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Property Chains Explained

A property chain is a term used to describe a series of buyers and sellers whose transactions are all linked to and dependent on each other through the buying of property.

Property chains begin with a buyer (who is not selling) and end with a seller who is not intending to buy. While there must be a minimum of two parties involved in order for a chain to take place, there is no upper limit on the number of transactions a chain could involve.

Ultimately, as property chains involve multiple participants whose transactions all need to align accordingly, it is recommended to avoid property chains whenever possible. 

 

How to avoid getting in a Property Chain? 

Provided you have the right preparation and have done your research, there are various ways in which you can avoid being a tie to a property chain. Please see below for our advice for buyers and sellers.

 

Advice for Buyers

    • If you are a property buyer, the easiest way to get away from a property chain is to only look for properties that have no chains involved. To avoid a chain, simply ask the estate agent to only show you properties that are not part of a property chain.

 

    • Additionally, you could choose to buy a new build property. New builds do not come with any chains as you would be the first occupant. However, please note that on average, new build houses cost substantially more than older homes of the same size.

 

  • In the event that you are not a first-time buyer, you could reduce the chances of entering a property chain by selling your current house prior to finding your new home. Should your property sell, you can move out, and rent temporary accommodation while you find your new home. While this tactic is risky, it will allow you to be a more preferable buyer to any seller you come across, as you wouldn’t be involved in a chain.

 

 Advice For Sellers

    • As mentioned above, if you are a seller who is finding it hard to sell your home due to your move being in a chain, it could be worthwhile to sell your home prior to purchasing a new house.

      While this is a very drastic and somewhat risky endeavour, by selling your home (without needing to buy another right away), you are breaking the chain associated with your move.

      Once you have sold your home, you are then free to move into rented accommodation on a temporary basis until you are ready to find your new home.

      However, when you are searching for your new home, you will need to be mindful that you don’t enter into a new property chain. As a result, you should ask the length of the chain when viewing a property.

 

    • As a seller, you have a few more options in order to avoid being tied into a long property chain. The easiest way to avoid entering a chain is to ensure that you sell to a first-time buyer, therefore, this person will not be looking to sell their previous property before moving into your own.

 

  • Another suggestion for sellers looking to avoid the dreaded property chain is to purchase a new-build home via a developer that is offering a part-exchange program.

    While not every developer will be able to accept a part-exchange, those that do will enable you to drastically speed up the process.

    However, please note that part-exchanges usually will give you a lower price than you would receive from putting the property on the open market.

 

How long does it take to buy a house in a chain? 

Buying a house usually can take anywhere between 6 – 18 weeks, however, the existence of a property chain can drastically increase the length of time it takes for a house to be bought.

Unfortunately, there is no clear answer on how long it takes to buy a house that is wrapped up in a property chain, as the length of time is dependent upon a number of circumstances, not least, the conditions of each property in the chain, as well as the borrowing ability of the respective buyers.

 

What happens if a property chain breaks?

As a consequence of their complex nature as well as the fact that the sale is not finalised until the contract is exchanged, property sales from time to time do fall through, even when a property chain is not involved. 

Despite property chains often being an intrinsic and lengthy-part of the house buying process, research has shown that regional, national and global events conditions, unemployment rates and major political events, are more likely to affect properties being sold than the collapse of a chain..

Figures show that the majority of sales fall through due to buyers changing their minds and pulling out of the deal. Gazumping and undesirable survey results often prove to be the main culprits of a failure to sell.

In the instances that a property chain fails, they often do so due to a seller somewhere in the chain being unable to find a suitable buyer for their property.

Unfortunately, unless you take out Home Buyers insurance to help you recoup a fraction of the fees, you stand to lose an average cost of nearly £3,000 should the property chain break.

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