Today approximately 33% of second hand houses are sold chain free, compared to only 10% ten years ago, with 2015 having the highest proportion year to date.
The reason for such growth in chain free sales is down to a mixture of structural shifts, such as the growth within the private rented sector and changing market conditions.
Whilst the housing market across most of the country is still dominated by owner occupiers selling to other owner occupiers, the recent growth of the private rented sector has resulted in a new submarket; investors selling to other investors.
75% of homes sold with no onward chain are bought by someone who isn’t reliant on the sale of a property. As the number of homes owned by landlords grows, so too will the number of homes being sold chain free.
Buyers with no onward chain are very attractive to sellers. Firstly, their lack of chain means that such buyers are less likely to cause hold ups and, perhaps more importantly, their situation means that the sale is less likely to fall through.
Chain free buyers come in all shapes and sizes; ranging from first time buyers taking their first tentative steps onto the housing ladder, to seasoned investors who are able to put down cash without the need for mortgage finance.
What unites them all however is that they are able to be relatively flexible to the demands of the seller, be it the need to move quickly, or move home on a specific day. The flexibility they offer is reflected in the strength of their negotiating positon and subsequently the price they are able to agree with the seller.
Recent studies carried out by the research team at Countrywide has identified some interesting key facts on chain free properties:
- Ten years ago 90% of all second hand homes were sold as part of a chain compared to 67% today.
- Just over 26% of sales in London are sold without an onward chain, the lowest proportion in the UK.
- 40% of onward sales in the North West have no onward chain, the largest proportion anywhere in the UK.
- The average time taken to exchange contracts, from agreeing a sale, when neither the buyer nor vender is in a chain, is 73 days.
- The two main drivers of the number of homes sold without a chain are the sellers need to use equity to buy elsewhere and the type of seller.
Selling through a chain is not all bad, it is in fact a sign that we still have a healthy housing market in the UK!
Chains are a great way of helping people move up or down the housing ladder. Those going up the ladder generally use a mortgage to bridge the difference in price between the home they’re buying and the home they’re selling, often selling their home to a first time buyer. At the other end of the market, those downsizing tend to be reliant on some of the capital raised from the sale of their home to buy somewhere new to live.