The housing market was effectively suspended by the government last night in an unprecedented move as the sector was plunged into chaos by the coronavirus outbreak.
Banks struggling with the volume of customer inquiries, difficulties with valuations and legal uncertainty have led ministers to call on people to delay moving.
Finance has dried up as mortgage providers cease to offer many new home loans. They include Lloyds, which owns the Halifax and Bank of Scotland and is the largest player in the market, and Barclays.
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The government issued official guidance telling people in the early stages of buying or selling their home to delay the transaction while emergency measures were in place. It said that no visitors were allowed into properties, including estate agents, surveyors and potential buyers.
“You can speak to estate agents over the phone and they will be able to give you general advice about the local property market and handle certain matters remotely but they will not be able to start actively marketing your home in the usual manner,” it said.
The government’s decision has led to a sell-off in the shares of housebuilders.
Shares in the biggest companies in the sector fell sharply when the stock market opened. Barratt Development, Persimmon, Taylor Wimpey, Vistry, formerly Bovis Homes, and Berkeley all fell by between 6.5 per cent and 8.6 per cent.
The government’s official guidance telling people in the early stages of buying or selling their homes to delay the transactions while emergency measures were in place is another blow for the companies that have already halted construction of homes to conform with the government’s measures on social distancing. They have also taken action to preserve cash, with some cancelling or suspending dividends.
Companies accounting for about a quarter of the annual supply of newly built homes have closed or began to close sites.
Downing Street has said that construction work can continue where sites can be operated in line with social distancing guidelines. Many employers have chosen to close sites, however, amid concerns about the safety of staff and contractors. These include Barratt Developments, Taylor Wimpey, Persimmon, Vistry, McCarthy & Stone, Bellway and Countryside Properties.
This morning Redrow said that it would close all its sites and offices and enter talks with banks to secure additional lending. Its shares fell by 6.7 per cent, or 27p, to 375p.
The estate agent Rightmove has fallen 6 per cent, or 29p, to 460½p this morning. In response to the freezing of the housing market it has cancelled its full-year dividend as part of a plan “to contain our costs and reinforce our financial position”. Shares in Countrywide, which owns more than 60 high street estate agency brands, including Hamptons International, Wilson Peacock and Gascoigne-Pees, fell 3 per cent, or 2p, to 62p.