You've found your perfect home. But what if there's a break in your property chain and everything stalls? Here's how to keep your purchase on track.
A property chain begins with someone who is buying a home (usually a first-time buyer, but not always) and ends with someone who's selling one.
How many 'links' or buyers and sellers there are in between can vary within each chain.
The chain is linked because all of the sales in it must happen at exactly the same time for everyone to be able to purchase their desired new home.
If something goes wrong along the chain, it can collapse in a domino-style effect, affecting everyone within it.
Even first-time buyers feel the impact of a chain, despite having no buyers and sellers below them, because the party they are buying from may be affected by the sellers of the house they are buying from and so on. This is known as an ‘onward chain.’
Any property chain can only progress as fast as the slowest link will allow, so staying on top of everything is essential for ensuring the chain succeeds.
Can I avoid a property chain?
Yes. If you're already a homeowner, you might think about selling your existing home and renting a place in the short term, so that you're chain-free at the point of taking your next step on the housing ladder.
If you're able to find a seller who's also not in a chain (because their sale isn't dependent on them buying another property), you're effectively chain-free and the transaction will be much less complicated to manage.
Other ways of avoiding a property chain include buying a new-build home directly from a house builder, or snapping up a property at auction, though the latter often requires a good budget for renovations.
What happens when a house chain breaks?
There are many reasons why a sale may fall through somewhere along the chain, for example:
- One of the buyers can't get a mortgage
- One of the sellers changes their mind and takes their property off the market, having already agreed a sale
- One of the parties is made redundant and can no longer afford to move
- One of the buyers pulls out after a survey throws up costly repairs on the house they wanted
Gazumping and gazundering also play their part.
Gazumping is where a seller accepts an offer from one buyer but then takes a higher offer from someone else at the last minute, thereby scuppering the sale.
Gazundering is where a buyer reduces their offer at the last minute, often just before exchange, which may result in the seller being unable to accept it and the chain breaking.
It is possible to buy specific home buyer's protection insurance, which will pay out if your purchase falls through, but make sure you read the terms, conditions and exclusions thoroughly.
Collapsed property chains can prove costly, as you may have already shelled out for a survey, searches or even legal fees, not to mention the heartbreak felt at losing your new dream home. So...
How to keep a property chain moving
If you do find yourself in a property chain, here are some steps you can take to minimise the chances of it collapsing.
1. Keep communicating
Communication is everything. Make sure you're in regular contact with your solicitor, estate agent and mortgage broker.
Push for regular progress checks and respond promptly when you’re required to provide information.
Doing this will help to build good relationships with your buyer and seller, which increases the chance of holding a chain together.
It becomes harder to let somebody down once you’ve established a rapport.
2. Be organised
Get your finances in place and line up experienced professionals, such as a conveyancer and mortgage broker, to advise you. And keep a record of all correspondence.
Being organised enables the process to move along more speedily, meaning there's less chance of things going wrong.
3. Get involved
If you discover that someone in the chain has pulled out because of money issues, you could try getting everyone in the chain to agree to a lower sale price.
Persuading all parties it is of mutual benefit will be no mean feat, but there are occasions where this has worked.
4. Ask your seller to rent
If the seller of the home you want has lost the home they want to buy and is telling you they're stuck, it's worth asking if they might consider renting in the short term, so that the sale can still go through.
This would put them in a stronger position when it comes to finding their next home, since they won't be dependent on a sale to secure it.
If you're really keen on their property and don't want to let it go, you could even offer to give them a few months' rent as a sweetener.