A Guide to Property Chains

Nov 5, 2020

Property chains play a significant role in the home-buying process, yet many buyers and sellers still find themselves asking, “what is a property chain?”. A lack of clarity can often lead to frustration when chains break and deals fall through.

It’s safe to say that a property chain is one of the primary reasons why buying or selling a home can turn into such a lengthy process. The average sale time of a property is between six to 10 weeks but can take even longer when chains get complicated.

A property chain represents a scenario where homebuyers and sellers find themselves intertwined because one house purchase relies on another sale. The curse of the chain is one of the property market’s biggest bugbears.

But how does a property chain work? In this article, we explain the chain process and potential fixes that can smooth the selling and buying of bricks and mortar.

What is a property chain? 

Property chains arise when multiple transactions are linked and need to be completed at the same time for each sale to be successful. The majority of buyers are part of a chain, as they typically rely on the sale of their home to fund buying a new one.

For example, you might currently own a property and want to move to a new home. But you need to sell your current home first, and the person you’re buying from is in the same position, also needing to sell their home (to you) before buying a new one themselves, which, in turn, may also see the seller of that home buying a new home.

Still with us? At this point, there are three links to the chain. And the process is more complicated than playing Crystal Maze.

In a nutshell, a property chain is a series of buyers and sellers linked together because each one is buying and selling a property at the same time.

A Guide to Property Chains

Do property chains lengthen property sale times?

 

There are, of course, other factors that lengthen the sale process – such as mortgages and paperwork. Sometimes buyers need to wait for mortgage funds to clear. Solicitors and conveyancers aren’t all created equally either, with some taking longer than others to take care of the legal side of things.

But it’s the chain that really grates. Especially as one hiccup along the way can cause the entire process to come apart, leaving everyone extremely dissatisfied. The worst-case scenario could see you losing out on your dream home over something you have no control over.

What is chain-free buying?

Not all property sales rely on chains. If you’re a first-time buyer, you won’t need to sell to move, which should make the buying process smoother and faster – as long as the seller isn’t relying on moving into a property. This is called buying with no onward chain.

From a seller’s point of view, first-time buyers are attractive as they minimise the chance of sales breaking down. Buy-to-let investors also typically purchase chain free, as they are buying a property with the intent of letting it on the rental market.

Cash buyers also don’t rely on a chain (or a mortgage), as they are paying all the money upfront. A cash buyer can, however, still lose out on a property if the seller is relying on a chain to move to their next home.

Where is the beginning of the property chain? 

The property chain begins with the buyer; not the seller. They are the first port of all and the ones who start the whole process. This can be a first-time buyer (even though they don’t need to sell a home) or someone buying their next home.

For example, if you’re selling your home to someone without a property already, you still rely on them to sell your home so you can move to another one. Therefore, they are the starting point of the property chain.

A Guide to Property Chains

Where does the property chain end? 

A property chain usually ends when the person selling doesn’t depend on existing owners buying a house to move into. Example of this include:

  • Someone who is moving into a vacant house
  • Someone moving into a new-build property
  • Someone who is going to rent their next home
  • One household moving into another household

Navigating the world of property chains

Around one in four property chains break, and the longer the chain, the higher the chance of it falling through. Buying chain free mitigates the risks and allows for a smoother sale, allowing you to get the key to your new home faster than the traditional method.