Property deals close to completion are progressing and land is still seeing strong demand, but much of the market is at a standstill.
Social distancing measures and the ban on non-essential travel, in response to the coronavirus outbreak, has put a stop to property viewings and pressed pause on the market.
However, agents are still getting enquiries from people wanting to buy land, according to Strutt & Parker’s English farmland market review for spring 2020.
It shows that though the smallest acreage of land in the past 20 years was publicly marketed in the first quarter of this year (4,500 acres), the same number of farms were marketed in that time as during the equivalent period in 2019 and 2018.
Guidance dictates pace
The firm’s team is continuing to work on deals that were struck before the lockdown was implemented and prepare property to market later this year, says Matthew Sudlow, director and head of estates and farm agency.
“We have seen very few deals fall through, with most buyers still committed to their purchase,” he says.
“However, people are having to be flexible and patient about getting these purchases over the line. Completion dates are being pushed back in line with official government guidance that, if contracts have already been exchanged, all parties should work together to agree a delay if necessary.”
For property with a residential element that has not yet reached the point of exchange, the government advice is to delay the exchange until stay-at-home measures have been lifted, he says.
Alternatively, contracts should include provisions allowing for completion dates to potentially be extended, subject to movement restrictions or because there may be people in the chain who need to self-isolate.
Other challenges include delays in funds being released by banks because they are focused on getting emergency lending in place for businesses needing support as a result of the virus.
Bare land seeing success
“We were planning to launch a number of farms and estates with a residential element during April, May and June, but vendors have put these sales on hold for now, with the intention to launch as soon as restrictions have been lifted,” says Mr Sudlow.
“Some vendors selling bare land are choosing to go ahead with marketing now, with some success.”
There was good demand in January and February, supported by the historic lack of supply and an end to the political-related uncertainty, and many of these buyers remain active.
The team is also continuing to get new enquiries from people looking to buy land, despite the coronavirus, many of whom have rollover money to invest and others looking to invest in a safe asset, he says.
“Our view is that once the market does get going again, all parties will need to show continued patience when progressing sales,” says Mr Sudlow. “There will be a backlog to get through in terms of valuations and searches, and agreeing lending is also likely to take longer than it may have previously.”
Lockdown buying and selling advice
Possession proceedings have been temporarily suspended as it is impossible to give vacant possession during lockdown.
Where vacant possession has been agreed, the terms of the contract between the buyer and seller need to reflect both parties’ circumstances and include:
- Exchanging contracts with completion conditional on lockdown ending within a certain timeframe
- An obligation on the seller to obtain vacant possession following completion, with the buyer retaining part of the purchase price until vacant possession is obtained.
Loan offers are time-limited, so where loan finance is being arranged, contracts with a delayed completion, especially one which is conditional on the lockdown ending, is a concern for both buyer and seller.
Use time wisely
Where a property has been in a family for generations, it is not uncommon for there to be some kind of title deficiency, boundary discrepancy or other issue that could hold up a sale.
Lockdown is a good time for landowners looking to sell to review their position, identify any potential issues and prepare for a future sale.
Source: Tim Olliff-Lee, senior associate, Wilsons Solicitors