If you’ve ever bought or sold a property, then you have probably come across the term ‘property chain’ before. But what is a property chain and how does it affect you?
What is a Property Chain?
A property chain is a term used for buyers and sellers who are linked together in a sales transaction. Typically, if you are selling your home, it’s because you are moving into another one, and you are buying that one, which means someone is selling that property and they are also potentially in the middle of buying their next property so they can vacate the one you are buying, and so on. It’s a chain of buyers and sellers and each sale is dependant on the other. So, in most cases, you can’t actually buy your next home until your current one sells, and that’s what makes property chains so tricky.
Ultimately, it’s all about timing and everyone in a property chain has to complete on their transactions all around the same time so that everyone in the chain can move forward. It is common for property chains to collapse and this is when one link in the chain can’t go through with the sale for one reason or another and that causes all the links around them to break. It can be devastating and frustrating when this is beyond your control.
Keeping property chains short and simple
In some instances of homebuying and moving, property chains can be much shorter and easier to deal with.
- A seller has several offers on the table. In this case they could opt for the buyer who isn’t in a chain – ie, someone who is not selling a home. This might be a first-time buyer or someone buying an ‘additional’ property, such as a buy-to-let or a holiday home.
- Buying a new-build. New-build properties are unlikely to have any upward chain, as the purchase is often made direct from the developer.
- One party is a first-time buyer. A first-timer doesn’t have to sell a home before buying, so only forms ‘half’ of a link in the chain. And if a first-time buyer is purchasing a new-build property, the deal is probably entirely chain-free.
- One property is empty. If someone is selling a home that’s empty – they are living abroad, recently deceased or it’s a second home for example – that can mean there is no upward chain.
- One or more parties is prepared to move out anyway. If one link in the chain agrees to selling and moving into short-term accommodation or staying with friends, this can also free up the chain. This flexibility could make you a more attractive prospect to seller – but there is no guarantee you won’t be waiting a long time to move into a home of your own.
Although it would make the homebuying process smoother and likely, quicker, it’s more important to find the right property for you and your budget, rather than to simply look for ways to avoid or shorten a property chain.
In most cases, you will have to contend with a property chain, but if you understand how it works and how to manage it properly, then you might be able to complete the purchase of your new home quicker and without undue hassle.