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Story for The Times: Are chains collapsing and sales falling through?

Journalist: George Nixon, The Times and The Sunday Times

ended 19. December 2022

Hello there,

I'm working on a piece for The Times about whether we're seeing an increasing number of property chains collapsing and deals falling through, especially because of higher mortgage rates. 

Are people finding completions are taking too long, that mortgage offers are expiring as a result and therefore they can't afford to buy any more, so are pulling out? Alternatively, are sellers having to accept lower asking prices because buyers aren't able to offer as much because they can't afford to borrow? 

Thanks so much.

10 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Our experience is that lenders are trying to be accommodating with offer extensions, even on drastically lower rates than are on offer today. That's not to say we aren't seeing an increase in chains collapsing, but this is due to buyers pulling out as they see the market unravelling before them.

We are seeing a dramatic increase in would-be purchasers decide they prefer the idea of renting this winter rather than the prospect of spending years in negative equity if they complete on a purchase price that was agreed some months ago. This is catastrophic for sellers who were content with the price agreed, but now look to have a depreciating asset that they want rid of but can't sell.
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Mike Staton
Director at Staton Mortgages
We have seen several sales fall through for various reasons, the most popular reason tends to be cost of living increases now making the property unaffordable. We had a client yesterday who had to withdraw from his BTL purchase as current affordability calculators are saying it is unaffordable, the mortgage was £567 per month with a rental valuation of £950, this is ludicrous especially considering that lenders no longer have to stress test. It gives me the opinion that lenders just don’t want to be in the BTL market at the moment and most landlords are being thrown under the bus. Hopefully we will start to see some changes in the new year, especially with Santander being the first lender to relax affordability in the BTL market
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Kylie-Ann Gatecliffe
Director at KAG Financial
We haven't actually had any chains collapse....yet. But we have come close with conveyancing taking longer than I've ever seen in fourteen years. We have had to request many offer extensions over the last few months, which thankfully we have been able to obtain. But for clients who are unable to obtain offer extensions this must be extremely stressful. If they had secured a previously low rate and they are now being offered what rates are available today they will see a significant increase, which will definitely be enough to force some buyers to put the breaks on. We have only seen one client renegotiate their purchase price but I do think this will become more common moving into next year, with prices set to slowly reduce.
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Ashley Thomas
Director at Magni Finance
We have seen some clients successfully negotiate lower prices recently. However, this is very dependent on the property as we have had some who are buying above £2m that have not been able to negotiate a penny below the asking price. This is because the supply for that type of property in the area is very limited.
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Graham Cox
Director at Bridging Hub
Chains are collapsing regularly. I had a couple pull out of buying recently, after the buyer of their property got cold feet. It was on the day Lloyds Bank brought out a report saying house prices would fall 8% next year, or 17% in the worst-case scenario. I actually think the latter is the likeliest case scenario, but who knows. The market is in limbo, and buyers are in 'wait and see' mode.
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Matthew Jackson
Director at Mint FS
We are at a time of year where historically more more property purchases will fall - however the backlog with Solicitors , delays with lenders and changes to affordability rules are no doubt adding more pressure to those chains who wish to complete before Christmas.

In addition to this clients are seeing reports predicting anywhere from a 10% to 30% drop in house prices in 2023 and i have seen a number of examples of purchases using this to renegotiate prices at exchange of contracts. This is called "gazundering" and can be for legitimate reasons, but also can be purchases using the current economic climate to their advantage.
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Gary Boakes
Director at Verve Financial
We have seen an FTB couple renegotiate £31,000 price drop because the sellers have taken so long that the mortgage has to be applied again and the monthly increase in mortgage payments over a 5 year fixed rate will now cost them approx. £30,000 in interest. This has caused a ripple of price reductions through the chain.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Completions are taking longer as some lenders had really long assessment times due to them having an overload on cases and issues with existing cases with all the rate changes that were occurring. Some even having to cancel all cases that hadn’t got to valuation stage which was catastrophic for clients that started the process with lower rates, then had to go for a higher rate often 2% higher or more. Maximum loans were also being reduced due to the ICR calculations, causing affordability problems and as such people were hundreds of thousands off what they needed to borrow so had to pull out of transactions altogether which is very disheartening. Depending on what the property/business is, some sellers have had to reduce the amount especially if they are keen to sell in this current climate, and are worried what the future holds.
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Michael Webb
Managing Director at Mortgage Republic
We are currently not seeing many fall-throughs within the marketplace, however as rates have started to rise new deals entering the system have significantly dropped, meaning that the progress through to exchange is starting to speed up, with the knock-on effect that deals are completing before mortgage offers expire. There is, however, significant downward pressure being applied to asking prices, with estate agents instigating price reductions on Rightmove, and properties staying available for much longer than previously experienced.
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Austyn Johnson
Founder at Mortgages For Actors
Although I haven't had this issue myself, a couple of my clients have said that other parties have been replaced in the chain due to changing mortgage circumstances. A couple of them have also been able to negotiate a lower price for the properties due to the previous buyer not being able to complete on a mortgage.
In fact, today I spoke to someone who was going to put in a £30k lower bid on a £600k property as the previous buyers could only raise £550k.