Moving house is considered one of the most stressful life events, along with it comes lots of property jargon that you need to understand. Depending on your circumstances when you move house you may be in a property chain, but what exactly does this mean?
Our Residential Property and Conveyancing department have created The Ultimate Guide to Property Chains explaining everything you need to know.
The Ultimate Guide to Property Chains
When you decide to move house make sure you are fully aware of chains with our Ultimate Guide to Property Chains.
In this article, our residential property and conveyancing department explain how property chains work, why they can take a long time to process and what can cause them to collapse.
What is a Property Chain?
A property chain is created when homeowners selling their properties are reliant on the buyers to also sell their own homes in order to be able to complete the purchase or sale. This links the buyers and sellers together in a chain. Chains are very common within the property market and can often be quite long because each buyer and seller within the chain is dependent on the other for the transaction to be successful.
For example, if you already own a property, but you need to sell your current property before being able to purchase a new one. Then the person buying your property also has their own property sell, this will create a link within the chain.
How does a Property Chain work?
For a property chain to work each buyer and seller involved in the chain must complete all of the essential steps for a property purchase to be successful. Although the steps required can vary from each property case, the main ones stay the same. If a buyer or seller doesn’t complete a step then this can cause issues within the chain.
The steps involved in a property chain are:
- Securing a mortgage in principle
- Submitting an offer on a property
- Estate agent marks the property to Sold Subject To Contract (SSTC)
- Instruct a solicitor
- Arrange legal objectives
- Order a survey
- Finalise mortgage
- Date to exchange contracts
- Date to complete
Average Length of a Property Chain
If you’re involved in a property chain or considering buying a house which is part of a chain then you may be wondering how long the chain will take to complete? Unfortunately, it is difficult to say the average length of a property chain because each house sale is unique. For some people their house may take a few weeks or months to sell, but for others it can take even longer.
It is evident that being part of a property chain means your transaction and house move can take a long time to complete. Each property sale is different and depending on how many links there are within your property chain determines how long the process will be.
Why do Property Chains take so long?
Property chains can take a long time to process because of the steps involved to make the transaction go through.
Here are some reasons why property chains take so long to proceed:
- One of the buyers or sellers not instructing a solicitor quickly enough
- Survey reports identifying issues with a property within the chain
- Waiting for parties to complete and sign documents
- Estate agents not acting efficiently enough
- Mortgage offer expiring
- Loss of documents
- Buyers or sellers unaware of what they need to do next
It’s important you instruct a reputable solicitor to work on your case because this can improve the efficiency of the work completed to allow the chain to progress s quicker. If you decide to go ahead with the cheapest solicitor then they may act inefficiently or not be proactive enough.
There is no denying that being involved in a property chain is frustrating, but don’t let it put you off buying a property which is part of a chain. Although some property chains may have multiple links within it, it doesn’t always mean the process will take longer to complete providing everyone within the chain completes their requirements efficiently.
Our head of Property and Conveyancing Department, Steven McMaster commented, “The longest chain I have knowingly been in was eleven properties. I was acting twice in the chain. One of the most important things to do in a long chain is get it exchanged as far in advance of the completion date. As with all purchase transactions we arranged for mortgage funds to arrive the day before completion and arranged for as many of the solicitors as possible to transfer funds up the chain a day in advance. Although the day of completion was still stressful this pre-planning allowed us to complete all the transactions relatively early on the day of completion.”
5 Reasons a Property Chain can Collapse
The longer the chain the more like likely is it that one part of the chain will not do what is expected, resulting in the chain breaking and potentially stopping the buyers and sellers in the chain from completing their sales and purchases. There are many factors which can cause a chain to collapse.
Here are 5 reasons a property chain can collapse:
- A buyer has financial problems and is unable to secure a mortgage.
- A buyer or seller decides they no longer want to proceed in the transaction.
- Following a property survey, unknown problems are identified and the buyer no longer wants to proceed.
- A buyer or seller attempts to renegotiate the terms of the transaction.
- Unforeseen circumstances slowing down the progress e.g. employee sickness or a global pandemic
How can a Property Chain be fixed?
Collapsed property chains are commonly caused by delays and failed sales which can add pressure, stress and expense to those involved in the chain. If your property chain has collapsed don’t panic because there are ways the chain can be fixed.
To fix a property chain you may need to compromise for example, if you can’t get a mortgage big enough to cover the asking price of the house, you’re wanting to buy then you could make a lower offer which the seller may accept if they want to move quickly. Another example, is if the seller pulls out of the chain and you don’t want to lose your buyer, then you may consider moving into rented accommodation, whilst you find a new property to buy.
If the property chain is broken ask your solicitor what options are available to you.
10 Ways to Prevent a Property Chain from Collapsing
There are a number of things you can do to prevent a chain from collapsing. Here are 10 ways to prevent a property chain from collapsing:
- Communication is key – It’s important you regularly communicate with people involved in your chain. Respond quickly if someone requires information from you. By building relationships with those within your chain, it may increase chances of the chain staying together.
- Choose a trusted solicitor – Don’t just choose the cheapest solicitor because you may not receive the best service and they could delay parts of the chain.
- Be honest – If you think there may be something which will slow down the transaction make sure those involved are aware of this.
- Know your finances – Make sure you know how much you can get a mortgage for before you find the property you want to buy.
- Rent or move in with family – If the buyer of your property wants to move before the purchase on your new home is complete you may consider renting or moving in with family whilst you wait for your new property to be ready, this will prevent your buyer from pulling out of the chain.
- Discuss time frames – At the start of the process discuss potential time frames so, that each buyer and seller is aware of what the goals are so, everyone is working towards the same date.
- Buy a property below you in the chain – If a property further down the chain is struggling to sell and you have enough capital then you could consider buying the property to speed up the process.
- Be efficient – Make sure you are aware of what is required from you at each stage. For example, any documentation that requires signature complete this as soon as its convenient for you.
- Sell to a ‘quick sale’ company – If the buyer of the property you are selling pulls out, you could consider selling your home at a discounted price to a ‘quick sale’ company. Although it may mean you lose out financially it could prevent the chain from breaking.
- Consider a bridging loan – If you have run out of options, then you may consider taking out a bridging loan. This means you are borrowing money against your current property.
Residential Conveyancing and Property Solicitors
- Residential sale and purchase
- Re-mortgage work
- Investment property work
- Transfer of equity
- Residential leases
- Residential tenancy agreements
What is residential conveyancing? Our solicitors have years of experience dealing with both simple and complex residential conveyancing cases involving freehold, leasehold, registered and unregistered property. We will keep you informed at every stage of your transaction process and ensure it is dealt with efficiently.
Morrish Solicitors is an approved Conveyancing Quality Scheme (CQS) law firm. To enquire about our services please call us on 033 3344 9607 or simply email firstname.lastname@example.org with your request.