My property chain has broken - What do I do now?
1-in-3 property sales fall through after offer and properties in a chain are more vulnerable. If your chain breaks, what can you do to save your home move?
What is a property or housing chain?
A property chain is a series of three or more interdependent property transactions. Each buyer and seller in the chain is dependent on the transactions of all other buyers and sellers in the chain completing.
At one end of the chain is someone who is buying only (such as a first-time buyer). At the other end of the chain is someone who is selling and not buying. All other parties in the chain will be both buying and selling.
A chain could be as long as 10 links or more - there is no upper limit.
Why do housing chains break?
There are a number of reasons why housing chains break, such as:
- A change in personal circumstances. Loss of a job, family issues, illness or even just a change of heart can lead to a buyer or seller pulling out.
- Property market jitters are increasingly common as the economy, particularly in light of COVID-19, looks uncertain.
- A buyer might be gazumped.
- A seller might be gazundered.
- An adverse survey result could highlight potentially costly defects prompting the buyer to pull out.
- Slow conveyancing could lead to the sale process taking too long and a buyer or seller could pull out.
- The mortgage lender might down value a property, meaning a buyer's purchase is not financially viable.
- A seller being unable to find a property to buy and their buyer loses patience.
Gazundering can be avoided when selling your home
Can I avoid getting into a chain?
- If you are selling and have multiple offers, choose a chain-free buyer if possible. If the buyer is buying without a mortgage – better still.
- Consider selling before you buy. If you can move in with relatives or can afford to rent for a while, you may have a lower offer accepted on a property as you will be chain-free.
- As a buyer, look for a chain-free property. Properties that are second homes, new builds or where the owner has died are more likely to be chain free.
- If the seller has not found anywhere to buy and other people on the chain are getting impatient, you could ask the seller to consider moving into rented accommodation.
How can I prevent my chain from breaking?
The majority of transactions will be part of a chain. If you find yourself in a chain, the faster the conveyancing process, the lower the probability of a link in the chain breaking.
There is much you can do as a buyer or seller to speed the process up, including starting the legal process when you put your property on the market and completing all of the property forms without delay.
We discuss how you can speed up the conveyancing process in detail in the following article:
What should I do if my property chain breaks?
It can be very difficult to save a broken chain - especially if it is not your seller or buyer who pulled out. This doesn’t mean you shouldn’t try, however.
If your buyer pulls out, do your best to find out why - either directly or via the agent, If the reasons are financial, can you press everyone in the chain to reduce their asking price?
If the other parties in the chain are uncooperative, you can still decide to take the hit and lower your asking price. This may be uncomfortable but weighed up against the alternative of starting again, it may be preferable.
If your buyer is dragging their feet following exchange of contracts and the chain is at risk, you can give them a ten-day deadline by sending a ‘notice to complete’. They will doubtless want to comply rather than risk losing their deposit.
If a seller withdraws their property from the market or accepts an alternative offer, you are still in a strong position to find another property as you have a buyer, and chain, in place. You will probably have to move quickly though. Be proactive in finding another property before your sale falls through.
Ask estate agents if they have any sellers who are in a hurry. Sellers who are particularly anxious to move quickly may be prepared to substantially reduce their asking price, given the strength of your position.
If you are struggling to raise a large enough mortgage, consider renegotiating with your seller. Renegotiating a lower price at the eleventh hour can feel uncomfortable but, depending on the reason and amount in question may well be acceptable. It will cost you nothing to try.
What about bridging loans?
Securing a short term bridging loan is an option if you lose your buyer and still want to go ahead with your purchase.
These short-term loans are aimed at property buyers and are designed to bridge the gap between buying a new house and selling your current property. Bridging loans attract high-interest rates and their uptake in the UK is low.
Communication is key
Wherever you are in a chain and whatever stage of the conveyancing process you are at, communication is a critical weapon in your arsenal.
By prioritising prompt and clear communication, you can set the tone for the whole transaction.
Ensuring that both you and your solicitor communicate clearly with all parties and that you tackle any potential issues quickly and proactively, you can make the difference between a successful sale and a broken chain.
Your next step
If you are buying, selling, remortgaging or transferring equity in a home, we can help you find an expert conveyancing solicitor.
We work with a panel of specialist conveyancing solicitors to deliver a stress-free moving experience.
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Frequently asked questions:
- How do I speed up the conveyancing process?
- What documents do I need when selling my home?
- What must a seller disclose when selling a property?
- How to (properly) compare conveyancing quotes
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