Insight 19 | Chain Gang
Buying property takes more than nerves of steel and being quick off the mark. You need superpowers! But what does it take to be the favourite buyer for your dream home in a competitive market? Gone are the days when you need to buy an estate agent expensive bottles of wine or baskets of home-made brownies. When the agent asks the question, So what is your position? you need to say, we are proceedable, no chain and ready to move fast!’
Being a cash buyer is ideal, but since that’s not always an option, an equally important status is being chain-free. In a market where there aren’t many homes available and where competition is tougher than the Premier League, being chain-free is like having Cristiano Ronaldo and Lionel Messi in your team. To be chain-free, more and more people are selling their property and moving into rented accommodation before buying a new home. One in three transactions in England, Wales and Scotland do not now depend on the seller finding a new place to live, up from one in ten a decade ago.
Here are our tips to be in the perfect position to get the home you want in 2016.
Break away from the chain
A chain can add a great deal of time, expense and risk to the buying process. Each of the parties in the chain needs finances to hold strong and surveys and valuations coming back without major problems. Equally, the timings have to work for when everyone wishes to, and is able to, move. This doesn’t affect first-time buyers but anyone else with a property to sell is in the same boat.
Being chain-free is the kudos you want as a buyer, as the market is very competitive. The sale of a chain-free property is simpler and faster than one in a chain and has less risk of falling through. As a result, sellers receiving multiple offers on their property undoubtedly give preference to buyers who can move quickly.
No seller wants to be sitting at home, biting their finger nails because the purchase of their dream home could be affected by someone they have never even met. To be in control makes the whole process calmer and stronger.
Not only does being chain-free benefit you as a buyer, it means you can sell your own home as chain-free, which is attractive to other buyers.
In areas where competition can be fierce, short lets are growing in popularity. The London short-lets market is growing exponentially. There has been a noticeable increase of short-let renters who want the flexibility of having a comfortable home base from where they can plan their next property move.
There is a growing array of short-let properties on the market to meet various budgets and requirements, as landlords switch on to the benefits of being flexible in this way. Either you get caught in chains that can take up to a year to complete while you wait for the person at the top to find a suitable house, or someone midway has to break the chain and rent to keep things in play.
Renting comes with added costs, so it’s not an option for everyone. Letting agents charge fees to tenants as well as landlords, which can total a few hundred pounds, plus you will need to pay a month’s rent as a deposit, and often monthly rental payments could exceed those you’re used to paying for a mortgage.
Even with these costs factored in, it might be worth it given that you are likely to be a desired buyer and could get a good price. Reports that chain-free buyers are able to command an average 1.3 per cent greater discount off the asking price than those stuck in chains. This number is down from 1.9 per cent ten years ago. This bargaining power has been dented by the increase in the number of people severing the chain. Aside from price, being chain-free also means you stand a better chance of getting the home you really want.
So as you plan your next move it may be worth considering taking a bit of drastic action to ensure you get the home you want, when you want it.