House hunting can leave you feeling like you have to learn a whole new language. And one term that’s extremely helpful to know is the meaning of “no onward chain.”
A home listed as having “no onward chain” is definitely worth a look. As a buyer, it means that successfully purchasing that home won’t rely on any other sales.
This can mean quicker completion and a smoother process for both buyer and seller.
Here, we dig into the property chain in more detail, including examples of no onward chain situations.
What is a property chain?
Let’s start with the basics. Many homes on the market are destined to become part of what is called a “property chain”, and each home makes up a separate link on that chain.
If a home catches your eye, asking the agent if it’s part of a chain is a good idea. In fact, it’s one of our top ten questions to ask when viewing a house. The longer the chain, the more complicated the sales process could become.
This is because most people rely on the sale of their current home to fund the purchase of their next one. And a home that’s part of a long chain may take longer to wrap up.
As a buyer, acquiring your new home depends on the seller finding and securing theirs, and so on. So, you become part of a chain.
Here’s how it works:
- Person A needs to sell house A to buy house B.
- The owner of house B needs house B to be sold to buy house C.
- House C’s owner will use the proceeds of the sale of house C to buy house D, and so on.
Every homeowner is dependent on the sale of their current home, and possibly by extension, even the sale of the homes that come before them in the chain, for every other link to reach completion.
It can be a delicate process, with an infinite number of links to be completed.
What is an onward chain?
An onward chain is essentially the links B, C, D, etc., in our example above.
If the sale of house B suddenly falls through, that means Person B will be in the difficult position of having to find a buyer very quickly to make their purchase of house C.
If they cannot find a buyer for home B in time, their purchase of house C may fall through. This means Person C, who was relying on the sale of house C to purchase house D, will also have a problem. Disruptions to the chain can have a knock-on effect, and anyone in the chain can be affected in the aftermath.
It’s said that one in three property chains break, and it can be frustrating and disappointing when they do. There are even insurance policies which will pay out a set amount of money should the chain break.
This will usually cover the costs that may have been incurred between the time a home is Sold Subject to Contract (SSTC) and completion day — for example, fees to cover conveyancing, mortgage arrangement, and surveys.
Is “no onward chain” a good thing?
It can certainly be less complicated.
When a house is advertised as having “no onward chain”, the seller is not dependent on someone else finding and buying a property before they can move out of the home you’re looking to buy. In other words, the property is ready to be sold straight away.
Buying a home that is chain-free or with no onward chain can be quicker, with less chance of the sale falling through due to factors outside of your control.
These elements make properties sold with no onward chain desirable among buyers.
What are some examples of “no onward chain” situations?
There are a few instances where no onward chain could apply, including:
- The property is part of an inheritance or a second home, and the seller does not need to find other accommodation
- The property is a rental property, and the tenants will be moving on
- The seller has decided to rent going forward
- The seller has already secured and bought another property to move to
- The seller is moving abroad or moving to retirement accommodation
- The house has been repossessed
- The property could be part of a new-build development
Is “no upward chain” the same as “no onward chain”?
No upward or onward chain can sometimes be referred to as a sale with “no forward chain”.
Essentially there are no sales to be completed following this final link.
Are sales with no onward chain guaranteed?
Unfortunately no. While often less complicated and speedier, even sales with no onward chain can still fall through.
This could happen for several reasons, such as:
- The buyer is unable to secure a mortgage.
- Either party changing their mind.
- A previous link in the property chain may have been broken, i.e. on the buyer’s side.
- A drawn-out sales process caused by the conveyancer or delays by either the buyer or seller could discourage either party, causing them to abandon the sale.
- The buyer could leave the sale if the survey reveals problems with the home they are unwilling to pay to fix.
Finally, the chain could fail due to gazundering, which is when the buyer suddenly reduces their offer at the last moment. The seller may then decline, returning the home to the active market.
This is different from gazumping, which is when another buyer swoops in and offers the seller a higher purchase price, effectively buying the property out from under the original buyer.
The truth is that no property sale is guaranteed until completion day.
How quick is completion in a property with no onward chain?
While entirely dependent on the individual factors at play for both buyer and seller, a chain-free property could go through in as little as six to eight weeks.
However, problems with mortgage offers, surveys or searches and enquiry results can delay a no-chain property just like any other.
Chain-free meaning: What does “no-chain” mean when buying a house?
A “chain-free” property shares many similarities with one with no onward or upward chain. In fact, as far as the seller is concerned, the two terms effectively mean the same thing.
A seller may come into a sale “chain-free” or with “no onward chain” because they’re going to rent for a period or they’re choosing to move abroad, for example. This is good news for a buyer because it simplifies the entire home-buying process.
This sale would also form the final link or the top of a property chain.
On the other hand, a chain-free buyer is usually a first-time buyer or one with the cash to buy the property outright. They will come into the sale without the pressure of selling another home to raise the funds to buy a new one.
This sees a smoother process for the seller and a shorter time frame overall.
As a property seller, if you find yourself in a position where you receive two offers on your home, you may find a chain-free buyer better suited to your timing needs, regardless of who has the highest offer.
This chain-free purchase could form the beginning of a property chain as the seller goes on to use the proceeds from the sale of that home on their next home.
Chain-free properties are usually a win-win for both buyer and seller.
In summary: What does no onward chain mean?
To recap, what does it mean by “no chain” in property? In short, the person selling their home doesn’t need to raise funds from the sale in order to move to a new property. Therefore, there’s “no onward chain.”
And choosing a home with no onward chain could make the entire process smoother.
Of course, it always makes sense to consider what you need from your next home beyond its position on a property chain, but a home with no onward chain (or a buyer who’s not part of a chain) will always be an attractive prospect.
And once you’ve chosen your new home, chain or not, remember to make sure it’s properly protected once it’s yours.
At A-Plan, we pride ourselves on individualised, tailored insurance services that meet your needs. Chat with one of our expert consultants today on the phone, or pop into one of our many branches across the UK.