How a property chain works when buying and selling
A property chain is a series of related property transactions where each sale and purchase depends on the others. Delays anywhere in your property chain can delay your house purchase.
Key takeaways
Property chains form when a buyer's purchase relies on the sale of their existing property, and that sale depends on another buyer's purchase, and so on
Being ‘chain free’ can be advantageous when buying a property as you don’t be depending on anyone else’s sale/purchase
The longer the property chain, the higher the risk of delays
Typically, all houses in a chain exchange contracts on the same day and then complete on the same day
What is a property chain?
A property chain is a series of linked house purchases that all need to take place to complete the chain. If you are a first-time buyer, you will be at the beginning of the chain. If you only need to sell your property – to move into long-term care, for example, you will be at the end. Property chains exist because, once you’re on the property ladder, you will usually have to sell your home to buy another house or flat.
People who tend not to be in chains include cash buyers, buy-to-let landlords, and families selling inherited property. First-time buyers will be at the beginning of a property chain.
How long does it take to buy a house in a property chain?
Property chains can mean property transactions take longer, but most go through within a few months.
However, if things go wrong, you could be waiting a long time. So, it’s wise to give yourself at least six months to buy a house in a property chain. The more sales that need to go through, the longer the list of reasons the chain could collapse. These include:
One of the buyers is unable to get a mortgage
One of the sellers/buyers decides they no longer want to proceed
One of the parties falls ill or dies
One of the property surveys reveals unexpected structural problems
A property chain involves lots of people, including other buyers and sellers, as well as their estate agents, mortgage lenders, solicitors, and surveyors. Therefore, the process can easily be delayed by holidays or missed phone-calls. For this reason, buying in a property chain can take anything from three months to a year or more.
What can I do if my property chain breaks?
If your property chain breaks you will either need to be patient until another buyer/seller can be found, or look for another property to buy.
The chain collapsing will usually also mean losing any money you’ve already paid out in related costs.
If the break is at your level, you may be able to take action to prevent it ending the whole chain. For example, if your buyers drop out because their mortgage is not approved, you could ask your estate agent to get back in touch with anyone else who made an offer for your property.
If it’s at another level, it’s vital to find out what the problem is. This way, you can decide whether to keep waiting or cut your losses and pull out of the chain. You can’t always stop a property chain collapsing, but ways to reduce the risk include:
Having your savings readily available to cover all related costs (stamp duty, solicitor’s fees, etc.)
Getting a watertight mortgage-offer
Buying a property that is chain-free or is part of a short, upward chain
Choosing a buyer who is not in a property chain
Selling your property and living in rented accommodation while you look for a new home
Buying a new-build property
How can I speed up a property chain?
Good communication is key to speeding up a property chain. You should stay in regular contact with your solicitor and estate agent. If things aren’t moving, ask if you can contact the other people involved directly. Other measures that can speed up a property chain include:
Getting your finances sorted as early as possible
Signing and returning all the relevant paperwork immediately
Using courier services or recorded delivery to prevent any delays
Keeping copies of all your correspondence
Including date clauses that give a timeframe for completion in the contract
What does 'chain-free' mean?
‘Chain free’ means a property sale or purchase doesn't rely on the successful completion of another property transaction.
A chain free buyer is one who doesn’t have a property to sell, i.e. a first time buyer or a buy-to-let landlord.
A chain free seller is one not buying another property. For example, they may be moving in with a partner or family, selling an inherited or rental property, or moving abroad.
When you are looking to buy a property, one that is advertised as ‘chain-free’ is one that is available for you to move into as soon as you are in a position to buy it. This is an advantage, as it means there is no chance of the purchase being scuppered by the seller’s purchase falling through. Sellers with a no-chain property may be less inclined to accept a lower offer, as they’re in less of a rush to sell. Conversely, if you are selling a house or flat, advertising it as chain-free should help you to attract more potential buyers.
First-time buyers can also use the fact they do not need to sell a property to buy as a negotiating tool.
What does 'no upward chain' mean?
A property with ‘no upward chain’ is one being sold by someone who does not need the sale to go through to buy another home. This could be the case when:
The property is a second home
The property is a rental house or flat
The seller is moving in with a partner
The seller has inherited the property
Do estate agents have an influence on a property chain?
Estate agents act as a crucial link between buyers and sellers, and their actions and communication can affect how smoothly the chain progresses.
Most sellers take their property off the market when they accept an offer and start the sales process. But in some circumstances their estate agent might pass on another, higher, offer which they accept. This can mean their buyer being ‘gazumped’ and the property sold to the highest bidder. This will disrupt the property chain.
What is the 'top' and 'bottom' of a property chain?
The ‘top’ of a property chain refers to the seller who doesn't need to buy another property in order to complete their sale.
The ‘bottom"’ of a property chain typically refers to the first transaction in a series of interconnected property sales. The bottom of the chain is usually a first-time buyer or cash buyer.
Do all houses in a property chain exchange contacts on the same day?
In most cases, yes, all links in a property chain will exchange contracts on the same day.
The completion – moving in – date will usually be the same too.
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