How is coronavirus impacting buying a property?

If you’re in the market to buy a property, you probably have questions about how coronavirus is going to impact your plans.

According to Zoopla’s UK Cities House Price Index, the demand for housing fell by 70% between the start of March 2020 and the week ending 29 March.

However, Zoopla reported that buyer demand was 46% higher in May than it was in early March. This demand moderated slightly during June, but Zoopla said this was to be expected given the huge demand once the property market reopened in May.

Yes, you can get a mortgage. 

However, there are a few types of mortgages where you might be limited in what you can do. For example, applying via telephone, or online, rather than in person due to social distancing conditions. Keep in mind, wait times may still be a bit longer than usual. 

For customers applying for a mortgage with HSBC, we’re now completing property valuations across the UK. Safety is a continuing priority, so all surveyors are issued with PPE and trained to use it.

Explore more: Applying for a mortgage

If you don’t currently own a home, the Government will temporarily not charge Stamp Duty Land Tax on the first £500,000 of a property purchased in England and Northern Ireland. This reduction will apply from 8 July 2020 until 31 March 2021. A 3% extra Stamp Duty Land Tax will still apply if buying a new property means you’ll own more than 1 property.    

So, during this time if you buy your first, or only, property in England or Northern Ireland for £500,000 or less, you will not have to pay Stamp Duty. If you buy a property for more than £500,000, or an additional property, you will pay significantly less in Stamp Duty.

The starting threshold for Land and Buildings Transaction Tax (LBTT) for residential property transactions will be raised from £145,000 to £250,000.  

This will apply to all relevant transactions where the effective date is between 15 July 2020 and 31 March 2021 (inclusive of these dates).

So, during this time if you buy your first, or only, property in Scotland for £250,000 or less, you will not have to pay LBTT. If you buy a property for more than £250,000, or an additional property, you will pay significantly less in LBTT.

Changes to the Land Transaction Tax (LTT) rates and thresholds will apply to residential property purchases from 27 July 2020 to 31 March 2021. The starting threshold for LTT main residential rates will be set at £250,000.  

This means those buying their only property costing less than £250,000 will pay no LTT and those buying their only property for more than £250,000 will make a saving of £2,450. These changes will not apply to those buying property as an investment, or those owning more than one property after the transaction.

Given the unique situations that many people are in, there have been some changes to how affordability is being assessed by banks. It’s important that if your income has recently changed, or you think it’s likely to change in the future, you include this in your application.

For example, if you’ve been furloughed and are applying for a mortgage with HSBC, we’ll use your furloughed income to make the assessment and you should put this in the application. If your employer is paying top-up income, we’ll use this income. 

Explore more: Applying for a mortgage with a variable income or zero-hours contract

If you have a Decision in Principle, this will only be affected if your income has changed. For example, if you’ve been furloughed you’ll need to let your prospective lender know your adjusted income. If you have completed a Decision in Principle online with HSBC and have had some changes to your income, you can amend it to get an updated decision.

You are able to make an offer and negotiate with a seller.

However, there may be delays in the buying process due to Government guidance. Things like viewing and assessing properties may be slower due to social distancing measures. It’s a good idea to check in with your conveyancer to find out how they’re currently working.

Explore more: Steps to buying your first home

The Government asked people to try and postpone moving home during lockdown. However, as some parts of the lockdown have lifted, it is now okay to move. This Government advice could change and we'll update our website with all the latest guidance on coronavirus.

You can still remortgage and switch mortgages. Again, if you’re in the process of remortgaging, or switching mortgages, and your income has been impacted, you’ll need to let your lender know.

Explore more: Remortgaging

Explore more: Borrowing more on an HSBC mortgage