27. Related transactions

When purchasing a property, certain transactions, such as the purchase being dependent on a sale or remortgage, can significantly affect the process. Understanding these dependencies and their impacts is crucial for a smooth transaction. 

Purchase dependent on sale 

A purchase dependent on a sale occurs when the purchase of your new property is contingent upon you selling your current property. This situation often arises when homeowners need the proceeds from their current property sale to fund the purchase of a new home. 

Impact on property purchase 

• Property chain: This creates a property chain, where multiple transactions are interlinked. Each transaction in the chain depends on the successful completion of the preceding one. 
• Increased complexity: The process becomes more complex as delays in one transaction can affect the entire chain. For example, if your sale is delayed, it can stall the purchase of your new property, impacting other buyers and sellers involved. 
• Timing issues: Coordinating the timing of both the sale and purchase can be challenging. Ensuring that move-out and move-in dates align requires careful planning and often some flexibility. 
• Potential for collapses: Chains are susceptible to collapse if one party withdraws or encounters financing issues, leading to potential delays or the need to start the process anew. 

Purchase Dependent on Remortgage 

A purchase dependent on a remortgage occurs when the buyer needs to remortgage their existing property to release equity or settle outstanding mortgage balances before completing the purchase of a new property. 

Impact on property purchase 

• Financial arrangements: The buyer must arrange for the remortgage to be completed before or simultaneously with the purchase. This requires coordinating with lenders and ensuring all paperwork is in order. 
• Early Repayment Charge: If there are early repayment charges associated with the current mortgage, these need to be accounted for, as they can affect the funds available for the new purchase. 
• Risk of delays: Delays in the remortgage process can hold up the purchase. Issues with obtaining approval or processing the remortgage could push back the purchase closing date. 
• Impact on seller: Sellers need assurance that the buyer’s financial arrangements will not jeopardise the purchase. Clear communication and transparency about the remortgage status are crucial to maintaining seller confidence. 

Property Chains 

A property chain is a sequence of linked transactions where each purchase depends on the completion of another sale or purchase. Chains are common in real estate markets and can involve multiple parties, from first-time buyers to those selling and buying properties simultaneously. 

Key points about property chains 

• Dependencies: Each party in the chain relies on the successful transaction of the previous party. A delay or issue in one link can impact the entire chain. 
• Communication: Effective communication between all parties (buyers, sellers, estate agents, and solicitors) is essential to manage the process smoothly. 
• Flexibility: Flexibility in terms of dates and arrangements can help mitigate some of the challenges posed by chains. For instance, buyers might consider temporary accommodation if their purchase is delayed. 
• Contingency planning: Having contingency plans, such as temporary housing options or financial buffers, can help manage unexpected delays or issues within the chain.