Property Chains – a Comprehensive Guide
Moving to a new house is an exciting time, but the uncertainty of a property chain can really dampen the experience. A broken chain is one of the biggest issues facing vendors. So, what is a property chain, how can you avoid them and how can you fix a broken chain if it happens to you? Our comprehensive guide will arm you with the facts you need to lead you through the process.
In this article:
- What is a property chain?
- What does no onward chain mean?
- What does chain free mean?
- What does it mean when a property chain breaks? And Why do property chains break?
- What problems do broken house chains cause?
- How to keep a house chain moving?
- My house chain has broken, what do I do?
What is a property chain?
Most people find themselves in a property chain when buying a new home. A property chain is several house purchases linked together by the sellers and the buyers. The chain always begins with a cash buyer who is not dependant on a property sale in order to buy a house, for example a fist-time buyer with a mortgage. The cash buyer seeks to buy a property from someone who is in turn looking to buy a new home using proceeds from the sale of their current property. From then, each sale is dependent on the buyer being able to complete the sale of their house in order to buy the next home. The chain ends with a cash buyer or ‘no onward chain’.
Chain-free properties make up just 10% of property transactions taking place on the open market in the UK; so it’s highly likely you’ll be buying a house in a chain.
What does no onward chain mean when buying a house?
So, what does no onward chain mean for you, as a buyer? A no-onward chain is when a house seller doesn’t need to buy a new property with the funds from selling their current property. For instance, if they are moving into rented accommodation or relocating abroad. In this scenario, this could be considered as the end of a chain and the seller’s home would be referred to as a no chain property.
What does no chain mean?
If you’re lucky, you might find a chain-free buyer. This is when a house sale isn’t connected to any other sale, and the house buyer is not relying on selling their current house to buy yours. So, if a first-time buyer is looking, they would be chain-free as they have no property to sell in order to buy yours.
A chain-free buyer is a very attractive prospect for a seller, as the sale is more likely to go ahead.
The average property chain length takes three to four months to manage, from finding a buyer to completing the sale.
Conversely, if you’re wondering how quickly you can buy a house with no chain, it could be as little as four weeks.
What does it mean when a property chain breaks? And why do property chains break?
Being stuck in a property chain can be quite unpredictable. Because all the sales are linked together, if a house buyer changes their mind and withdraws from the sale, the chain becomes broken. This then impacts all the other properties in the chain. This is the biggest reason house sales don’t go smoothly.
The milestones in a sale are the same for everyone. After finding a house you’d like to buy, this is the general process:
- Obtain a mortgage agreed in principle
- Make an offer which, if accepted, is then classed as sold subject to contract (SSTC)
- Instruct a solicitor
- Begin legal searches (these are the surveys which include a value survey, property survey and a local survey)
- Finalise your mortgage
- Exchange contracts
- Move house
A property chain can break for a variety of reasons, from a buyer not having the mortgage in place to redundancy. Here are a few more events that affect a sale:
- Under-valuation – An under-valuation means the house is in fact worth less than the asking price. In this case, the mortgage lender often reduces the sum it will lend, which leaves the buyer unable to borrow the full amount. This results in renegotiation or the sale falling through.
- Failed survey – A survey might highlight structural problems with the property.
- Gazundering – A buyer can reduce their offer at the last minute before the exchange of contracts. This is called gazundering or being gazundered. It forces the seller to accept the lower offer or refuse and put the house back on the market, which breaks the chain.
Not to be confused with gazundering, gazumping is when the seller accepts a higher offer from another buyer late on the sales process, leaving the original buyer to start searching for a house all over again.
What problems do broken house chains cause?
Besides disappointment and frustration, a broken house chain can dent your pocket. When a sale falls through and you’ve paid for searches, solicitors fees and estate agent fees, it can be costly. If you’re selling a house that you’ve inherited, a broken property chain can also run up council tax fees if it’s standing empty. For those selling due to divorce or relocating, a broken chain can slow the process and increase stress levels.
How to keep the house chain moving.
There are certain things you can do to help the process along when you’re stuck in a property chain. Get your finances in place early, so you’re in a good position. You should also keep in touch with your solicitor and estate agent so you can chivvy them along if you feel someone is dragging their heels.
- Sign and return documents as quickly as you can.
- Have any details with you at home and at work in case you need to answer questions or call anyone else.
- Consider sending documents by recorded delivery to minimise delays.
My house chain has broken, what do I do?
When a house chain collapses, it’s a bit of a blow, especially if you have your heart set on a property and are relying on the sale of your current house to buy it. All is not lost though. If you need to sell your house fast, you could take your house to auction, or look to cash house buying companies like Good Move.
At Good Move, we bypass the housing market, so you don’t have to worry about being stuck in a property chain.. Our expert surveyors could sell your property in as little as two weeks. You don’t pay any seller’s fees and as the UK’s most highly regulated quick house sale company our customers know they can trust us. Get in touch with our experienced surveying team here at Good Move for a fast and convenient sale.