A leading agency says so-called Covid Clauses are being inserted into contracts as buyers become increasingly cautious ahead of a possible second Coronavirus lockdown.
Knight Frank says an increasing number of purchasers are accelerating their house moving plans because of virus fears and weaker economic news. The agency’s latest report on the market warns that “this could eventually produce a natural tail-off in activity even if the market remains open.”
The agency first warned about such clauses during the spring lockdown when it said the inclusion of ‘Coronavirus Events’ in contracts was becoming more common, and helped a number of potential deals stay on course rather than fall through.
Such clauses typically cover anyone involved in the buying process having to self-isolate, disruption to Land Registry searches and removals, as well as the ability to transfer money or sign documents.
Completion dates are typically left flexible and can be reviewed on a rolling basis and the use of long-stop completion dates means that after an agreed point in the future either side can walk away without penalty.
Their return comes as Coronavirus cases are spiking again in the UK - yesterday afternoon's official figures suggested 7,143 new cases reported in the previous 24 hours across the UK, with 71 deaths.
These clauses are just one of a number of factors influencing the market right now, says Knight Frank.
These include Brexit and the threat of a no-deal cliff-edge. “This year has mirrored 2019 in many ways though Brexit remains lower down the news agenda due to the pandemic. Its significance will spike around key dates in the calendar, including the end of the transition period in December. The combination of a no-deal Brexit and a pandemic may deter some buyers and sellers” is the agency’s view.
On a more optimistic note, Knight Frank says that if there is a breakthrough in finding a workable vaccine for the virus - clearly an unknown currently - the market could change.
“The chances of positive news around a vaccine or treatment are rising as trials get closer to completion” says the agency.
“There have been predictions of a run on concert tickets and restaurant bookings should the scientific news improve. While this can’t be relied upon, an acknowledgment that sentiment could change quickly may help inform the decision-making process for buyers and sellers.”