When you are buying and selling property at the same time, with people both above and below you, you are in the middle of a property chain. All the people in the chain will be dependent on each other.
Most transactions will involve a property chain, as many people are reliant on their property being sold before they are able to buy a new one. This unfortunately can make the process of buying the new property slow, as it will only progress at the pace of the slowest link. There is also always the risk that one transaction sales leading to the chain breaking.
The chain can break for numerous reasons, including finance falling through, personal circumstances changing and even other buyers making a higher offer on a property within the chain also known as gazumping. The longer the chain, the harder it is to keep it together.
Until contracts of sale are exchanged, the deal is not legally binding. It is therefore important to progress the buying and selling process through as quickly as possible.
If there is an issue that threatens to break the chain, it can sometimes be sorted through renegotiation or allowing extra time for other property to be found.
If your property chains become broken there are a few options available that may be able to repair the chain and keep the whole process on track.
if you have your buyer pull out, it may be possible to find another buyer that may repair the chain.
Other options available include using a ‘quick sale’ company or taking out a bridging loan. However, these should be viewed with caution and if possible, and should only be used as a last resort and following independent financial advice.
What can be done to minimize the risk of the property chain collapse?
The simplest way to avoid the risk is to have as short a chain as possible. For example, if your property is proving to be popular, choose a person who is currently not part of a chain, such as a first-time buyer.
Another option is to consider selling your property prior to purchasing another and renting or staying with family and friends in the meantime. This means there is no risk of a chain above you whilst you sell, and already to move quickly once you have found the property you desire.
If you are worried about the consequences of a chain collapsing, especially the financial consequences of having to pay the fees up until the point of collapse, Homebuyers Protection Insurance may be available. This will cover the fees should the transaction fall through and may save you thousands of pounds.
If you would like to speak to one of our expert Conveyancing solicitors ring us on 0333 305 5189 or email us at enquiries@lpropertylawyers.co.uk
