Why chain-free properties command a premium – experts explain

Purchasing a chain-free property could be the key to a quicker completion when buying a house – but you’ll need to be prepared to pay more for your new home.

A property chain is a series of homes which are all being bought and sold at the same time. Being in a chain can slow things down as you’re at the mercy of the slowest buyer or seller, or their conveyancer.

What does chain-free mean? For sellers, it means you’re not buying another property as part of the same transaction, while for buyers it usually means being a first-time buyer or a cash buyer.

Chris Hodgkinson, managing director of HBB Solutions, says: 'The chain is one of the most dreaded aspects of buying and selling so the ability to bypass it brings great appeal. The ability to remove this anxiety means that sellers will often opt for such a buyer even if they receive higher offers elsewhere, while those looking to buy will stretch their budgets that little bit further for a chain-free home.'

Why pay more for a chain-free property?

Jeremy Leaf, north London estate agent and a former RICS chairman, says chain-free properties command a premium at the moment. 'Chain-free properties are often sought by those who have suffered problems in the past and lost money trying to purchase a property which then fell through. Such buyers are frequently prepared to pay more for the privilege of not having to rely on a long chain of buyers and sellers all completing on their own properties in a timely way.'

As a result, some sellers put themselves in a ‘no upward chain’ position by planning to move either into rented accommodation or in with family or friends after they have sold their home. They can then look for a new home as chain-free buyers, which is attractive to vendors.

Some vendors will also be encouraged by the idea that chain-free properties command a higher selling price. There are several reasons why this is:

1. Fewer complications

A big selling point to a chain-free property is that there is no involvement of separate deals further up the chain. The vendor doesn’t need the sale to go through at a specific time in order to fund their own purchase, and this flexibility can make selling far easier.

Chris says a property chain is essentially a real-life property-themed game of Jenga.

'One small hiccup somewhere down the line can scupper the sale of a completely unrelated home,' he explains. 'It’s an extremely nerve racking, stressful place to be and so it’s hardly surprising that buyers are willing to pay well above the odds to secure a chain-free home.'

2. Reduced chance of the sale falling through

If you’re in a chain, it only takes one buyer or seller to pull out of the transaction for the whole chain to collapse.

Liana Loporto Browne, president of Propertymark NEAE, says: 'If you have a chain you are reliant on another purchaser. Throughout the chain there are events for third parties such as mortgage valuations and surveys which can cause the sale to fall through.'

With no upward chain, there is a reduced chance of a negative survey, valuation or the like causing the deal to collapse.

3. Quicker completion

Buying a property is a notoriously long and time-consuming process in the UK. This process takes even longer if you are in a lengthy property chain, so purchasing a chain-free property offers the chance of a speedier completion.

In fact, HBB Solutions found that the average conveyancing time for a chain-free property is just four weeks versus an average of 10 weeks across the wider market.

4. More flexibility

The fewer parties that need to negotiate dates to exchange contracts and complete, the better. If there are many links in a chain, various dates may be off the table for completion due to the various parties’ commitments and trying to fit in with things like school term dates and holidays.

It’s much simpler to agree exchange and completion dates when there are just two parties involved.

How much more could you be paying for a chain-free property?

Various studies have shown that chain-free properties can generate a higher selling price.

Research by GetAgent.co.uk earlier this year found that property purchasers are willing to pay 10.8% more on average to buy a chain-free property. However, this varies by region; Edinburgh commanded the highest chain-free property price premium, with homebuyers prepared to cough up an average of £75,606 more for a chain-free property in the Scottish capital.

A similar study, this time by HBB Solutions, found that on average, a chain-free home costs £23,131 more than average. Its analysis was based on property prices sourced from PropertyData and compared to the wider average cost of a property using government figures.
The results are below:

Source: HBB Solutions