Property chain problems are one of the biggest headaches for home movers, sending chills down the spines of buyers and sellers. With worries about rising interest rates right now, the chance of a buyer’s mortgage falling through somewhere up or down the chain is a legitimate concern.
But property chains are a necessary part of stepping up the housing ladder – aren’t they? If you want move on, you’ll need to sell and buy at the same time? Not necessarily.
People moving house in Wandsworth, Tooting or Balham might decide to avoid the potential pitfalls – by being the movers who break the chain.
Talk of breaking chains sounds a bit drastic – like we’re suggesting you deliberately wreck your chances of a house move. It’s not. We’re talking about taking action to simplify your property transaction and give yourself a better chance of a move that doesn’t fall through.
Property chain problems
The problems with property chains can be numerous. The key issue is that, however well you own transaction is going, what happens up or down the chain could have a significant impact on your move. The main problems we see in property chains are:
– A buyer pulls out because of a change of mind.
– A buyer pulls out because of change of circumstances – including that mortgage offer issue.
– A buyer pulls out because they don’t like what’s in the survey.
– A seller takes their property off the market because of a change of mind or issue with their own sale.
Why should I break the chain?
There are four compelling reasons to consider breaking your chain
1. To speed up your move – rough estimates of how long the moving process takes reveal that buying a chain-free property takes around 16 weeks. This increases to around 36 weeks if three transactions are involved – the best part of a year! By breaking the chain, you could cut your moving time down significantly.
2. To decrease the risk of your transactions falling through – it’s a fact that house sales do fall through sometimes, for all the reasons we listed above. Even chain free sales can do so. But the problem with chains is that the more the links, the greater the chance of a problem happening for everyone. Surveys show that a chain-free sale has around a 24% chance of failing – rising to 56% if three properties are involved.
3. To get a better deal – on both your sale and purchase. If you break the chain, the home you are selling is more attractive to buyers (who, like you, are possibly looking for chain free homes). This potentially means more demand and greater bargaining power. As a chain free buyer, you are also a more attractive proposition, meaning you may have more leverage to put in a lower bid than someone tied up in a chain.
4. To avoid wasted costs – this comes back to the fact that your transaction is less likely to fall through, meaning you won’t have wasted money on a homebuyer’s survey or legal costs.
Five ways to break a house chain
There are five main ways to break the chain in your house move:
1. Choose a chain free buyer – there are plenty of chain-free buyers out there. First-time buyers, obviously, but also investors looking for rental properties and people buying a second home. Tell your estate agent that you are prioritising chain free buyers. How realistic this is will depend on the type of home you selling and the level of demand at that point.
2. Look for properties with no upward chain – similarly, you can restrict your search to chain-free properties. These include new homes, inherited properties, ex-rentals and those owned by people who are also trying to break the chain in their house move.
3. Move into temporary accommodation – you can break the chain, and give yourself the time to look for your dream home at leisure, by selling your property and moving into temporary accommodation. This could be a rental property, an Airbnb or by moving in with relatives. The downside is you’ll be moving twice in a short space of time and the first two options will come with added costs. You’ll also need to look for places to rent in a high-demand market. However, these options will take away the stresses of being in a chain and make you an attractive buyer.
4. Buy before you sell – this option also gives you the space to look for the right home to buy without the pressure of selling at the same time. It only works if you have the spare capital to buy a second home, while owning your existing one, or you are able to secure an additional mortgage or a bridging loan (a short-term, usually interest-only loan taken out until the first property is sold). One drawback is that you’ll need to pay the stamp duty second homes surcharge (an extra 3% on top of the normal rate). However, as long as you sell your original home within three years, you can reclaim the tax paid.
5. Ask your vendor to break the chain – another option to use instead of, or as well as, breaking the chain yourself is to ask your seller to consider going into temporary accommodation. If the chain looks to be in jeopardy, your estate agent is likely to be willing to help with this.
If you’re looking to buy and sell in the south west London areas of Wandsworth, Tooting or Balham – with or without a chain – we’d be happy to talk you through the options. Contact us today for a market appraisal of your own home and to discuss our range of amazing properties.