Renting To Avoid A Property Chain Disaster

Property Chain

I didn’t really realise how many reasons there are behind people choosing to rent, and it seems though more reasons surface every day. I mean, when someone tells me they’re renting I just automatically shuffle through 3 of the most possible justifications, and try to guess which category they fall under:

  • priced out of the market
  • prefer responsible-free lifestyle
  • scared of investing at such turbulent times

They’re the most common reasons, right?

I was talking to one of my tenant’s last night about general crap. Then he started talking about the property he’s just purchased. He’s due to move out in 2 months time; he’s bought a house just a few blocks down from the property he’s renting off me. He told me the only reason he and his wife rented for a year was so they weren’t caught in a property chain.

Hmm..that seemed pretty odd to me. They spent nearly 10k on rental payment so they could get into a “chain free” situation. I can appreciate how frustrating being in a chain can be; but for the sake of 10k, wouldn’t you rather just tolerate the pain? I sure as hell would.

I guess the couple must have some dark stories closed away, where they got stung pretty badly by being in a chain. I didn’t pry, even though I wanted to ask more questions. He then began to tell me that it wasn’t the first time they went into rented accommodation to avoid a chain. My tenant basically said they can’t be arsed with the hassle of being in a chain, and from their experience being in a chain free situation makes all the difference when moving homes. After all (I know it’s cliché), but they say:

moving homes is the most stressful time of someone’s life

P-Diddy Chilling I can see my tenants’ point, and I can sort of understand their madness of splurging 10k on rental accommodation. The couple aren’t exactly spring chickens anymore, so any fragile turbulence could cause the old dears to topple over like dominos. Why live the later end of life on a rollercoaster, when you can chill in red, plastic trousers like P-Diddy?

But seriously, spending 10k on rent to avoid a property chain? It doesn’t take a year to find a property and push through the sale. At least not from my experience.

Having said that, I can definitely see the benefits of renting to gain a “chain free” status.

Benefits of renting to gain “chain free” status

  • you’re not relying on someone to purchase your property
  • there’s less stress
  • there’s less paperwork on your behalf
  • there’s less solicitor costs on your behalf
  • you don’t generally have to rush around; everything is more relaxed
  • the chain can only collapse on one end, as opposed to both ends- worst case scenario is that the chain on top of you collapses, meaning your purchase might fall through. But at least that won’t hinder your non-existant sale (which happens all the time with people caught in the middle of a chain). Half the stress.

The advantages of being in a chain-free situation are pretty self-explanatory. And I only covered one side of the process there. By that I mean, they were also in a similar situation when selling their property. They were in a protected area of the chain- right at the top, where all they had to do was wait for a buyer to pull through. Ultimately, they sliced up the whole process of buying/selling property into two, stress free sections (at a cost of course). It’s not quite Ocean’s Eleven slick, but it’s a nicely executed performance.

However, as stated, I would NEVER rent for a year just to become chain free; the financial implications are just way too high for me. Hmm…but for a substantially shortened period? Perhaps. While I’m not necessarily a follower of this method, I’m still willing to endorse it. I see the benefits, I see the sense, but I also feel my pockets getting lighter…

Just thought I’d throw the idea out there; maybe someone who has also had chain related stresses is also on the same wavelength as my tenants.

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3 Comments- Join The Conversation...

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Jeremy 24th November, 2011 @ 01:16

I think your financial analysis is flawed. The real cost to your tenant is not, as you state:

Cost of your rent (£10k)

it is really

Cost of your rent (£10k)
minus mortgage payments not made for a year because there is now no mortgage
minus interest earned on the equity sitting in high interest savings account before new property purchased.

Depending on the latter two numbers, the net cost could be not very much at all, in which case the emotional benefits and the increased buying power benefits which come from being chain free could make the decision a doddle.

1
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Jason Thomas 27th November, 2014 @ 18:55

Another factor to consider is the if you rent and are not in a chain you are in a stronger buying position as people know you chain won't fuck them over half way through the process. If you can use this extra bargaining power to get a few percentage points of the asking price you soon start to make up for the 10k costs. You could even end up with a profit. Having said that I would never do this as you could be royally screwed if you sell one place and prices go up 10% before you find what you want to buy!

2
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dropshort 11th February, 2015 @ 15:53

I am in the same postion. The bargaining power of being chain free means I can easily save £10k on a property, if not more.

My sums were(are) this

Capital paid off on Mortgage in one year = c£4000

Mortgage approx £1000 per month.

Cost of house hold maintenance = £1000 p/a

So, I pay out £13,000 and get £4000 back. so, approx £9000 pound outlay.

Ok, that does not factor in a house price increase. However, I sold my house at a premium anyway, as I was prepared to move out with no chain, so it would not increase much in the year, if anything.

So, now being chain free, I can bargain to get the vendor to drop their price.

Its not a bad move if you can get your figure straight.

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