Stuck in a property chain
There are few things in life as stressful as property chains when buying and selling a house.
Unfortunately, property chain issues affect a significant number of house sales and cause many sales to fall through before completion. Even sales that do go through successfully often experience frustrating and unnecessary delays as a result of property chain hold-ups.
In this guide
- What is a property chain?
- What does chain-free mean when buying a property?
- Can you avoid getting into a property chain?
- Why do property chains fail?
- What are the implications if my property chain breaks?
- What can you do to keep your property chain moving?
- Average property chain length
- How many property chains fall through?
- What to do when a property chain breaks
What is a chain when buying a house?
A property chain is a series of linked house sales and purchases.
If you are buying a house, you will often need to sell your current property to fund the next. The person you’re buying from is also likely to be buying another property. This is the property chain.
Unless you’re selling your house to a first-time buyer and buying your new home from someone who is stepping off the property ladder (perhaps they are moving into rented accommodation or you are buying a property that has been inherited by the current owner), you will most likely be caught up in a property chain.
What does chain-free mean when buying a property?
A ‘chain-free property’ means the seller is not buying a house while selling a house. You often hear this terminology in property marketing. That’s because a chain-free property transaction is favourable. It’s likely to make a big difference to the speed and success of the property purchase.
Can you avoid getting into a property chain?
Buying a house with a chain can be complicated and uncertain, yet with only a small number of property transactions in the UK being chain-free, it is incredibly common.
You can make yourself chain-free by selling your property and moving to rented accommodation before you purchase another, or by selling to a professional home buying company.
If you choose to sell your property and move into a rental property there will be no onward chain. This allows you can offer a little more certainty to prospective buyer. Having no upper chain is likely to make your property more attractive to those looking to purchase a property.
Selling your property to a professional home buying company can take a lot of the hassle and uncertainty out of selling a property, leaving you to purchase your next property as a chain-free buyer. You can also time the sale to fit in with the purchase of your new property, meaning there’s no need to endure the added hassle and cost of renting a property before you move into your new home.
Putting yourself in a chain-free position when buying or selling a property will not only reduce the chances of a chain collapsing and speed up your purchase, it will also give you better negotiating power when making an offer on your next property.
Why do property chains fail?
Any property sale or purchase that is part of a property chain is precarious. Buyers and sellers pull out of a sale for a wide variety of reasons. When you’re part of a chain, someone pulling out of the sale – even several steps above or below you – can jeopardise your sale.
Ultimately, the more properties in the chain, the more opportunity there is for someone to pull out and disrupt the entire process for all involved. Many estate agents will avoid talking about failed sales, but it’s estimated that as many as one in three property sales falls through before completion.
Common reasons for chain collapse include:
- Difficulty getting a mortgage
- Issues identified in a property survey
- Slow progress on a house sale
- Buyer or seller tries to renegotiate after a sale has been agreed
- Buyer or seller simply changes their mind about proceeding with the move
What are the implications if my property chain breaks?
If your property chain breaks, it puts every sale in the chain in jeopardy. If you find yourself in a chain-break situation, your property sale and purchase may still be salvageable if the lost party is able to be replaced quickly. If that’s not possible, you may need to start the property sale and purchase process all over again.
What can you do to keep your property chain moving?
Communication is very important when you’re trying to keep your property chain moving and minimise the probability of it collapsing. It’s important to respond quickly to any queries from your solicitor and keep in regular contact with both your buyer and seller, via your solicitor, about how their sale and purchase are progressing.
It’s also wise to ensure you choose a proactive conveyancing solicitor who will keep the momentum of the sale up.
Average property chain length
There is no official data on the number of properties in the average chain, but it will be a minimum of three, and can go into double figures.
How many property chains fall through?
67 per cent of property sales are part of a chain and around one in three property sales will fall through before completion.
What to do when a property chain breaks
If your property sale has fallen through, either because your buyer has pulled out or because there has been a collapse further down the chain, and you’re determined not to lose the property you’re buying, there are things you can do.
Firstly, make contact with the owner of the property you are buying and explain the situation. Make it clear that you are still very keen to continue with the purchase of their property.
Once you’ve reassured the owners, you’ll need to try to secure another sale for your property as quickly as possible. You have a couple of options:
- Relist your property with an estate agent. Pricing the property very competitively should help to attract a buyer quickly. However, it is important to keep in mind that it will take 2-3 months to sell a house from the point of accepting an offer, so it won’t be an overly quick process, and there is a risk of the sale falling through for a second time.
- Use a quick sale company. A genuine home buying company with their own cash funds to buy your property will be able to offer you a guaranteed sale on a date of your choice. Any genuine company will pay less than market value, so you’ll need to be able to afford to accept a lower price for your property, but in return you’ll be able to the sale of your property to fit with your onward move, and your purchase needn’t face any delays as a result of the chain collapse.
Find out more about:
- Buying a house with subsidence
- Can I sell my home and rent it back?
- Structural survey – all you need to know
- What is a memorandum of sale when buying or selling a house?
- What are title deeds?
- When was my house built?
- Should I sell my house to pay off debt?
- Retirement planning – should you sell your house?
- How to stop house repossession
- Selling an inherited property