What happens when a house chain collapses?

The housing market is a delicate thing, and house chains are one of its most vulnerable elements. These interconnected sequences of transactions rely on everything running smoothly from start to finish. Yet, the reality is far more precarious. A single hiccup — whether financial, logistical or emotional can disrupt the entire process, leaving buyers and sellers frustrated, stressed and back to square one.

The fragility of property chains is no small issue, with around 35% of all house sales falling through in 2023. Rising interest rates, stricter lending requirements, and economic uncertainties have only increased these challenges, making the already complex process even more susceptible to failure.

In this article, we’ll explore why house chains are so fragile, the most common reasons why they collapse, and what steps you can take to avoid or recover from a chain collapse. 

Remember, The Property Buying Company is always the best option to repair a broken chain!

Why do house chains collapse?

House chains are complex sequences of interconnected property transactions, where the sale of one property depends on the purchase of another. Property chains can create a domino effect, making the entire process precarious and vulnerable to disruption.

According to Which?, one in three property chains collapse. The risk of chains collapsing has only been exacerbated in recent years by rising mortgage interest rates, which make securing financing more challenging for buyers. The risk of a chain collapsing increases with the number of linked transactions — the more properties involved, the more dependencies, and the greater the likelihood that something could go wrong.

Why are house chains so fragile?

House chains rely on every link working smoothly and efficiently. However, even minor disruptions can cause long delays or lead to a total collapse. This fragility often results in higher costs to repair or restart the process, such as additional legal fees or renegotiations.

Here are some of the main reasons for chain collapses:

If your house chain falls through, then you may want to consider selling to a cash buying company like The Property Buying Company. We can help you sell the house in as little as 7 days, helping you keep the sale from moving forward. Within 48 hours of completion, you will receive the cash funds directly into your bank account, assisting you in any onward purchases.

What’s the most common chain break reason?

The most common reason why chains break is mortgage financing issues, which account for approximately 20% of chain breaks. Buyers often face challenges securing the necessary financing because their financial circumstances can shift unexpectedly between applying for a mortgage and completing the property purchase.

A sudden change in employment status, such as losing a job or having their income reduced, can make buyers appear less creditworthy to mortgage lenders. Additionally, taking on new debts during this period can negatively affect their debt to income ratio, reducing their eligibility for a mortgage. Rising interest rates further complicate matters, as they can make previously affordable loans unmanageable.

The second most common cause of chain collapses, responsible for 18% of cases, is unfavourable house survey results. When a survey uncovers issues like structural problems, damp or roof damage, buyers may be deterred from proceeding with the purchase. 

These findings often lead to negotiations, with buyers requesting price reductions to cover the anticipated repair costs. However, sellers may be unwilling or unable to accommodate these demands, causing the process to halt. In some cases, buyers may simply walk away unwilling to take on the financial or logistical burden of addressing the issues.

In third place, buyers backing out causes 15% of chain breaks. This often happens when buyers find a more appealing property, experience changes in their personal circumstances, or lose confidence in the housing market.

For example, fluctuations in house values or fears of economic instability can make buyers reconsider their decision. Such last-minute withdrawals leave sellers scrambling to find alternative buyers.

Can chain breaks be avoided?

One of the most effective ways to avoid chain breaks is to sell chain free. This means selling to a buyer who does not rely on selling their current property to finance the purchase. Chain free buyers can include first time buyers, people transitioning from rental accommodations, or cash house buyers. By choosing a chain free buyer, you significantly reduce the dependency on other transactions and minimise the risk of delays or collapses.

If you’re already part of a property chain, it’s important to focus on keeping your transaction moving smoothly, even though you have limited control over transactions above or below you in the chain. You can take proactive steps to strengthen your position by ensuring you have all the necessary paperwork prepared in advance, staying in regular contact with your estate agent to confirm they are actively progressing the sale, and encouraging clear communication between solicitors. Keeping all parties aligned can help reduce delays and make sure the transaction stays on track.

That said, not all chain breaks can be avoided. Sometimes, external factors such as financing issues, survey results, or unexpected changes in personal circumstances are beyond your control. 

If your property chain does break, it’s important to remain resilient and consider alternative solutions, such as using our cash buying service, helping you to move forward quickly and with minimal disruption.

What to do when a chain collapses?

When a chain collapses it can be an extremely stressful and frustrating experience. However, it’s important to act quickly and strategically to keep your sale moving forward. Realistically, these are the only ways you can keep a house sale moving forward:

Relisting your house on the open market

The most common course of action is to put your house back on the market, often with the same estate agent you originally used. Some people may wish to change estate agents, as they believe this will give you more energy in the market. While this can reconnect you with potential buyers, it does come with some challenges:

Attracting open market cash buyers

To accelerate the process, you can target cash buyers by marketing your house as “cash buyers only.” This often attracts property investors or individuals with liquid funds, speeding up the sale process. However, cash buyers can have their own challenges:

Selling through a property auction

If you need to sell quickly, a property auction can be a great choice. Auctions often ensure a quick sale, with properties selling within either 28 days (traditional) or 56 days (modern). You can also set a reserve price to protect against underselling.

While auctions are fast, they come with risks:

Using The Property Buying Company

For a fast, hassle free and completely free solution, you should consider using The Property Buying Company. We can complete the purchase of your property within a week, providing cash directly to you within 48 hours of completion.

Unlike estate agents and auctions, we cover all legal and selling fees, so the price we agree on is the exact amount you’ll receive. 

As members of The Property Ombudsman and founding members of the National Association of Property Buyers, we follow a strict code of conduct. This ensures fair communication and transparency at every stage — a level of service you won’t find with unregulated cash buyers.

With over 200 years of combined experience in house buying and selling, and 13 years in the cash buying industry, our team of over 40 property experts across the UK is here to guide you through the process.

By selling to The Property Buying Company, you gain a reliable, efficient and cost-free way to sell your home, even after a chain collapse.