When buying a new home, you will likely find yourself part of what is commonly called ‘the chain’. The chain refers to a series of linked property purchases where each purchase is dependent on the successful purchase of the homes in the chain ahead of it.
How is a chain created?
A chain is created when somebody agrees to purchase a new home before the completed sale of their current home, the money from which they require to complete the purchase of their new home.
Once the chain has been created by two home buyers, it can quickly grow longer as more people and more purchases become dependent on a successful sequence of completions.
To illustrate: The sale of Home A must be completed in order to provide the money for the sale of Home B to be completed, and the sale of Home B will provide the funds for Home C to be completed, and the sale of Home C will provide the money for Home D to be completed. This is a four-property chain where sales B, C, and D are all dependent on the completed sale of A.
Frustrations can arise when, for example, the current owners of Home D have to wait months and months for three different sales to be completed before they can move. But that’s not the worst of it!
The worst comes when something causes the chain to break. For example, in the aforementioned four-property chain, if the owner of Home A decides not to sell and not to buy Home B, it means the owner of Home B can no longer pay for Home C which, in turn, means the funds are no longer available to buy Home D – the chain is broken. One failed sale acts to ruin the sale of all four homes.
How does the chain end?
The perfect way to end a chain is for all the home sales to be successfully completed in quick succession. In this case, everyone gets what they want and everyone is happy.
However, if this isn’t looking likely, there is a compromise which people can make in order to bring an end to the chain: someone in the chain can decide to move into temporary accommodation while waiting for their new home to become available.
In our four-property chain example, if the owners of Home D agree to finalise the sale of their home and move into a short-term rented property while looking for a new home to buy, it enables the owners of current Home C to move into Home D, which enables the current owners of Home B to move into Home C, and the current owners of Home A to move into Home B. Thanks to the compromise from the owners of Home D, the chain comes to an end.
Can the chain be avoided?
Sadly, the chain cannot always be avoided. Even if you yourself are completely ready to go – you’ve got your deposit, secured your mortgage in theory, and even sold your current home – you’re still relying on many other people to be the same. In many ways, this is out of your control.
You would be wise to get yourself as ready as possible to move (this will mean you’re not a problem link in the chain) but, for the most part, you’re at the mercy of your fellow chain-mates.
One thing you can do is hire a good conveyancer – they will work on your behalf to try and get the chain moving.
Are you stuck in a chain? We’d love to hear about your experiences. And if you’d like some chain advice, our property expert, Russell Quirk, will be happy to help. In either case, drop us a message in the comments section below.