What is a Property Chain?

Selling a house will usually involve other people.

And selling a house well usually involves good cooperation with other people.

Patience and urgency are often needed in the right measure.

Understanding what a property chain is and how to work well within one will help you sell your house quickly.

What is a property chain?

The term property chain refers to a series of interconnected and often interdependent property sales.

A property chain is usually formed when you sell your house the traditional way., i.e., on the open market.

If one part of a property chain breaks, the entire chain can delay or even collapse altogether.

Timing and communication matters

Everyone in a property chain might need to complete their transaction on the same day.

This ensures that the funds are available for each person’s deal.

Achieving this involves active communication. All parties must stay up-to-date on the whole chain, not just their particular part.

Reasons that a property chain breaks down

A property chain can break down for reasons inside and outside the buyer and seller’s control.

Delays in the process

There are several moving parts to property chains. Many of these need to be completed within a clear timeframe.

For example, mortgage offers usually last for 6 months after being offered.

If the sale is completed during this period, the mortgage offer will remain valid, and the chain will remain intact.

If not, the chain will likely collapse.

Why the delays?

Poor service from the professionals involved in the deal can often contribute to this not happening.

If a solicitor or conveyancer takes a long time to complete and submit forms, this can disrupt the sales timeline elsewhere.

Survey issues

Surveys sometimes reveal previously unknown issues with properties.

After all, this is their purpose…

These issues can range from structural issues to problems with pests – and a lot in between.

Change of heart

One of the main reasons a chain breaks down is because someone voluntarily changes their mind.

This might be due to disagreements in negotiations, the discovery of other properties (or buyers), or a simple change of heart about moving.

Change in personal circumstances

Someone might pull out of a house sale at the last minute because of a change in their personal or financial situation.

This could be because of:

Personal issues (illness, divorce, grief, etc.)
Losing a job
Taking a new job.

Change in broader circumstances

There might also be a broader change in the economy of specific areas (i.e., mortgage interest rates) that causes buyers (or sellers) to revise their budget.

Many people have already pushed their budget to its limits for property.

(For example, the value of outstanding mortgage balances with arrears increased by 4.2% in Q1 of 2024. This indicates that more people are struggling to meet their mortgage payments.)

So, difficulties in broader economic circumstances can significantly impact many buyers.

Failed mortgage applications

Mortgage offers can be withdrawn for several reasons.

Two of the most common include banks’ discovering that a property’s value or condition differs from the seller’s estimate.

Unethical last-minute negotiation tactics

Property sales are high-stakes transactions. In fact, for most, they are the highest stake transactions of their lives.

It should come as no surprise that some people try unethical tactics to better profit from them.

Two of the most well-known are:

Gazumping: When, after already agreeing to sell to another buyer, a seller accepts a higher offer from another buyer
Gazundering: After agreeing to the seller’s original asking price, a buyer then offers a lower price for a property.

How to reduce chances of property chain from breaking

The breakdown of a property chain is often outside of the buyer or seller’s control.

But some steps can taken to reduce its likelihood or the damage it can do…

Good communication

Regular and clear communication is a priority. All parties should follow up consistently with one another.

Documentation admin

Documents should be handled promptly and accurately. Estate agents and solicitors should update the rest of the chain on this.

It’s equally important that buyers and sellers are ‘on the ball’. Don’t take too long to answer requests or fill in forms.

Transparency

You should be honest about any problems with your house. It will be detrimental in the long runif you try to hide these things.

A survey often reveals them and your buyer might pull out, or drastically reduce their offer. This can cause everything to collapse.

How to deal with a break in your property chain

You cannot always control the collapse of your chain. But you can decide how you respond to it.

Consider potential second buyers

In case your current one drops out, it may be worth having a potential second buyer lined up.

Retain their contact details and contact them quickly in case of a chain break with your existing buyer.

(Your negotiating power may be diminished so you could have to compromise on price).

Consider finance for interim periods

Finding a way to finance the interim might be worthwhile if you are stuck waiting for someone else in the chain.

It depends on your situation. Consider a bridging loan and get advice from an expert. This short-term solution might stop the entire chain breaking altogether.

Consider chain-free buyers

Finding a chain-free buyer in the first place is also recommended. These people are not impacted by other breakdowns in a chain.

This increases the likelihood that everything can proceed. Common examples include:

First-time buyers. These often already have their current accommodation secured (renting somewhere or staying with relatives).
Cash buyers. These do not rely on mortgages to make purchases, increasing their flexibility.

Look at short-term renting options

If the person you are buying from has lost the home they want to buy, you could ask them to rent it in the short term.

This might enable your sale to proceed. You might choose to compromise on price to say thank you for this.

Selling buy-to-let properties

Selling a buy-to-let property is usually a chain-free interaction. The buyer may be part of a chain, but the seller is unlikely to be.

After all, sellers are unlikley to be living in their buy-to-let property. There are regulations against living in them long term (though some exceptions exist).