The Coronavirus pandemic has resulted in a more apparent link between public health and housing in the UK. As the economy contracts and many thousands have been furloughed or lost their jobs, evictions have increased. In recognition of the way in which evictions can exacerbate public health issues, several councils across the country have put moratoriums on evictions. These measures, however, are temporary and the full social and economic impact of the pandemic is yet to be realised.
Since the start of the COVID-19 pandemic, significant reforms in renting law have been made. Evictions were temporarily placed on hold until 25 June 2020, a deadline that was then extended until 23 August 2020. This meant that landlords seeking possession in England and Wales must give three months notice. In Scotland, tenant protections were extended for six months and the moratorium is due to expire on 30 September 2021. In addition to this, courts are required to exercise broad discretion in terms of the circumstances of non-payment of rent. These could include the personal and economic impact of the pandemic on the tenant.
While some short term legal protections have been put in place, there is a lack of meaningful legal reforms that will combat the rent arrears crisis. While there are furlough schemes and income support available for British citizens, as much as a third of tenants are concerned about being able to meet their rent obligations. Without any further legal intervention, the pandemic is likely to create future issues in the market as well as an increase in security for citizens.
A critical time for mortgages
In terms of mortgages, while some have had difficulties in meeting their monthly repayments, there was also a slump in the mortgage market. Then on 8 July, the UK government announced changes to stamp duty to help first-time buyers get on the property market. In addition to this, mortgage providers have scrambled to adapt their products to suit the limitations of the current market.
More products are now available for first-time buyers, home movers, and those wishing to remortgage in the current climate. While slightly higher deposits may be required (10%-15%), some lenders are offering payment freezes for those impacted by COVID and interest rates were cut to 0.1% in an effort to encourage buyers.
Providing optimum legal support
As a second wave is anticipated in the Autumn, it is not yet known how the government and mortgage lenders will respond to the situation as it develops. Of course, terms and conditions relating to property loans are expected to contract and tighten up, but it’s important that the clients have as good an understanding of how mortgage agreements work as they possibly can, devoting particular attention to termination clauses and any exemptions relating to the pandemic.
Solicitors may be called upon to help their client out in this regard, but there are also handy resources that can be recommended to them that already set out in a clear manner what mortgages are, how the interest rates work and, specifically, the effect of the pandemic on mortgages. For example, clients can get free advice regarding the top mortgage deals at Trussle. Being able to compare different deals that are on the table, including terms and conditions, fees, and interest rates is more important than ever during these times.
There is no doubt that the UK property market for renting and purchasing is passing through a period of great unknown. While the UK government have taken some steps to provide legal assistance and certainty for citizens, it may not be enough. Now is the time for your clients to seriously consider their options and take smart decisions to secure their properties, finances, and futures.
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