Property Jargon Explained
The Property market can become confusing at times. Our glossary below will help you understand property jargon.
A
Arrangement fees: Fees charged to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed or capped rates.
Asset: Any form of property owned by a person, including currency, stocks and enforceable claims against others.
Appraised value: The value of a property, as estimated by a surveyor.
B
Buildings Insurance: Insurance which provides cover if the structure of your home is damaged.
Buy-to-let mortgage: A type of mortgage specifically designed for people buying a property with the intention of letting it out.
C
Chain: Most sellers will be buying a new home at the same time, and the person they’re buying from is also likely to be buying another property. This is called a chain.
Contract: A legal agreement between the seller and buyer of a property, which binds both parties to complete the transaction.
Completion date: This is the date when you become the owner of your new property, and can move in, having paid all money due.
Completion statement: Your lawyer or conveyancer will provide a statement, which lists all the financial transactions and costs.
Conditions of sale: These are the terms agreed between the buyer and seller, including any special terms.
Covenants: Some properties have rules and regulations that govern what can and can’t be done and would be lodged with the title deeds or lease.
Conveyancer: A property lawyer or solicitor who manages all of the legal aspects of selling or buying a property.
Conveyancing: The legal process of buying or selling a property and transferring ownership.
D
Deed(s): The legal document(s) that gives title to the property and includes its history of ownership.
Deflation: The opposite situation to inflation. A situation in which prices are falling.
Deposit: See Mortgage deposit and Holding deposit.
Dilapidations: Any damage or disrepair to a property.
Disbursements: Other expenses paid by the lawyer or licensed conveyancer on the buyer’s behalf, such as local searches, Stamp Duty and Land Registry fees.
E
EPC: An Energy Performance Certificate measures the energy efficiency of a property using a scale of A-G. It is a legal requirement to have a valid EPC commissioned before a property can be marketed
Equity: This is how much of the property you own. It’s the difference between the value of your home and the mortgage you still owe. Negative equity occurs when you owe more to the lender than the sale price of the property.
Exchange of contracts: The buyer and seller exchange contracts through their lawyers. The contract is a legally binding agreement and means they are committed to the transaction. At this time, the buyer could pay a holding deposit.
Excess: A part of an insurance claim to be paid by the insured
F
Fixtures and fittings: A list of the items at the property, which will be included or excluded from the sale.
Freehold: When you buy a freehold property you own the property and the land outright and are responsible for maintaining them. See also Share of freehold.
FSA: The Financial Services Authority is an independent body that regulates the financial services industry in the UK.
Further Advance: This is an extra loan that provides additional funds for home improvements or for other purposes, and is secured against the property.
G
Gazumping: This happens if the seller takes an offer of a higher price offer from another house buyer after your offer has been accepted.
Gazundering: When a buyer reduces their agreed offer prior to exchange of contracts.
Ground rent: Rent paid under the terms of a lease by the owner of a building to the owner of the land on which it is built.
Guarantor: A third party who undertakes to ensure mortgage payments are maintained, and will also promise to pay the borrower’s debt if the borrower defaults.
H
Holding deposit: This is paid when contracts are exchanged, but not all sellers insist on a holding deposit. It is paid to the seller’s solicitor and is usually between £500 and £1000 or a percentage of the purchase price. It’s to show that you’re serious about buying the property and is only refundable in some circumstances, usually if the seller pulls out.
Homebuyer’s survey and valuation: This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.
I
Indemnity insurance: Insurance taken out by conveyancing firms to cover losses to clients, arising from errors or fraud in dealing with their matters.
IFA: Independant financial advisor
Inflation: A general increase in prices and fall in the purchasing value of money
J
Joint tenants: A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner’s will).
L
Land Registry: The process of registering the legal title of an area of land with the Land Registry, typically handled by a solicitor.
Land Registry fees: Fees paid to register the ownership of property with the Land Registry.
Leasehold: A leasehold property means you have the right to live in it and occupy the land it is on for a fixed period of time – the length of your lease. This can be a varying term but commonly 99 years, 125 years or 999 years.
Legal fees: The charge made by a solicitor or licensed conveyancer for carrying out the conveyancing and other legal work connected with buying and selling a property.
Loan to value: The proportion of the value of the property on which the lender is prepared to loan.
Licensed Conveyancer: This is a specialist lawyer who is trained and qualified in all aspects of buying and selling property.
M
Maintenance charge: The costs that are incurred by a freeholder for repairing and maintaining internal and external communal parts of a building which is passed to the leaseholder.
Mortgage deposit: The up front payment towards part of the of the property purchase price. Typically it’s around 20% but can be more, or less. Also known as a Down Payment, or Home Loan Deposit.
Mortgage deed: This is an agreement, which transfers legal title to your property to the mortgage lender. It remains dormant unless you don’t repay the mortgage. If this happens, the lender can repossess our home.
N
Negative Equity: Potential indebtedness arising when the market value of a property falls below the outstanding amount of a mortgage secured on it.
O
Offer: A sum of money that the buyer offers to pay for a property
Open house or open viewing: House hunters are given a time of a few hours when they can all go and view the home for sale rather than in separate viewings.
Open market valuation: The price that a property will achieve on the open market.
P
Probate: The disposal of a property by an executor of a will following the death of the owner.
Property questionnaire: Sellers provide an accurate account of the property including: Council Tax band, Local Authority notices served on it, any alterations made, any history of flooding, parking, and arrangements covering the repair and maintenance in place for flats.
R
Repossession: This occurs when the mortgage lender takes possession of the property due to the non payment of the agreed mortgage.
Retention: The ability of a lender to hold back (retain) part of a mortgage until certain conditions are met.
S
Searches: These are done by your lawyer to check if there’s anything that could affect the value of the property. You must have a Local Authority Search before exchanging contracts.
Share of freehold: This is when the freehold of the property is owned by a limited company and the shareholders are the owners of the property, usually the owners of flats within that building.
Stamp Duty: This is a tax on every home costing more than £125,000; starting at 1% and rising to 7% for homes above £2 million.
Survey: This is done by a qualified building surveyor to check the structure for any faults. Home owners can choose from three main types of structural survey depending on how much information they want. See also Valuation Survey.
Subject to contract: This means a contract is not legally binding until contracts are exchanged and the details of the contract have been agreed.
Subject to survey: An offer is usually made ‘subject to survey’ and it’s a provisional price depending on what the survey reveals. The results can often lead to negotiation on the price if expensive faults are uncovered.
Surveyor: A professionally qualified expert who carries out an instructed survey.
T
The Property Ombudsman: The Property Ombudsman (TPO) is a free, fair and independent arbitration service which provides sellers, buyers, landlords and tenants with an assurance that they will receive the highest level of customer service.
Title deeds: The ownership documents which have a description of the property and land you own, as well as any rights and conditions attached to it.
Transfer document: The final legally binding document that transfers the property and all its rights from the seller to the buyer.
V
Valuation: A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.
Vendor: The legal name for a person who is selling a property.
