Property chains make a return, but don’t panic….9.12.2013
With the residential property market at all levels finally showing signs of a recovery in Kent, the return of the property chain means buyers and sellers will need to be patient. What can be done to hold the chain together?
With a buoyant property market chains with four or five properties in them are not unusual, however recently I have dealt with chains with eight or nine properties.
Until the recovery of the property market there had been a trend for people to complete the sale of their existing property and potentially to move into temporary accommodation before looking to buy again. However as property prices appear to be rising people are now looking to tie in their sale with an onward purchase in part I believe to avoid the upheaval of moving more than once and the incidental costs of this, storage, removals and rent. But more importantly I believe to ensure that they are not caught out by price rises on properties that they would wish to purchase.
There are a number of external factors that may bring pressure to bear with regard to dates for exchange of Contracts/completion such as the cut off date for applying for a School place, fitting in with School holidays, moving in before Christmas or more personal matters such as getting married, having a baby or starting or leaving a job. All these factors have the potential to add to the stress of a situation.
How best to deal with the strain of the chain
- It is easy to say but hard to do, but be patient. The chain will only move as quickly as the slowest person in that chain. On average contracts are exchanged in 4-6 weeks and completion usually within a fortnight thereafter, however there are many factors beyond your or your Solicitors control that can affect this.
- Use a Solicitor accredited by the Law Society with the Conveyancing Quality Scheme (CQS). Under the Scheme there is a code of conduct and time scales imposed with regard to matters such as dealing with correspondence and preparing the initial documentation for submission to a buyers solicitors.
- If at all possible do not give notice on employment unless you can afford to do so and if you are starting a new job you may wish to consider the option of temporary accommodation.
- Avoid committing to a date with removal companies until such time as you have exchanged contracts, as a number of removal companies will charge a fee for cancellation.
- Use your estate agent. A good estate agent can help smooth the water and keep all parties happy. The agents can liaise directly with both parties to the transaction and as such it is generally better to avoid dealing direct with your seller/buyer as this can on occasions create difficulties.
- Avoid late re-negotiations on purchase price as any change in a purchase price, where there is a mortgage involved will need to be formally approved of by the mortgage lender, which could take some time. Your survey should be carried out at the outset and you should avoid trying to save money on a survey as the property purchased is likely to be the largest purchase you will ever make and the survey can assist you in negotiating on your purchase price.
In the event that it looks as if the chain may collapse then parties in the chain may wish to give consideration to “breaking the chain” i.e. completing on a sale prior to completing on a purchase. If you are the party that is being asked to break the chain then bear in mind that if you exchange contracts on your sale but have yet to exchange on your purchase there is no guarantee that you will get the property you wish to purchase as until such time as contracts are actually exchanged it is open to any party to walk away from the transaction or to seek to re-negotiate the terms. Furthermore if you are completing a sale please be aware that there may be redemption penalties on your mortgage which if the purchase was being done in connection with the sale would not be payable as these would effectively be transferred across to the new property.
Being in a chain is undoubtedly stressful but with the assistance of a professional solicitor and a good estate agent most difficulties can be overcome without jeopardising your transaction.