When it comes to buying or selling a property, there are several terms that it’s important to understand — some of which refer to the “property chain”. So, what does “chain free” mean when buying a property?
When you’re buying a property, it’s vital to be aware of all of the factors that can impact your purchase and potentially cause delays or the sale to fall through altogether. One of these things is the property chain, which we’ll go into more detail about below. But, more specifically, this blog will look into the advantages of buying a “chain-free” property.
What Is a Property Chain?
A property chain tends to be one of the biggest causes of frustration for people buying or selling a property. It arises when buyers and sellers are linked together by their property transactions — each sale depends on the successful sale of another property by a different vendor.
If one person in the chain pulls out or runs into problems, it can break the entire chain. This situation is a source of substantial stress and disappointment for many buyers. Not only could they miss out on a property they have fallen in love with, but their chances of getting a satisfactory price for their property could be hindered.
What Does Chain-Free or No Chain Mean When Buying or Selling a Property?
“No onward chain” are the three magic words every buyer and seller wants to see when it comes to buying and selling a property. “Chain-free” means the property you want to buy or sell isn’t reliant on the successful purchase or sale of other properties.
As a chain-free buyer, your purchase is not dependent on the sale of a property you currently own. For example, all first-time buyers are chain-free buyers.
No upward chain means whoever is selling that property isn’t looking to buy another one, so they will be at the top of the chain. Buying from them means there will be minimal risk of the house sale falling through.
Are Property Chain Issues a Cause for Concern?
In short, yes. One in five failed property sales in the UK is due to buyers being unable to sell their homes. In cases such as these, buyers lose substantial amounts of money from unrecovered conveyancing, valuation(s), surveys and brokerage costs.
In 2017, government figures showed that homeowners lost over £500m a year because of failed home sales. If you are a developer and your buyer decides to pull out, your entire project can be delayed, making it difficult to attract more buyers.
What Is the Average Property Chain Length?
According to research by Zoopla, it takes around 130 days to sell a house in a “hot” property market and up to 200 days — almost seven months! — in areas where demand is lower. If you’re buying or selling as part of a property chain, the process typically takes longer than it would if all parties were chain-free.
Each property sale is different, and it is impossible to put an exact figure on the “average” property chain length. Anything from the type of home you are selling to its location can impact how many people there are in a chain.
Furthermore, the length of the chain does not always directly translate into how long it will take for the transaction to complete — a chain of five or six properties could be problem-free and move quickly whereas a chain of just two or three properties could be riddled with issues causing countless delays or a failed sale.
What Are Property Chains Like Now?
The COVID-19 pandemic brought about a boom to the property market thanks to the stamp duty holiday (that ended in June 2022) and a surge of remote workers moving out of cities into more spacious areas. This made the first 9 months of 2022 rather frenetic in property, however the months that followed were a stark contrast.
The mini-budget unveiled in September 2022 had a profound impact on the British economy, prompting successive increases in the Bank of England’s base rate, subsequently causing mortgage rates to rocket. This has caused more sales to fall through than before and, unfortunately, other houses in those chains are at a higher risk of their sales not going through.
Higher mortgage costs combined with tightened lending criteria and the cost-of-living crisis putting even more pressure on personal budgets means many homeowners are looking to wait until moving house becomes more viable and affordable.
2023 is looking similarly frigid as both house prices and overall mortgage lending are expected to drop.
How this will impact property chains in 2023 is yet to be seen, however, people are less likely to be buying and more likely to be cautious in the short to medium term property market, so a break in a chain is likely to have a greater impact than before and be harder to repair.
What Are the Benefits of Being a Chain-Free Buyer?
The property chain can prove to be one of the most stressful and frustrating aspects of the housing market. All it takes is for one link to falter, and you can be back to square one.
A chain-free buyer avoids the anxiety of being dependent on another party to ensure they can complete the sale. They are also more appealing to sellers, as they won’t have to deal with the hassle of the property chain.
The latter is crucial, as it can be a contributing factor in buying a property for a price that suits your budget while avoiding the pitfalls that can arise if you find yourself in a property chain.
Purchasing a property is a big decision involving a lot of money, so you need to have as much control as possible. A chain-free purchase provides you with more peace of mind and ensures your sale won’t fall through due to circumstances that are completely out of your control further along the property chain.
How to Avoid Property Chains
If you’re keen to avoid the stress and hassle of a property chain, there are a few actions you can take to attract or become a chain-free buyer.
If You’re Buying:
- Buy a new home — there will be no upward chain, and you can sell your home as part of a part-exchange scheme.
- Look for chain-free properties such as vacant possessions — if you buy an empty property, there will be no onward chain.
- Make yourself a chain-free buyer by selling your current home and moving into rented accommodation while you search for a new property.
If You’re Selling:
- If you receive multiple offers, opt for a buyer who is chain-free — for example, a cash buyer or a first-time buyer.
- Stipulate to your estate agent (if you are using one) that you will only accept offers from chain-free buyers.
- Target developers who can buy your home outright for cash — although this may mean accepting an offer that is lower than the market value.
Do you want to know more about how HBB Solutions can help you or your clients to avoid the headache of property chain problems? Get in touch today to request a FREE consultation and discuss your needs with one of our experts.
Updated January 2023