What is a Property Chain and How Does It Work in South East London?

‘What is a property chain?’ is a question we often get asked by home movers in the south east London areas where we operate – Bermondsey, Surrey Quays, Deptford and Canada Water.

Maybe your first property was a new build or with no onward chain, or perhaps it’s been a while since you bought and sold? If you’re unfamiliar with property chains and how they work, we answer the questions sellers frequently ask us before they put their homes on the market.

What is a property chain?

A property chain is a series of linked property purchases. Chains usually start with a first-time buyer, who has no home to sell, and end with a no onward chain purchase – so this is particularly applicable to people who are selling and buying a house at the same time.

When finalising a sale, all the houses in the chain need to complete at the same time in order for the transaction to work. This requires co-ordination across multiple buyers, sellers and their solicitors to ensure that everything proceeds smoothly. Equally, this is the reason why property chains sometimes ‘break’.

What is a chain free property?

A chain free property is one at the end of the chain. This might be because the owner is moving into rented accommodation or they are selling an inherited property after a parent has died. Sometimes chain-free properties are the result of a landlord deciding to sell up or because the property is a new build.

Whatever the reason, chain-free properties are desirable because the transaction is likely to go more quickly and more smoothly. You might also hear them described as the ‘closed chain’, ‘no onward’ or ‘no forward chain’ property.

Property Chain Terms Explained: Chain Free, No Chain, Closed Chain and Onward Chain

How do property chains work?

Each person in the chain carries out the normal steps of buying or selling a property – so having the survey done, instructing a conveyancer, getting a mortgage approval etc. The same completion date will be set for every home in the chain, meaning that, in theory, everything will happen simultaneously, and you will all move on the same day.

Why Do Property Chains Collapse? Common Reasons Explained

An issue somewhere along the chain will impact on everyone’s sale. Someone changing their mind or finding a problem with the property are among the most common issues, along with a change in personal circumstances such as a redundancy, or the withdrawal of a mortgage offer.

In other cases, one buyer may withdraw because they can’t find a suitable property to purchase. Estate agents along the chain will work hard to find a solution that rescues the sales, but sometimes you will have to start again to find a new buyer or property.

Some of the most common reasons why chains collapse are:

• Survey issues – problems found during a property inspection
• Change of heart – a buyer or seller pulling out, sometimes due to personal reasons but often linked to market uncertainty
• Chain breaks – a link elsewhere in the chain falling through
• Finance issues – a mortgage offer is withdrawn or the buyer’s financial situation changes
• Legal delays – complications during conveyancing such as delayed searches

What to Do If Your Property Chain Breaks

Contact your estate agent and solicitor immediately to check what costs have already been incurred, and explore options that could hold the chain together. Sometimes, you may find a replacement buyer or seller to rescue the chain – for instance, your estate agent may know of an interested buyer.

If your seller pulls out, you could alternatively sell now and rent until finding a new home. Where the chain can’t be saved, chain break insurance can help with covering survey costs and legal fees already committed, or bridging finance may help.

How often do property chains break?

While people may not like the idea of being in a chain and worry about breaks, remember that most house purchases are conducted this way, and the majority go ahead without a hitch.

Whether your chain will break or move along intact could also depend on the number of transactions it contains. The longer your chain the more chance it has of coming unstuck. It does happen, with 46% of respondents in a property chain reported that it caused a delay or chain break, according to a recent Barclays survey. However, most UK property chains are reasonably short, consisting of around three transactions.

Is chain break insurance worth it?

If you’re concerned about the costs and stress of a property chain collapsing, you could consider chain break insurance to cover incurred costs. These typically include survey fees and legal fees, as well as mortgage arrangement fees, that can total £2,000-£3,000 or more if a chain collapses.

Also known as home purchase protection insurance, it costs an average of £75 to £200, depending on the excess and level of coverage.

What can I do to make my chain purchase go smoothly?

While you can’t avoid some chain-related issues, such as those related to personal circumstances, you can do things to make sure your sale and purchase move along quickly. This means being organised with your paperwork and responses to buyer queries, pressing ahead with your survey and instructing your conveyancer.

You should also be careful when choosing an estate agent and conveyancer. Look for people with a good track record of managing chains, and a proactive local agent who will actively manage and chase the chain end-to-end. If you are selling your home in East or South-East London, contact Oliver Jacques.

How long does it take to sell your home in a property chain? 

How long it takes to sell a property will depend on the number of buyers and sellers in your chain and how complex their transactions are. Property portal Zoopla’s recent research suggests that the average time to sell a house ranges from 17 to 32 weeks, with the more complex chains at the upper end.

How do I avoid a property chain?

If you really want to avoid a property chain, there are some things you can do. As a seller you can prioritise first-time buyers, however, this may mean accepting a lower offer from the home.

As a buyer, buying a new build, or limiting yourself to resale properties with no onward chain, but this will also restrict your choice. If you want to make yourself completely chain free, you could consider selling then moving into rented accommodation until you find a place to buy.

Considering a home sale?

If you’re thinking of selling in Bermondsey, Surrey Quays, Deptford or Canada Water, talk to us. We are a local estate agent with plenty of experience of chain purchases in the area and would love to give you a no-obligation appraisal of your home and our advice on managing your all aspects of your sale.

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