How to stop a house chain collapsing
Wednesday 08 March 2006
No chain. Those are the two words we all want to see when we look at estate agents' details for the house of our dreams. But chains occur in 85 per cent of property transactions, usually starting with a first-time buyer and then moving along a line of existing owners.
The chain usually ends with an owner who just wants to sell - perhaps on behalf of a deceased relative or to move abroad. - and thus does not want to buy another property.
When the market is hot and there are more buyers than homes on sale, chains tend to be strong. Purchasers usually overlook minor faults when viewing or reading surveys.
But when the market cools, as it has this past year, chains progress slowly as buyers have a wide choice. "Things have changed a lot. Buyers and solicitors are ultra-cautious and want everything to be right," says Rupert Sweeting of estate agent Knight Frank.
These days about 25 per cent of chains break. "Sometimes it's because a survey reveals a problem, there's a legal complication, or because of a job change, divorce or illness. But most sales fall through because someone changes their mind," says Peter Bolton-King, chief executive at the National Association of Estate Agents (NAEA).
Agents say there are ways of minimising chains breaking - but these may limit sellers getting the best price and buyers making a quick move. Here are some:
n Try to sell to a first-time buyer or someone who has already sold and moved out of their property.
* Accept an offer only from someone who can prove they are ready to move and can afford your property.
* Play hardball - accept two or more offers and say the first to exchange contracts will have the home.
* Sell your property and rent or live with friends or family, before starting to look for a new home.
* Arrange your mortgage and solicitor before putting your home on the market.
Few buyers, sellers and estate agents follow these tips. Perhaps this confirms what we thought all along - trading property brings out the desperate and ruthless in us all.
"We once had a chain with a very expensive country house at the top and an inexpensive flat at the bottom which simply wouldn't sell. The seller of the big house got so fed up he bought the flat himself," says Richard Page of London estate agency John D Wood.
Relationships can cause problems. "My client had a cash buyer purchasing a home for his daughter. The deal collapsed when the daughter fell out with her boyfriend," says Mary Still of Stacks Property Search.
NAEA chief executive Peter Bolton-King reckons talking minimises the risk. "By building relationships you can perhaps increase your chances of keeping a chain together. It is more difficult to let somebody down if you have got to know them a little," he says.
Well, perhaps. I put my home up for sale in 2003 and found a self-employed buyer, a father of two. I invited him for tea. Yet there followed months of excuses why no offer appeared. In the end the deal fell through.
But help may soon be at hand for those stuck in chains. The Land Registry, which monitors property sales, is setting up a confidential website for estate agents, conveyancing solicitors, buyers and sellers in three pilot areas. For six months from this summer they will be urged to use the website as a blog, allowing everyone in the chain to check on progress.
"Everyone who has ever bought a house knows how fraught the process can be. We believe about a quarter of residential chains fall apart at the moment, and our online service aims to reduce this misery," says Liz Hirst, the registry's director of electronic conveyancing, and leader of the pilot scheme in Bristol, Portsmouth and Fareham.
From summer 2007 there should be more help when Home Information Packs (HIP), the reports about the condition and "service record" of every home on sale, must be prepared by sellers and given to would-be purchasers.
"Packs should alert buyers early to many of the problems that lead to chains breaking at a late stage," says a spokesman for the Office of the Deputy Prime Minister, which is behind the new law.
One estate agent involved in a HIP pilot in Bristol says the rate of broken chains before packs were used hit 26 per cent; since then, the rate has fallen to under 2 per cent. Let's hope this is how the future will work. We have nothing to lose but our chains.
Why chains break
* Absence of correct building-regulation documents and planning permission
* Sellers refuse to remedy defects identified on surveys
* Bans on pets
* Uncertainty on rights of way
* Sellers refusing to pass on residents' parking permits
* Properties selling just above Stamp Duty thresholds
* Confusion over land boundaries between country estates
Source: estate agents
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