is a line of buyers and sellers involved simultaneously in property
transactions that are linked to each other. If one property transaction falls
through or is delayed, the chain can break and the effects are felt up along
are waiting for a buyer to complete the purchase of your property before you
complete the purchase on your new property, and your buyer pulls out, you may
have to pull out, which could cause problems for the vendor of your new
It is a
very common problem in the UK. Recent Government figures estimate one in three
property transactions in England and Wales fall through. It's an expensive
problem too, given that the surveyor, estate agent and legal fees involved in
buying property are non-refundable. There is insurance you can purchase to
cover these fees should your chain break down.
for trade event the Homebuyers Show found that 36% of people feared getting
stuck in a chain more than any other aspect of moving house.
break a chain?
breaking can happen due to a variety of reasons.
Most chains fail because of
tight deadlines for paperwork being missed or finance falling through at.
The buyer can simply
withdraw his or her offer. Until contracts are exchanged, the buyer is
under no legal obligation to buy the property and does not have to pay for
any of the costs that you as the seller may have incurred.
Another common reason is
that the survey - currently undertaken late on in the process - reveals
some previously unknown problem with the property and the buyer pulls out.
Gazundering occurs where a
potential buyer reduces their offer at the very last minute before
contracts are exchanged and the vendor refuses the lower offer. The NAEA
has warned that Gazundering is rising as the UK housing market slows.
Increased knowledge of property prices and a huge selection of properties
for sale means buyers are more frequently springing a nasty shock on
sellers and offering lower offers. If this happens before contracts are
exchanged it is up to the seller to decide whether or not to accept the
lower offer. Once contracts have been exchanged the buyer is legally
committed to paying the price stated in the contract. They can still pull
out, but will forfeit the 10% deposit they paid when contracts were
The vendor may accept an
offer for their house and then inform the buyer that they have been
offered a higher price by someone else. This is known as 'gazumping'.
be a delay in the lender making a formal mortgage offer to the buyer. Until the
mortgage offer is made, contracts cannot be exchanged.
How can I
avoid getting caught in a property chain?
a number of steps you can take to minimise the risk of getting caught up in the
Avoid chains in the first
place. Find out the status of potential buyers and decline their offer if
they are stuck in a chain. Find out the status of the people you are buying
from too as chains can break either way.
Make sure you have all your
finance in place. To avoid becoming the weakest link yourself, have your
mortgage offer in place before you start making offers.
If necessary, arrange for a
bridging loan. This is a short-term loan which covers any financial
shortfall and smooth’s the process. It can usually be arranged very
quickly and will typically charge interest of 1.5%-2% a month.
It is standard procedure to
ask to see the necessary paperwork for the buyer below you in the chain to
rule out any chance of a chain break.
You can reduce the amount of time involved in lenghty chains by shortening the time taken to complete.
You can sell your current property and go into rented accomodation whilst searching for your new property.
Keep communication channels open between all parties can ease things along, lower stress and reduce the risk of chains collapsing.
any other ways to fix a broken chain?
As a last
resort, you could try a company specialising in repairing broken property
chains. These companies’ co-ordinate reductions in price all the way down the
line to try to get things moving.