COVID-19 and housebuilders - working out the new normal


27 April 2020

The Government has recognised that housebuilding and construction are a key part of the economy and rather than order sites to shut, allowed builders to remain open, provided that social distancing can be observed. Notwithstanding this, there are significant challenges to trading in these times. In this article we explore the Government guidance and focus on some of the creative solutions we are helping our clients to put in place.

Government advice is clear that estate agents should not carry out viewings and that branches should be shut to the public. By extension this means that any site sales office or show home should also be closed and that staff cannot meet with prospective purchasers to progress sales. Perversely though, with more time on their hands many peoples' thoughts are turning to moving house and the market has responded by offering virtual house  tours. Anecdotally we understand that many of these house tours are turning into reservations. Here a builder needs to be careful with the terms of such reservation and consider a longer cooling off period should the purchaser change their mind.

What about sales already in the pipeline? Guidance states that generally sales should be delayed, but that the industry can still work to sell unoccupied properties and should allow people to move when the house move is critical. All provided social distancing rules can be observed.

Firstly for us, delayed doesn't mean downing tools. For those purchasers that do not need to or cannot move, we are working to get contracts exchanged with completion on notice, all ready to go when restrictions can be lifted.

For those people that need to move we are working with our clients to find creative solutions. Most work can be done remotely, but the key challenge for us and our clients has been getting documents signed as we still require a wet ink signature for most property transactions. Solutions to this include putting in place powers of attorney so that we can sign on your behalf. For one client, all parts of Birketts from our administrative team to our chief executive are working together to ensure that documents get signed so that sales can go ahead.  This involved advice from our corporate, litigation and property teams all working together.

We are also able to offer advice on the impact of COVID-19 on construction and supply contracts for materials and trades needed to complete dwellings and how to operate these safely, together with negotiating sign off of building regulations and obtaining warranty cover. Despite the crisis standards of construction, safety requirements and the need to satisfy any mortgage lenders remain the same.

With new sites where no reservations have been taken, we are working with clients to complete the preparatory legal work to set these up so that they are ready to go when restrictions are lifted.

If you have any questions on the services we can offer housebuilders please contact Pauline Phillips, Head of the New Build Team or Emily Groom, Senior Associate, Residential Development team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2020.