Covid-19 coronavirus: Can buyers move into their new houses?

Home buyers might have to wait until after the lock down to move into their dream new home. Photo / 123rf

Roger Evans had been set to move his family into a beautiful new Auckland home next week but now everything is up in the air.

The Government's strict lockdown aimed at curbing the spread of the coronavirus has cast doubt on whether he can complete his sale settlement by its set date on April 1.

Evans was supposed to vacate his old house by April 1 so its buyers could move up from Taranaki, while the lady currently in Evans' new house must also move out so he can move in.

Home buyers might have to wait until after the lock down to move into their dream new home. Photo / 123rf

But with people unable to meet in person or undertake unnecessary travel, Evans was now swamped with questions.

Would it be possible to vacate his old home in time - and did this risk toppling a whole domino of transactions?

Would it be possible to hire a removalist during the lockdown?

What if the lockdown threatened the financial security of the buyers of his old house - could it leave him holding two homes and their mortgages simultaneously?

"You've suddenly got this blanket decision and there is no guidance for people," he said.

"You are left to flounder your way through major contracts worth thousands of dollars and involving your house – it is worrying."

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With Auckland's housing market having run hot at the start of this year, Evans was not alone with many other Kiwis having planned to complete settlements and move houses in the coming weeks.

In another case posted to Facebook recently, a home buyer wrote how he had bought a house and given his landlord notice weeks ago to leave his rental.

However, his property manager then called him to say he was no longer allowed to leave during the lockdown period.

Elsewhere, renters and landlords were also left wondering if it was possible to evict tenants during the lockdown and whether the Tenancy Tribunal would stay open.

In many of these cases, the questions were set to remain unanswered until the Government made an official announcement.

But here is what we do know:

Settlements

Technically settlement paperwork could go ahead. Lawyers must verify the identity of all buyers and sellers when a home is sold.

Land Information NZ has now released a Covid-19 update in which it confirmed lawyers could verify a buyer or sellers identify over a video call if they had known the client for more than 12 months and if they could "see and hear" the client and clearly see what documents they were signing.

Vacant possession

However, in many cases, houses must be made vacant at the time of settlement and this was where trouble was occurring.

The Ministry of Business, Innovation and Employment was not able to say today whether people would be allowed to move house during the lockdown.

However, the Real Estate Insitute has now put out advice suggesting settlement dates be deferred until after the lockdown.

"Travel will be restricted to essential travel only - for instance pharmacy and supermarket trips - so settlements and moving house should be deferred until after the Alert Level 4 restriction is lifted," REI chief executive Bindi Norwell said.

This was also the recommendation of the Auckland District Law Society.

Murray Harden, a property specialist with Morrison Kent Lawyers, said most lawyers were looking to co-operate and encourge their clients to mutually agree to move settlement dates back.

"But legally as it stands, if you don't settle by the agreed date, you are potentially in default and there could be consequences for that," he said.

He urged the Government to use its emergency powers to temporarily excuse people from settlement obligations during the lockdown.

However, even with mutual agreement to defer settlement dates, there were still likely to be financial consequences.

People advanced home loan deposits to complete sales might be left paying interest on their loans before they actually need them, while developers could be left with increased holding costs due to house sales not going through on time.

Harden expected the bank might defer these types of interest payments but was unlikely to waive them completely.

House removalists

MBIE was also not yet able to confirm whether house removalists would be considered essential businesses and able to operate during the lockdown.

However, Mike from Auckland's Low Cost Service furniture movers said it looked like he would be under lockdown, too.

"I've been in contact with a few of the other owners and none of us know, we can't give a straight answer," he said.

"The essential services list on the Government website includes transport companies in freight, but we are not classed as a freight company."

"If you look at it we can't really go into people's houses - there seems a risk."

He also said it had been a crazy few days as everyone tried to bring their removal jobs forward ahead of a potential lockdown.

Renters

MBIE was also not yet able to give a clear direction about whether renters could leave their tenancies during the lockdown.

However, it seemed clear that in many cases it would be hard for landlords to evict tenants.

Disputes between landlords and tenants would also be mostly put on hold as the Tenancy Tribunal ceased operating tomorrow until further notice.

"All parties who have hearings scheduled during this time will be advised of new hearing dates, once services are open and operating again," a tribunal spokesman said.

"The Tenancy Tribunal does have the provision to hear some special cases in these circumstances, and these will be determined in accordance with the legislative provisions."

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