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If you’re buying and selling property, then you might have encountered the term ‘property chain’. You might not, however, have encountered an accompanying explanation of what a property chain is. This is something which we can rectify with an FAQ; let’s get started!

What is a Property Chain?

The term ‘property chain’ describes a series of buyers and sellers, each one buying from the person behind them, and selling to the person in front of them, figuratively speaking. A chain begins with a seller who isn’t buying, and ends with a buyer that isn’t selling.

Chains of ownership sometimes exist with other goods, too – but since the process of buying a house is complicated, the knock-on effects of a disruption in a property chain can be felt even dozens of links down. If a purchase is delayed because someone fell ill, forgot to recharge their phone, or misplaced a crucial document, then so too will the following transaction be, and the one after that. If you’re several links along, then you’ll get a delay – but you won’t be able to pin the blame on anyone!

In some cases, a sale might fall through completely, and then the entire chain will break – a disaster that we’ll touch upon later.

What Does “No Chain” Mean?

If a property doesn’t have a chain, it means that you aren’t relying on the seller buying somewhere else to live before you can buy the property. This means there’s less potential for headaches as a result of things going wrong further up the chain. New builds tend to have no chain, as the initial buyer won’t need to wait for anyone to move out.

What Does “Onward Chain” Mean?

An onward chain is simply the chain onwards from a particular position in it. After all, most sellers aren’t concerned about the well-being of the chain downward from them! The phrase is typically used with reference to their being ‘no onward chain’.

How Long Can a Property Chain Be?

The short answer is: very long indeed. If you’re particularly unlucky, you could be waiting for months on end. You can expect a longer wait in some areas where subsidence is common, such as where old mines are to be found. Mining surveys and local authority searches can complicate purchases – with knock-on effects throughout the chain.

What Can I Do if I’m Stuck in a Property Chain?

The best way to avoid being tethered to a property chain is by doing so pre-emptively before making any decisions. Scout would-be homes and prioritise those without an upward chain. New-builds, and those whose previous occupants are no longer living there, will provide an option. If you’re a first-time buyer, you’ll be at an advantage for much the same reason.

To avoid delays, you might wish to agree upon a fixed date for the transaction to take place – that way you’ll give both buyer and seller an incentive to commit to the purchase. You might also wish to investigate the financial circumstances of a would-be buyer by asking for confirmation of their in-principle mortgage offer, and asking your agent to check whether the nature of the property doesn’t disqualify them.

Why Would a Property Chain Get Broken?

If a broken chain is so disastrous for all involved, then why would anyone break it? There are a few reasons:

  • A change in personal circumstances, like a bereavement or divorce, might cause a buyer or seller to pull out.
  • A survey might reveal a major problem with a property, to much the same effect.
  • A lender might pull out.
  • A change in financial circumstances, like a redundancy or a major lottery win, might cause a buyer or seller to pull out.
  • Someone might make a big offer to a person in the chain, causing it to fall through.

Of course, these are quite unlikely – but with a sufficiently long chain they each become almost inevitable. In some circumstances, you might even wish to break the chain yourself!

Should You Ever Break the Chain?

There are several reasons you might wish to break the chain and move out on your own – which is partly why roughly a quarter of all transactions fall through. Since you won’t have anywhere to live in between selling your existing property and buying a new one, you’ll need to live elsewhere – most likely in rented accommodation.

But in doing so, you’ll be able to market your home as a ‘no chain’ property, which will be attractive to buyers looking to minimised hassle. If there are no other transactions to worry about, the likelihood of a complication will be minimal.

After you’ve sold up, moreover, you’ll effectively be a first-time buyer again. This will lend you a considerable advantage over rivals, and give you a better chance of securing the home you’d like. This position is so desirable that estate agents have a special term for it: a ‘hot’ buyer.

What Should I Do if I’m in a Broken Chain?

Broken chains can be extremely stressful, and even more so if you’re unsure of your next step. Fortunately, there are several things that might be done to remedy the situation. If you’re willing and able to collaborate with the other stricken homeowners on the chain – all of whom stand to make a loss – then you might be able to scrape together enough extra cash to allow the transaction in question to go through.

Another option comes in the form of a short-term, high-interest loan, known as a ‘bridging loan’. These are designed to plug a gap between an amount of money going out and another coming in, but they’re high-risk and thus should be considered only as a last resort.

If you find yourself in this situation, then obtaining expert advice at the earliest opportunity is essential. Fortunately, this is a problem that we’re acquainted with, and so we’ll be able to lend a hand. Get in touch with us via phone or email.