24 Mar 2020

Coronavirus: House sellers, buyers face derailed or delayed sales

3:06 pm on 24 March 2020

The Real Estate Industry and the Law Society are scrambling to find solutions for people whose house sales have been derailed by the Covid-19 lockdown.

An auction sign outside a house for sale in Auckland.

Photo: RNZ / Claire Eastham-Farrelly

In most deals, the seller of one house is the buyer of another, and that vendor is looking to buy another, so a last-minute failure of just one sale can trigger a chain reaction which affects large numbers of people.

In some cases, people will be unable to move into the houses they have bought and the vendors will be unable to move out, due to the lockdown and in others it will not be possible for anyone to do a pre-settlement inspection.

Some 6694 properties were bought or sold over four weeks in February.

Harcourts managing director Byran Thomson said common sense would have to apply. He said people could mutually agree to defer final transfers until the crisis passed.

Similar solutions would apply to the rental market, where people had agreed to lease a property but could not move in.

The Real Estate Institute later provided figures that gave a rough indication of the size of the problem.

"By looking at the last three years of settled sales between 26 March and 23 April, we can expect that there may be around 5,800 properties due to settle during the New Zealand Alert Level 4 lockdown period," Bindi Norwell, chief executive at the Institute said.

This included 1485 properties in Auckland, 801 in Canterbury and 699 in Wellington.

The total number for New Zealand is 5781.

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Otherwise, the rent might still have to be paid, even though the tenants could not move in and were stuck with rental payments for their present flats.

Thomson said it was a more difficult problem than any that had been faced by the industry before, so protocols being developed by the Law Society and the Real Estate Institute would be very welcome.

A spokesperson for the Real Estate Institute said her office had been overwelmed with calls from buyers, sellers, tenants, real estate agents and others who were desperate for a solution to their problems.

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