What does ‘chain free’ mean in the property market?

What does ‘chain free’ mean in the property market?

No end of the anxiety involved in buying or selling properties comes from being part of a chain. So ‘chain free’ can also roughly translate as ‘stress free’, because you will hopefully avoid the potential pitfalls of a chain. But seriously, what does ‘chain free’ really mean in the property market?

Chain free – at a glance

What does chain free mean?

Chain free can describe a type of buyer or seller/vendor, or a type of property, but it usually refers to the property.

When you see ‘chain free’ on a property description, it generally means that a vendor of a property is not reliant on the sale of their property to purchase another property. If a buyer is in the same position – they are not selling a property at the same time – then the buyer can be considered ‘chain-free’. In these circumstances the property transaction has no chain, and might also be termed ‘chain free’.

A chain free buyer could be a first-time buyer, or cash buyer. A property might be marketed as a chain free property if it is sold at auction, or sold after probate. There is less that can go wrong if you are lucky enough to be buying chain free, or where there is no onward chain.

What is a property chain?

Buying a property usually means that you are just one of a number of people buying and selling property from each other. This is called being part of a ‘property chain’. If you are at the bottom of the chain, you are buying but have no property to sell – all first time buyers are at the bottom of the chain. The chain ends when someone selling a property does not require funds from their sale to purchase a property, or are not buying at the same time.

Each property transaction relies on the one below it in the chain proceeding. If it does not, the chain ‘collapses’ and all the prospective purchases fall through. This can be costly if people have paid conveyancing and survey fees.

Is chain free the same as no onward chain?

No, not quite.

When an estate agent describes a property as having ‘no onward chain’, it means that it is being sold without the vendor relying on its sale to purchase another property. These are often but not exclusively probate sales. It does not necessarily mean the same as ‘chain free’, however. It will only be chain free if the buyer of the no onward chain property has no property themselves to sell.

What is chain-free leverage?

‘Chain-free leverage’ simply means that the party who is chain-free has negotiating power within the house buying process. A vendor may be able to advertise their chain-free property at a higher guide price because the sale can proceed much quicker than if it was in a chain, and they feel they can charge a premium.

Equally, a chain free buyer could seek to negotiate a reduction in the sale price, or make a lower offer, if they have a hunch that the buyer wants a quick sale. It depends on which party in the transaction feels they have the most leverage in the process.

When chain-free leverage matters most

Chain-free leverage really comes into play when a chain-free buyer can use this advantage over competing buyers. A first-time buyer can use their position to negotiate a lower price, for example, because they are not reliant on any other parties in a chain. The seller knows that the transaction can reach completion much faster if they deal with a chain-free buyer.

Why do sellers prefer chain-free buyers?

Sellers prefer chain-free buyers because there is less risk involved. The longer a chain of buyers and sellers, the more chance there is of a property transaction collapsing. It only takes one link to break the chain. Having a chain-free buyer brings more certainty to the house buying process - although it doesn’t eliminate risk completely.

Can being chain-free speed up completion?

Yes, a chain with multiple buyers and sellers, and associated solicitors and conveyancers, could delay completion for several months. It is not uncommon for even small property chains, with perhaps only 3 or 4 parties involved, to take 6 months to complete.

How long does it take to complete on a chain free property?

A chain free purchase or sale usually happens much quicker than if you are part of a property chain with multiple buyers and sellers, simply because there are less parties involved, fewer exchange and completion dates to juggle and less paperwork to be done.

A chain free buyer can expect to complete in 8-10 weeks, but it could be quicker or take longer depending on the particular circumstances of the transaction or property. Anything could hold up a purchase or sale, from the survey to the searches to the mortgage application.

What happens at exchange and completion in a chain-free sale?

There is nothing different about the exchange and completion process of a chain-free sale than a sale with a chain – but it can happen much quicker, with fewer parties involved. Completion day itself is often far more straightforward for estate agents and solicitors to co-ordinate.

Chain-free vs property chain - what’s the difference?

A property chain means that there are multiple parties in the house buying process. If buyer A is buying a house from seller B, who needs the funds from that sale to buy a property from seller C, then that is a chain. A property chain only ends when the final seller in a chain does not have a linked purchase.

Chain free simply involves two parties: buyer A buying a house from seller B.

What are the risks of buying in a property chain?

The main problem you will encounter as part of a property chain is that you will have no control over the house buying process. If another member of the chain decides to pull out of their purchase or sale, it will have a domino effect on everyone else in the chain.

Negotiation and pricing differences

Property chains are likely to offer less scope for individual negotiation than a chain-free process. Buyers and sellers will also have fewer opportunities to make lower offers or add value to prices, as there will be less to gain in a chain.

Do chain free properties cost more?

It is often the case that properties with no onward chain will have a higher asking price. A chain free property will be in greater demand because it offers the prospect of a quicker, less complicated purchase, and one less likely to fall through. Buyers will pay a premium for that privilege.

Sometimes, however, the opposite is true. Chain-free buyers may be able to negotiate a lower price.

How to reduce or avoid chains

How to avoid chains when buying

The only real way to avoid being part of a property chain when buying is to be a first-time or cash buyer. Even if you are buying a chain free property, you need to have no property to sell too.

Reducing risk when selling

Many properties will have no onward chain through circumstance, rather than the choice of the seller. Houses that are being sold because their owners have passed away will fall into this category.

There could be happier reasons why you can sell chain free. You may not need to buy because you have got married and moved into your spouse’s property, and so just want to sell your property. Some vendors might even make special arrangements so that their property has a chain-free premium – for example, by moving into rented accommodation for a period so that they can achieve a higher price for their sale.

Should you prioritise chain-free properties?

Properties being sold with no onward chain can offer significant advantages, especially if you are a first-time buyer. But they are also likely to see high demand, which can drive the price up. Chain-free properties might not be suitable for first time buyers – they could be too large, expensive or need too many repairs. You will have to bear these factors in mind if you see a chain free property become available.

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