We all want a stress-free process when it comes to buying or selling a house. The chances of that happening are often slim, but it does, and perhaps the largest factor contributing to a hassle-free property transaction is when there is no onward chain.
Having no onward chain removes some of the difficulties, delays and drama you may otherwise face during a property purchase or sale, however, it is not without its own issues either, as we’ll explain here.
What is a property chain?
A property chain is a series of property transactions that are all dependent on each other for them to go through.
Think of when you sell a home, somebody is normally buying it from you. For them to do so, they might need to sell their house. The person buying that needs someone to buy theirs. The chain runs on and on until it reaches a property with no onward chain. This property will be the one that’s sold where there is no need to use funds from a sale to buy another property, or no property is being purchased.
Should one link of the chain break – let’s say, somebody withdraws their offer – the chain collapses as all the other associated sales and purchases are no longer able to happen.
Unfortunately, this can be costly. If conveyancers have already been paid and surveys conducted, buyers can have already spent a fairly large sum on a house they are no longer moving into.
Are chain-free and no onward chain the same?
You’ll see both terms used often, and whilst similar, they do have a small yet important difference. No onward chain means that the chain ends with the sale of that property. Chain-free, on the other hand, means that a property is being purchased without the need for funds from the sale of a home.
You could think of it as no onward chain being found at the end of a property chain, and chain-free more likely to be found at the start of the chain.
Why do properties have no onward chain?
There are a host of reasons why a property can be sold with no onward chain.
It was a rental property
A tenanted property often has no onward chain as the landlord will already have their own place to live. Quite often, a landlord will choose to sell with tenants still in situ, making for an easy sale to other buy-to-let landlords and additional reassurance to tenants.
The property was inherited
When a property is inherited, as much as it brings back memories and holds sentimental value, it often sits empty. This can put a drain on finances and over time, see it lose value.
The property will be sold with the funds distributed as per the will, and due to the home being vacant, there is no seller reliant on a sale to complete their next move on the property ladder.
The seller is moving into rented accommodation or abroad
If the seller has no plans to buy, yet they still have a property to move into, be it locally or abroad, they can sell without relying on an onward chain to facilitate the move.
They are buying a house with their own cash
If the person selling already has substantial funds behind them, they can go and buy another home without having to worry about a chain affecting the sale of their current property.
It’s being repossessed
When a home is repossessed, it is the lender’s way of selling the property to get their money back. As a result, there is no onward property transaction stemming from the sale.
The funds from the sale go to the lender, not the seller (unless anything remains after the debt is cleared).
Are there benefits to no onward chain?
There certainly are! If a property has no onward chain, it can make the whole process much easier.
We all know it can take considerable time to buy or sell a home, but with no onward chain, it can be reduced. This is because the current owner does not need to find another property before their sale can go through. This puts a buyer in a great position as they only have to rely on their sale and the ones before it, rather than hoping that both ends of the chain don’t break.
There is also more certainty that the sale will go through. With fewer obstacles in the way, there is less to stop the transaction from faltering. This includes the possibility of gazumping.
Gazumping is where someone jumps in with a higher offer after your offer has been accepted. With things moving so much faster, the opportunity for this to happen is greatly reduced.
Are there any no onward chain complications I should be wary of?
Yes. Despite no onward chain paving your way to a faster property transaction, it can come with a few bumps in the road. Just like sales in the middle of the chain, they can collapse.
If, for example, you delay your sale for any reason, the potential buyers may just walk away. This then puts you back at the start of the process.
The buyer cannot get a mortgage
You may have done everything right in getting your house sold, but when it comes to the buyer, they let you down. Sometimes, this will be no fault of their own; other times, it could be due to a lack of research on their part. Should they fail to secure a suitable mortgage, the whole transaction could come to a halt.
A change of heart
Before the exchange of contracts, the buyer or the seller can pull out and decide the move is not for them. There could be specific reasons that lead to this. Perhaps it is no longer as affordable as they hoped, maybe a job relocation means a move elsewhere is on the cards or in some cases, it just might be that the house no longer suits their needs.
The other side of the chain breaks
Even though there is no onward chain, your buyer may still have a chain connecting their sale to their purchase of your home. Remember, your home having no onward chain doesn’t mean there is no chain at all. So, if the buyer of their property pulls out, they won’t be able to sell their home and use the funds to purchase yours.
Issues with the survey
If you have no onward chain, you want the smoothest sale, but failing to be open and honest could see that sale slow right down, and maybe even collapse. The survey will flag up any issues and allows the buyer to have a valuable insight into the home and any potential repair costs that may arise.
Increased desirability
For the buyer, a property with no onward chain is enticing, but you could soon find yourself competing against multiple buyers. Everyone wants the quickest and smoothest purchase, so offers will likely come flooding in for properties with no onward chain. This gives power to the seller, who can then negotiate hard to get the best possible price.
Property chains can be one of the more problematic aspects of a property transaction. Having no onward chain means a seller can appear more attractive to a buyer as there is potentially less risk for them. However, the chances of the purchase faltering do remain.
If you are looking for houses for sale in Epsom with no onward chain or have a property that you would like to sell, speak to our team. At Cairds, we use our years of experience as the leading independent estate agents in Epsom and the surrounding areas to help facilitate your property plans.