The following is a Guest Post:
UK government figures have estimated that as many as one in three property transactions in England and Wales fails to reach completion, citing breaks in the property chain as a common cause of these occurrences. Unfortunately, there is nothing in UK law that prevents buyers from pulling out of a property purchase before the point of contract exchange. This means that up to this point, the future of a number of households can be potentially broken by one person pulling out. This is the action known as “chain breaking”, and effects of this can lead to both financial and mental anguish; several property owners can be left out of pocket and may have to face the reality of losing their dream property.
Being in the middle of a property chain can be a daunting prospect for first-time sellers and, when awaiting a contract exchange, there are several scenarios that could result in you failing to complete on your new home. Here are just two that could arise:
1) If your search for a new home has been successful but you have been unable to sell your house fast , you may end up being the link that breaks the chain and this could result in you losing your chosen future property. This could waste the time and money you have invested in your search, while also placing extra pressure on you and your family if you have commitments you need to fulfil, such as taking up a job in a new area.
2) Paperwork delays are another reason for chain breaking. If you have secured a buyer for your home but elements of the process are delayed, this can cause problems right before the point of exchange, forcing you to pull out of the chain.
If your chain does break, you may seek out a temporary solution. If you lose your buyer, you may choose to take out a bridging loan to cover your investments and allow the purchase of your own home to go ahead, or seek the assistance of a professional property buyer. If the shoe is on the other foot and your home has sold yet you have lost the house you were hoping to purchase, you may choose to move into rented accommodation until you find the right property for you and your family; this again will incur costs and you will have to weigh up the pros and cons to make a financially-savvy choice.