What is a property chain?

May 10, 2023
Property chains

You have almost certainly heard of a property chain – but would you be able to explain to someone else exactly what one is? Do you understand how chains work, or how you can manage them?

In a nutshell, this circumstance arises when a group of property sellers and buyers are connected. In other words, the links exist because each sale or purchase is dependent on another, somewhere along the chain, for their own home purchase to proceed. They occur because, once you are a property owner, you typically need to sell your place before you can buy somewhere else. So if you are keen to purchase a place but need to wait first until the vendor buyers their own next home, you are in a chain. And if a sale falls through, you may not be able to move in to your dream home unless you find another purchaser at speed.

Does being in a chain mean things take longer?

It can mean a more complex or lengthier process to move house. Equally, the longer a chain is (i.e. the more people are in it), the likelier it is that you could run into problems, with, in the worst-case scenario, the sale collapsing completely. Inevitably, those in the middle of a chain are the most likely to run into problems.

In contrast, if a sale is chain-free, there is no dependency on other transactions proceeding for the sale to happen. (A property can also be described as having no onward chain.)

If everything goes smoothly, you could find the sale goes through within weeks. But there can be great potential for hold-ups. More people are involved, including the other vendors and buyers, plus their solicitors, surveyors, lenders and estate agents. A single missed vital phone call or holiday absence can hold things up. Allow yourself a good six months to buy if somewhere if you are in a chain.

That said, each year many thousands of people go through property chains. So being in one doesn’t necessarily have to mean a complex or tricky transaction.

There won’t be a chain involved in cases where:

  • A first-time purchaser is acquiring a new-build place
  • Someone is buying a property that’s already vacant or has been repossessed
  • You are moving in with someone else post-transaction
  • You are part-exchanging a flat or house to a developer

Equally, if someone doesn’t need a sale to proceed to buy another home, for example if they’re buying a second property, or the vendor is moving in with a partner, this is classed as having no ‘upward’ chain.

How it works

Clearly, some chains are longer than others. But typically, a property chain may have a formation similar to this:

  • First-timer – The buyer at the ‘bottom’ of the chain who is purchasing their first home – they are not selling a property.
  • Homeowner – Buying from someone who is retiring; selling their home to the first-time buyer
  • Retiree – Moving in with their family so no purchase; selling to the property owner

The ‘top’ of a property chain is usually the last property, where someone isn’t looking to buy a new home. The ‘bottom’, meanwhile would be someone like a first-time purchaser, without a ‘dependent’ sale of their own.

In the majority of cases, all parties in the chain will exchange contracts on the same day, and share a move-in date.

What can I do if the chain breaks?

If your link in the chain breaks, you could ask your estate agent to contact anyone who previously put in an offer on the place you’re selling. If it happens at another point, try and get to the root of the problem. Then decide whether to continue to wait or cut your losses and leave the chain.

Then there are things you can do to reduce the threat of a property chain. One is to live in rented accommodation while you look for a new home. Another is to try and find a new home that’s chain-free or just part of a short, upward chain. And aim to have enough savings to pay for relevant costs of moving.

Finally, if you have a watertight mortgage offer, you’re also in a strong position. That’s something we at The Mortgage Centre Online can definitely help with. Learn more about our honest, friendly advice – browse the website and get in touch today to learn more.

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