Warmer weather and longer evenings traditionally make spring a busy time in the housing market. Whether they are looking for their first home, trading up or downsizing, people seem to be at their keenest to move around now.
They find a home that’s right for them; they arrange the mortgage – and then get caught in a property chain. The excitement of making a move can turn to delays and frustrations for buyers and sellers alike.
At Continuum we are looking at property chains.
What exactly is a Property Chain?
When you buy a home, you move into it on or around completion day – the point where the property transfers to your ownership and you get the keys. Your mortgage usually kicks in at this point.
However, if the seller is also buying a home, they will be waiting for completion day on their new property. They might not be able to move into their new home if the person they are buying from is unable to move into theirs.
A property chain forms when a homeowner wants to make a move and needs to sell their property to simultaneously purchase a new one, the buyer of their property is also selling their own property first, and so on. The chain can involve multiple buyers and sellers, each depending on the other's transaction completing successfully.
Chains can have many links. Four or five are common, but double figures are not unknown. The longer they are, the greater the chance for one link to run into a delay or snap altogether. A broken chain means nobody can move until a replacement can be found.
This can lead to prolonged periods of waiting, uncertainty about completion dates, and increased stress for both buyers and sellers. A broken chain can mean starting the buying or selling process over again from scratch, which can be financially and emotionally taxing.
Every move in the chain has to be coordinated, because everyone in the chain needs somewhere to live.
Even first-time buyers feel the impact of a chain, despite having no buyers and sellers below them, there may be a long onward chain of movers that they are on the tail end of.
Dealing with a chain
High prices and the conveyancing process mean that property chains are an unavoidable feature of the UK housing market, but there are ways to manage them, or even potentially avoid them altogether.
Where possible, buying chain-free transactions can sidestep the problem. This involves buying from sellers who do not need to purchase another property themselves, reducing the dependency on multiple transactions aligning perfectly.
There are three key types of purchase that are chain free:
Newbuilds. Buying a newbuild fresh from a developer can avoid a chain. Developers can afford to wait (even if they prefer not to) and some may even take your existing home in part exchange.
Vacant possession. Buying an empty home can avoid a chain. Owners who have already moved on, or who have died or gone into care can be chain free as they don’t need to buy another home.
Auctions. Buying at auction is not for the faint-hearted. But if you can raise the cash, you could bag a bargain as well as avoid a chain.
If you're already a homeowner, you might even think about selling your existing home and renting a place in the short term, so that you are chain-free at the point of taking your next step on the housing ladder. You would need to consider the additional cost of rent in this case.
Getting some help
Chains break for many reasons. Solicitors, brokers, estate agents or other third parties can take too long over paperwork. People in the chain can simply change their mind.
But the main cause of problems is usually finance. There is little you can do if it is someone else in the chain whose mortgage offer is not as solid as it appears, but you can try to ensure your own arrangements are as dependable as possible.
What’s the simplest way to get a mortgage arrangement that you can depend on, and which aims to save you money too? Simply call us at Continuum.
How to stop yoour property chain collapsing | Zoopla
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to a particular mortgage product and you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.
