You’ve probably heard the term ‘property chain’. You might have come across property listings that include phrases like ‘chain-free’. But what exactly is a property chain, and what do these terms mean?
A property chain refers to a series of transactions that all depend on each other. If you’re buying a house, and the person selling you the house is also buying another house, that’s a property chain. Chains are a very normal part of buying and selling property – but they can cause a headache.
How is a property chain formed?
Some chains are long, and involve lots of people connected through buying and selling property to each other, while other chains are short, sometimes involving just two transactions. But every chain must have a beginning and an end.
A chain begins with a person who is buying a property, but not selling one, for example a first-time buyer, an investor or somebody who has rented or stayed with family in between selling a home and buying another.
A chain ends with the opposite: somebody who is selling a property, but not buying one, such as an older person moving into care or to live with family.
Chains happen because in the UK, most people use the money from the sale of a house in order to buy another one. A buyer usually cannot complete the purchase of their property until the funds have been released from their previous property.
Why do property chains collapse?
Chains can collapse when something goes wrong with one of the transactions within it, because it affects everybody else whose purchase or sale is dependent on that one. This could be due to somebody changing their mind about buying or selling, and pulling out, or because of a mortgage or survey issue.
Even when a chain does not collapse, delays or hold-ups at one stage of the chain affect everybody else within it.
What does ‘chain-free’ mean?
A property being sold chain-free means that its sale is not dependent on another transaction. Often this is because the vendor is moving into rented property, because the property is vacant or repossessed, or because it is a new-build.
A chain-free property comes with the advantage of not having to worry about things going wrong further up a transaction series, which would be out of your control.
A chain-free buyer is one whose purchase is not dependent on a sale, perhaps because they are a first-time buyer or an investor. Because of the risks and delays that can come with a long chain, some vendors will prioritise chain-free buyers when considering offers.
What does ‘chain complete’ mean?
A property chain is said to be complete once it has both a first and last transaction in place, meaning nobody involved is still searching for a buyer or a property. The bulk of conveyancing usually takes place once the chain is complete and all parties have agreed sales/purchases.