How to manage a property chain
Most house purchases in the UK are part of a property chain.
You can look at property chains as a necessary evil. They’re frustrating, delay-causing and sometimes cause the transaction to fall through – but most of us wouldn’t be able to move house without one.
Let’s look at what property chains are and how to manage them.
What is a property chain?
A property chain is a line of people linked together through their property transactions.
A chain is caused by few people having the available funds to buy a new house outright. So, for most people, buying a property means selling one first. As a result, a chain is formed, and the purchase of each property is reliant on the successful sale of the next property along in the chain, and so on.
Delays, hiccups and failed transactions elsewhere along the chain have a knock-on effect, causing issues with the timing of your property deal. Problems elsewhere along the chain can even cause your transaction to become one of the 1 in 4 property deals which fall through in the UK.
Is a property chain inevitable?
Usually, yes. A chain is a result of needing to sell up before you can buy somewhere new – the reality for most of us. However, there are some exceptions.
If you’ve been searching for a new property for any length of time, you’ve probably seen terms like ‘chain-free’ or ‘no onward chain’ being banded about.
A house that’s advertised as ‘chain-free’ has sellers who aren’t reliant on the sale of another property in order to move. Chain-free buyers don’t need to sell their current house before buying the new one.
Having no chain, whether as a seller or a buyer, is attractive to other buyers and sellers as it means a smoother transaction, less conveyancing time, reduced chance of delays and less likelihood of the sale falling through overall. A chain-free buyer is also better positioned to negotiate on price and terms.
Here are some examples of people whose house transaction isn’t subject to the usual chain:
First-time buyers often form the ‘beginning’ of a chain because they’re buying a house without needing to sell one simultaneously.
Buy-to-let landlords who are offloading one of their properties (without simultaneously buying a new one) often form the end of a property chain, as they don’t need to wait for the sale to go through before proceeding with another sale.
Homebuyers who have already sold their property and are renting for a few months means they’re in the position of being chain-free. This can be an excellent option for homebuyers who are moving into a new area and want to get a feel for their new environment before committing to buy.
Those lucky few who have the funds available to buy a house outright are also chain-free buyers. These buyers also aren’t relying on a mortgage lender to release funds, so they’re in a powerful position when negotiating and making offers.
There is no onward chain if you buy a brand-new home from a housebuilder. This means a more stress-free buying experience, as you don’t need to wait for the seller to go through their conveyancing process before you can secure the property.
What can I do about the chain?
If you don’t fall into one of the categories above, there’s not much you can do about the existence of a property chain.
However, it’s good to keep in regular communication with the seller of the house you’re after and their estate agent. This will ensure you’re the first to know if there are any issues up the line, such as the owners of the house your seller is buying experiencing a failed sale themselves.
The bad news
Unfortunately, 1 in 4 house sales in the UK does fall through. The reason can be anything from a buyer pulling out, gazumping or even unexpectedly poor results of a home survey – and the existence of a long chain makes a failed transaction all the more likely.
If you’re part of a chain, you have no guarantee that you won’t fall victim to delays and broken links – derailing your transaction. This hits particularly hard when you’ve already spent money on your house purchase – for example, solicitor’s fees, house surveys and conveyancing fees. Fall-throughs cost almost £2,500 on average, and you usually can’t get these fees back.
The good news
However, there is good news! You can safeguard the money you’ve already spent on a house sale with Home Buyer’s Protection Insurance. This cover allows a buyer to claim back much of the upfront costs they’ve already spent on a house sale if it fails through no fault of theirs. This includes being gazumped, the buyer pulling out or a survey revealing that extensive repair work is needed.
Ultimately, you can’t control how long a property chain is. Neither can you influence the behaviour of the other ‘links’ in the chain. But with Home Buyer’s Protection Insurance, you need not fear the chain as the cash you’ve already put towards the sale is protected.