What are property chains and how do they work when buying or selling?

A broken property chain can disrupt the process of buying a home, but there are steps you can take to make things run more smoothly…

A broken property chain can disrupt the process of buying a home, but there are steps you can take to make things run more smoothly…

Daniel Evans
Mortgages expert
6
minute read
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Posted 3 JANUARY 2020 Last Updated 25 FEBRUARY 2022

What is a property chain?

A property chain describes a sequence of house purchases that are linked to one another. The chain begins with someone who’s only buying and ends with a person who’s only selling. Every other member of the chain is trying to sell and buy a property at the same time, creating dependencies in both directions. If one link in the chain breaks, everyone can be affected.

What can disrupt a property chain?

Many things can disrupt a property chain, including:

  • A sale falls through because a buyer’s finances aren’t in order, someone’s circumstances change – they lose their job, for example – or a seller decides to take their home off the market
  • A buyer is unable to get a mortgage
  • Someone in the chain tries to renegotiate the terms of the deal – because of gazumping for example
  • A building survey, which is made during the process of conveyancing, shows problems with a property.
  • There are delays or issues with legal documents.

It’s also common for delays to occur within a chain for administrative reasons, such as a person forgetting to sign a document or missing an important email.

What does 'upward chain' mean when buying a property?

If a property has an upward chain it means the seller has to buy another property before they move. The upward chain is all the people – buyers and sellers - involved that enable them to buy that home, each forming their own link in the chain. Some chains can become quite long with maybe 10 or more properties involved.

The chain will end when someone is moving:

  • Into a new-build property and buying from developers
  • Into a rented property
  • In with others into an existing property
  • Into a vacant home.

How long does it take to move house if I’m part of a chain?

Unsurprisingly, the time varies. If you’re part of a small chain involving two or three house purchases, a move could take between three and four months. If there’s no chain, it could take as little as two months. The chain will move at the speed of its slowest link in the chain, which can be frustrating.

What role does an estate agent have in a chain?

Estate agents work for the person who’s selling the property, so it’s in their interests that everything goes smoothly. However, they will also try to secure the highest sale price, so they might disrupt the process if a new buyer comes in with a higher offer.

What’s the role of solicitors in a chain?

Solicitors look after the legal paperwork associated with buying and selling a house. Their role is to check details of ownership and other matters affecting the interests of their client. In the course of their work, solicitors are likely to raise queries that take time to be answered. If they discover a problem or trigger a dispute, this could have a major impact on the chain as a sale/purchase might be delayed or even cancelled.

What does chain-free mean?

If a sale is chain-free it means that:

  • The buyer doesn’t have a property to sell and
  • The seller isn’t buying another property.

An example would be a renter who’s buying an empty new-build or repossessed property.

Only two parties are involved in chain-free transactions and can work out between them when is convenient to exchange and complete, without having to take into account other transactions in a chain.

Sellers are attracted to chain-free buyers as it can make things much simpler for them. Being a chain-free buyer can give you an edge over other potential buyers, so if you have nothing to sell make that clear when you make an offer on a property.

How can I ensure things run smoothly for me?

There’s no getting away from the fact that the process of buying a new home is complicated. But if you plan well and understand all your options, you’ll give yourself the best possible chance of limiting any disruption linked to property chains. Here’s a summary of the steps to take:

  • Shop around for a great-value mortgage and be prepared by having an agreement in principle in place before you start looking.
  • Make sure you budget for all the expenses you’re likely to face – including solicitor’s fees, estate agent’s fees (if you’re selling), stamp duty (if you’re buying) and removal costs.
  • If you’re selling, put your property on at a realistic price and be honest about any issues – as the survey will uncover them anyway and the buyer may try to renegotiate the price.
  • Contact your estate agent and solicitor regularly and ask if there’s anything else they or you should be doing.
  • Gather receipts, warranties and guarantees for any work done to your home - for example, replacement windows, extensions, subsidence or damp-proofing as your buyer may need to see them.
  • Keep copies of all documents relating to the buying and selling process – include notes of any phone conversations you have.
  • Take care to return any paperwork quickly – consider using couriers or special delivery to speed up the process or even delivering it yourself
  • Make sure you’ve got the cash deposit ready for when it is time to exchange – this may be particularly important if your money is in a notice account.
  • If you're selling and have offers on the table, you might want to choose a buyer who isn't in a chain themselves, like a first-time buyer.

The process of buying and selling property can be stressful, so prepare yourself for some disruption and delays along the way. If you respond quickly to requests and remain positive in looking for solutions, you’ll give yourself a good chance of a hassle-free process.

What to do if a property chain fails

What you can do will depend on where the chain has broken. If it’s part of the chain you have no influence over, all you can do is keep in touch with those above and below you in the chain to see if they’re happy to wait until it can be repaired.

If it’s your part of the chain that’s affected then there may be actions you can take.

  • If the seller pulls out, contact estate agents to find another property so you can keep your sale going. You may even need to consider moving into a rented property while you find another home to buy.
  • If your buyer pulls out, try to find out why. For example if finances are the issue would dropping your asking price slightly make enough difference to keep things moving? If it’s a problem with your home can you do anything to fix it?

If your buyer delays after the exchange of contracts, there’s a legal remedy available. Your solicitor can send them a ‘notice to complete’ within a deadline of 10 days and they could lose their deposit if they fail to do so.

There are also potential financial solutions to help with avoiding a chain breakdown, but they can be expensive.

There are companies that will buy your house from you – ‘chain-free’ – but they will usually offer you far less than the property’s market value, so you’ll have to decide whether the certainty of the sale is worth the financial cost. You can sometimes share the cost across the chain as it can be in everyone’s interest to keep the chain together. Ideally, you should take financial advice before you use this option.

Alternatively, you could opt for a bridging loan, enabling you to buy the new property before you’ve received the money from the sale of your own. But beware, the costs of these loans can rack up because of the large sums of money involved, particularly if delays continue longer than you planned for.

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