Scottish property sales “all but ground to a halt” within a matter of days following the coronavirus lockdown, new figures have shown.
There were 464 transactions completed on the day the measures were imposed on Monday, March 23, but the figure plummeted to just three by the end of that week.
Deals worth tens of millions of pounds in the north and north-east have been left at a standstill, with sales chains collapsing and some mortgage lenders pulling out of contracts.
The Scottish Government has advised that people should delay moving house until it is safe to do so – with the Registers of Scotland, Law Society of Scotland and Faculty of Advocates offering similar guidance.
The national property register is only processing emergency transactions, piling further pressure on the market.
Aberdeen-headquartered Aberdein Considine, which also has offices across the north-east, and in Glasgow and Edinburgh, now has 304 transactions on hold.
These sales are worth more than £54.6 million.
Senior property partner Bob Fraser said: “From a client’s point of view, the most important part of the transaction is getting the keys.
“However, for the lawyer acting for you, the most important point of the transaction is getting a title deed and security registered.
“The deed transfers ownership of the property from one party to the other, and the security gives the lender ability to recover its money should the homeowner default.
“Without a registered security, a bank won’t lend and, without a registered title, a purchaser does not legally own the property.
“The sudden closure of the register caused the market to effectively stop, causing chains to collapse and some lenders to withdraw mortgage offers.”
He added: “Following the introduction of a digital solution by the Registers of Scotland, some transactions are proceeding, but on a case-by-case basis, and only where emergency need can be demonstrated. For example, if someone was to be left homeless without a deal settling.
“And this is only if it can be done safely and that everyone involved in the move can maintain all the social distancing requirements, and that the property is empty or can be safely vacated.”
Due to the slowdown, sellers are facing additional bills of hundreds of pounds to update their home reports.
These are required by law and must be less than three months old for the valuation to be accepted by a mortgage lender.
As the market has essentially been lying dormant for almost 12 weeks, many people may soon find themselves having to pay for refreshed reports if they want to sell their property.
However, this comes at the same time as new data from the Office for National Statistics (ONS), which has shown another increase in average property prices.
During the year to March 2020, they rose 1.5% in Scotland to £152,000. Across the UK as a whole, there was an average 2.1% increase.
The ONS warned that the Covid-19 pandemic may have skewed these figures slightly, as there were fewer transactions towards the end of the period.
After next month it will be suspending the routine publication of these statistics due to the low numbers of sales involved.
Bernadette Walker, manager of the Highland Solicitors Property Centre, is hopeful that interest in the property market is beginning to pick up.
“Although the past two months have been tough, there is still strong interest in the property market in the north of Scotland, both from buyers and sellers,” she added.
“We have taken a steady number of inquiries throughout the lockdown period which is indicative of the demand for property movement.
“With England now easing out of lockdown, there has been an increase in inquiries in anticipation of the same happening in Scotland.
Property buyers and the Coronavirus Bill
Emergency legislation aimed at helping some property buyers is expected to pass through the Scottish Parliament this week.
People who have bought a new home without selling their old one are typically given 18 months to do so and reclaim a 4% tax which is imposed on second properties.
But, due to the pandemic, many have been left struggling to meet the deadlines and receive back the Additional Dwelling Supplement (ADS) surcharge they paid out.
The new legislation, which forms part of the Coronavirus (Number Two) (Scotland) Bill, propose giving these buyers a further nine months to complete this process.
This would allow anyone who has bought a new property between September 24, 2018, and March 24, 2020, and who has paid the ADS, a total of 27 months to sell their previous main residence and claim it back.
Alan Cumming, national estate agency director at Aberdein Considine, said: “It has been a stressful time for movers who have had their sale or purchase held up by Covid-19.
“People involved in property transactions are grateful for any help right now, so this change would be welcomed.
“ADS can run into tens of thousands of pounds for some people, so the prospect of not being able to recover that money was very worrying, and would have potentially put people off moving in the short and medium term.”
