How does a property chain work?

01/11/2017
A property chain is a number of linked conveyancing transactions that are all reliant upon each part of the chain to complete. Chains can come in any number of sizes, from a small chain where a first time buyer is buying from a buy to let investor, to a long chain where there are several families all moving on the same day.

Buyers and sellers often worry about their chain collapsing and how best to manage a long chain. Moving home when there are two people in a chain is stressful enough, however when there are multiple people, just one slow party can have a ripple effect up and down and the chain. This is why it is so important to know how many people are in your chain and find out their circumstances.

What do you need to know about every party in a chain?

Download your FREE Property Chain Checklist and find out how long your chain is and if there are any issues that'll slow down your exchange.
Stay on top of your chain so you don't get any surprises down the line!

In this article we'll examine:


Our team of specialist conveyancing solicitors are on hand to help with complicated chains. We offer a No Sale No Fee protection for our legal to protect you from our legal fees should the chain collapse. Call 0333 344 3234 (local call charges apply) to get a quote or click here to use our online quote engine.

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Is the conveyancing process different for a long chain?

The conveyancing process (click to see the complete Conveyancing Process) follows exactly the same route regardless of how long the chain is. What does change is when you should complete certain stages.

If you are at the bottom or in the middle of a chain, you don't want to pay for property searches or mortgage valuation if your seller, or the seller's seller, has yet to find a property to buy. The reason for this is because if the chain isn't complete, then you could be left waiting whilst the seller's find a property to buy. You could even be left financially out of pocket if the seller decides to stay put as they can't find anywhere to buy.

Mirror the chain

The best advice is to mirror the chain which means that you order your property searches and mortgage valuation when your buyer does.  Whilst you are waiting you should check to see the average turn around times for your local authority to get the results back for your property searches and with your bank for them to book in their mortgage valuer (if either of these take 3 to 4 weeks then you may have to order earlier than the rest of the chain).

How many houses are in a chain?

There can be any number of properties in a chain, however it is more common to have either 1 or 2 properties in a chain. A chain starts with either a first time buyer or a buy to let investor and ends with a buy to let investor, probate sale or someone moving back in rented. It helps to understand who is in the chain and what their drivers are so you can all work to the same goal.

Download your free Chain checklist by clicking here


What can you do if you are stuck in a slow chain?

You are limited with options when you are stuck in a slow chain. The key thing you need to do is find out the cause for the chain being slow and whose property it relates to. Is the issue a:

  • problem with the legal title?
  • slow solicitor (holidays or overworked are two key causes)?
  • undervalued property?
  • renegotiation between the buyer and seller?
  • change of heart?

You'll need to find out what the issue is to know how to address it. You should flag your concern with your estate agent so that they can communicate with the estate agents in the chain to help understand what the delay is. This can be a challenge if you are using an online estate agent.

How do you break a chain?

Breaking a chain is a last resort for sellers and buyers and is normally caused by the loss or delay to their onward purchase. By breaking the chain you are looking to complete the sale of your property to your buyer, moving into temporary accommodation, with the goal of finding another property or completing at a later date with the existing property.

What about second home stamp duty?

Second home stamp duty is not payable if you are selling and buying your main residence. If you sell your main residence and own another property, then you still don't have to pay second tamp duty as long as you buy your main residence within 36 months.
You should consult the HMRC to find out your own stamp duty liability.

What do you do if your chain collapses?

The chain can collapse at any time for any reason up to the point of exchange of contracts. Having your chain collapse is a very emotional time, especially as so much time, effort and money will have been spent in getting to the stage of collapsing. You should however find out the exact reason why your chain has collapsed as it could be salvageable. If the conveyancing process has been slow, some people in the chain may get frustrated and pull out.

Protect yourself from the legal fees

You should make sure your solicitor operates a No Sale No Fee policy so that if your chain does collapse, then you don't have to pay for the legal work on the failed transaction. Read more about our No Sale No Fee policy.

If there are delays then speak to your estate agent and put forward a definitive date for the exchange to take place and then work with your solicitor to make sure this is achieved. It doesn't always work, however knowing that the end goal is within sight can help keep the chain together.

What does chain free mean?

If you are chain free there is only one property being bought and sold. With chain free transactions, all parties will feel the conveyancing process should complete quicker. This is a fair assumption, however there are other factors that can slow down the sale such as if:

  • the property is leasehold;
  • there is a mortgage;
  • the council is slow at returning the local authority search; or
  • the seller doesn't provide satisfactory replies to enquiries.

What happens if the chain can't agree on a completion date?

You should agree a target date for completion with your chain at the outset, however you must be flexible as completion dates often move.



 
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