Your guide to property chains (for properties in England and Wales only)
What they are, how they work and what they mean for you
Unless you're buying a brand new home, there's a very good chance you'll become part of a property chain. A property chain is a sequence of linked purchases with those that are buying or selling their properties to each other at the same time, each of which is usually dependent on the buying and selling of the other properties in the chain. It sounds straightforward, but because everyone in the chain is linked, the actions of every individual can have either a positive or negative impact on everyone else.
It's impossible to predict what will happen with any property chain. But there are positive steps you can take to ensure your link is as co-operative as possible.
Step 1: Understand the structure of a property chain
Whether you're a first time buyer, moving with a growing family or looking to downsize, our example property chain can help you picture where you might fit in.
Jenny is first time buyer
Currently living with her parents
Wants to own her own home
Tom is a single professional man
Currently owns an apartment
Wants somewhere bigger in the city
Jacqui & Peter
Jacqui and Peter are a couple in their 30s
Currently own a 2 bedroom house
Want more space and a garden
Lucy & John
Lucy and John are couple with teenage children
Currently own a 3 bedroom house
Want somewhere with an annex for her elderly mother
Mary & Derek
Mary and Derek are a retired couple
Currently own a large country home
Want to sell up and move to the villa they own in France
Step 2: Be aware of potential hold-ups and problems
Below are just three scenarios of what could happen in a chain and how that might affect the other links.
Scenario A: Tom's survey highlights some major structural problems so he refuses to proceed without getting further professional advice. Jenny wants to move sooner rather than later so she puts an offer in on another apartment. Jacqui and Peter are unable to move so they lose out on Lucy and John's house.
Scenario B: Peter loses his job and decides that they can't afford to move right now. They take their house off the market which means Lucy and John lose their buyers and Tom loses his £1,000 non-refundable surveyor's fee.
Scenario C: Lucy and John reduce their offer to Mary and Derek at the very last minute before contracts are exchanged (gazundering). Mary and Derek are counting on the extra money for their retirement so are now forced to accept an offer from another buyer. Until Mary and Derek find another property to buy, everyone behind them in the chain is stuck and can't move.
At-a-glance: common reasons for hold-ups
- Finance falling through at the last minute
- Paperwork deadlines are missed
- Issues come up in the survey
- A buyer changes their mind
- A buyer reduces their offer (gazundering Tooltip:
Gazundering is when a buyer reduces their offer at the last minutes, often just before contracts are exchanged.
- A buyer outside the chain comes in with a higher offer (gazumping Tooltip:
Gazumping is when a seller agrees to accept an offer from one buyer, but then goes on to accept a higher offer from someone else.
Step 3: Do what you can to keep things moving
Avoid a property chain
Ask the people you're buying from and selling to if they're in a chain. If they are, consider whether you want to join them.
Get your finances in place
Don't make an offer on a property before you've got a mortgage agreed in principle.
Question your buyers
Before you accept an offer, make sure they're all ready to go with someone to buy their home, a mortgage agreed in principle and a solicitor or licensed conveyancer in mind.
Stay in regular contact
Keep talking to your estate agent and solicitor or licensed converyancer to make sure everything is being done, when it should.
Break the chain
The shorter the chain, the more chance you have of completing. So you might want to consider selling your home first and moving in with family, friends or renting for a short time.
The content of this article is believed to be correct at the time of publication and is provided for general information purposes. When buying or selling a property you should obtain appropriate professional advice and this article is not intended as any substitute for or supplement to that advice and must not be relied upon as such
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