A chain-free property is a property that is being sold by a vendor (home seller) who does not need to purchase a new property after they sell. Only 10% of all property transactions in the United Kingdom are chain-free.

Origins of the term

The term ' property chain' is common in

real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...

, especially in the UK. The chain is the line of people buying and selling. For example, there might be a first-time buyer trying to purchase a small flat, another person waiting to move from the flat to a small house, another person waiting to move from the small house to a larger house, and so on. If one person drops out of the chain, the sellers are not able to continue with their moves and the chain collapses.

Reasons for chain-free properties

Chain-free properties are available for numerous reasons: * Homeowner reasons – the current homeowner has already a new home to move to, the seller is not buying a new home, emigration, selling on behalf of a deceased relative * Financial institutions (lenders, banks and building societies) – after acquiring properties thorough

repossession Repossession, colloquially repo, is a "self-help" type of action, mainly in the United States, in which the party having right of ownership of the property in question takes the property back from the party having right of possession without in ...

probate Probate is the judicial process whereby a will is "proved" in a court of law and accepted as a valid public document that is the true last testament of the deceased, or whereby the estate is settled according to the laws of intestacy in the sta ...

or equity release, they are re-sold on the open market. As the seller is a company, not a private individual, there is no property chain. * Home builders – properties that have been acquired in a part-exchange transaction and are being re-sold on the open market. As above, the vendor is a company, not a private individual, so there is no property chain. * Professional Investors – properties that have been acquired as part of a portfolio, not for the owner to reside in, but as investments. Although a private individual, the vendor is selling for business reasons, not to enable them to move on, making the property sale chain-free.

Recent rise in volumes and popularity among home buyers

The sale of chain-free properties has risen in the past two years, mainly due to the rising number of properties being repossessed in light of the

credit crunch A credit crunch (also known as a credit squeeze, credit tightening or credit crisis) is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks. A credit cr ...

. After repossessing properties, lenders look to sell the properties on so they can unlock the cash tied up in them and use it to rebuild their damaged mortgage books. With house prices falling in the past two years, these properties are usually priced to sell quickly to limit any losses on the properties. Therefore, there are obvious benefits in purchasing a chain-free property: * They are priced to sell in a short timeframe, making them usually slightly below the general market value. * Unlike a traditional purchase, where the ability of a ‘chain’ of buyers and sellers to move affects a purchase, there are only two parties involved in the purchase of a chain-free property – the buyer and the seller – making it a much simpler transaction.

References

{{Reflist Real estate terminology

Origins of the term

Reasons for chain-free properties

Recent rise in volumes and popularity among home buyers

See also

References