When buying or selling a house, the word ‘Chain’ rings immediate alarm bells for our clients, and rightly so! Every additional link in the chain brings an increasing amount of risk to the sale or purchase. Recent research has shown that broken chains are the most prevalent reason for sales falling through in the UK, costing buyers and sellers millions of pounds.
So, what is a property chain? A property chain describes a line of buyers and sellers linked together because each is selling and buying a property from one of the others. The chain begins with someone who is only buying, not selling, and ends with a vendor who is only selling, not buying. The ‘links’ in the chain are the people in between who need to both sell and buy a property.
Chief executive of Market Financial Solutions, Paresh Raja, explains that “The UK is renowned for its love of bricks and mortar. However, it is concerning to see so many deals falling through after the formal house-buying process has begun. Difficulties in accessing the finance they need to complete the deal is also a major issue. Whether rejected by a lender or facing severe delays, buyers must ensure they are aware of all the options available to them.”
Problems in the chain can not only cause long delays and fall throughs but often a vendors is forced to allow their sale to complete without access to the house they are being. Leaving them homeless, they have to move into a friend or family members home or even a hotel. You Move (an online estate agent) have published research which found that “27% of people in the UK who have bought a house in the last 10 years have been forced to stay with friends, family or in hotels while waiting to complete on their new property.”
When an offer is put forward a crucial factor for the client to consider will be the length of the chain. A smaller chain will often mean our clients willingness to take a lower offer to avoid the hassle of a drawn our and precarious sale. We often see buyers taking bridging loans to avoid being in a chain, they know this will make it easier for them to secure the property they want and disconnect the purchase from their sale.