Rough estimates suggest that across Great Britain, 450,000 pending sales have been interrupted by the lockdown. No one knows how long it will be before processing them will resume but, almost certainly, an unknown number will fall through.
If, prior to lockdown, there had been “completion of missives” (the lawyerly term used in Scotland for simply saying a sale had been signed and sealed) then it will have become incumbent upon the buyers to proceed. If not then they have the right, in law, to pull out.
In many cases, withdrawing will be understandable; with so much uncertainty about future job security (and not just in the short term), who can blame people for thinking that now may not be the right time to move and that it will be best to hunker down and make do with what they have.
Human nature being what it is, however, other non-committed buyers will see this as a chance to lower their offer or perhaps look for what they perceive to be a “bargain” elsewhere. Either way, this leaves the frustrated seller in a quandary and no doubt feeling a sense of disillusionment, perhaps even bordering on despair.
Ironically, these circumstances provide the estate agency profession with a platform to prove to the public its real (and often underrated) worth to the housing market. Notwithstanding seeing their own businesses battered and bruised by lockdown, estate agents will still need to go the extra mile and maximise every available sinew on behalf of their distressed clients.
Of course, agents are already well-practised in re-marketing properties on the verge of a sale that – for various reasons – subsequently fell through. But, post-lockdown, even greater effort will be required, especially as many clients who have fallen victim are likely to be more distressed than normal, given all the other uncertainties affecting their lives.
Each lead will have to be followed through several times until the possibilities are exhausted – or, as one hopes, it leads to matching the client with a genuine buyer. Regularly touching base will become even more important than before.
For example, the agent will need to know as soon as possible when and if a vendor could become more flexible; this does not necessarily mean dropping his or her price (although in some cases this may be necessary) but it will also apply to reassessing issues such as move-in dates, any outstanding pre-sale repairs or a re-think on the inclusion of certain white goods, for example.
All these could be the missing link that leads to a sale. Communication will continue to be essential even when there is little buyer interest in a property; if nothing else it lets the client know the agent is fighting his corner.
Government could also help in several ways. Given the immediate nature of the problem, its most effective contribution would be a substantial cut in the rate of Land and Buildings Transaction Tax (LBTT). This could be done in several ways although simply increasing the threshold at which the tax becomes due will be insufficient.
My preference would be a cut in the rate right across the board – to encourage sales at the top of the market and not just those in the lower and middle sectors. It need only be a short-term “holiday” (say, over six months) because a limited “window of opportunity” would energise buyers and sellers to act before the concession ended, thus helping to kick-start the market.
Some Holyrood politicians will no doubt react in the usual knee-jerk manner – ie conclude that lower rates of tax automatically lead to a diminution in government income. Hopefully the wiser ones among them will realise that by lowering the rate of LBTT, the additional sales this produces actually could lead to an excess of revenue compared to that from depressed sales at the current rate.
David Alexander is MD of DJ Alexander
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