significant distress, the opportunity to use or occupy the property over a limited period of time can be regulated by a form of licence between the parties that would not extend the same rights to a purchaser as title itself or, indeed, a more regular form of tenancy. In cases where a purchaser is relying on secure finance from a mortgage lender their options may be very restricted. However if a purchase is not based on secure borrowing or on reliance of another sale, settlement involving the postponement of registering the new title could be accommodated provided all parties were properly advised and aware of the relevant risks and responsibilities.
Conveyancing is only one aspect of our daily lives that have been dramatically affected by the present restrictions. As noted above, for many that will simply mean delaying or suspending their involvement in the market. For others it may be more a necessity and in those circumstances it is important to get early detailed legal advice from an experienced and qualified conveyancer.
