Jargon Buster

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Buying or selling a property can be very confusing. Especially when Estate Agents start reeling off terms that to them are part of their everyday language, but to you they can be baffling and bewildering.

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The terms us Estate Agents most commonly use are given below along with a clear and concise (hopefully) explanation of their meaning to help you make sense of the process of buying and/or selling a house.

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A

Applicant: The term used by an estate agent to refer to you when you are a potential buyer of a property.

Appraisal: This is done by the Estate Agent provide an opinion on your property’s current market valuation.

Assignment: The transfer of ownership from one person to another. For example if you buy a leasehold property ownership is ‘assigned’ to you via the contract.

B

Base Rate: This is the lowest rate of interest a bank will charge when it lends you money and is used as a benchmark to set interest rates for borrowers. This rate set by the Bank of England and is reviewed several times a year. Lenders will charge borrowers a margin above the base rate.

Boundary(ies): A line which marks the limits of an area; ie your property and/or the land upon which it’s sits.

Bridging Finance/Loan: You may need ‘Bridging Finance’ if you are buying a new property before selling your current house. This is to ‘bridge’ the gap before you have sold your property so as to complete the buying process of your new property before selling your existing home.

Broker: This is a person who advises on mortgages and loans, known as a ‘mortgage broker’

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.

Chain Free: This is when the owner of property doesn’t need to sell the property in order to buy another, thus it is offered chain free.

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.

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.

Covenant: A requirement by law on the owner of a property to either do or not do something with their property.

D

Deed(s): The legal document(s) that gives title to the property and includes its history of ownership.

Deposit: See Mortgage deposit and Holding deposit.

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: The Energy Performance Certificate (EPC) shows the energy efficiency and carbon emissions of a property and gives an indication of the fuel bills. It’s shown as two graphs – the energy efficiency and environmental impact of the property. Each is graded from A to G with A being the best rating.

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.

F

Fixed price: The price the seller should accept for the property – but there’s no guarantee. You may be able to negotiate.

Fixtures and fittings: A list of the items at the property, which will be included or excluded from the sale.

Fixed Rate Mortgage: A mortgage which has a ‘fixed’ rate of interest for a set period of time.

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.

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: This happens if the buyer offers a lower price after the original offer has been accepted by the seller.

Ground Rent: This is rent paid annually by the leaseholder of a property to the owner of the freehold. Usually it is paid to the owners of the land on which the property/properties are built.

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.

I

Indemnity insurance: Insurance taken out by conveyancing firms to cover losses to clients, arising from errors or fraud in dealing with their matters.

J

Joint / Multiple Agency: This is when you instruct more than one estate agent to market your property.

L

Land Registry: A government office that stores records of land ownership and any charges against the property such as a mortgage.

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 fee: 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.

Lender: A person or company that lends money for an agreed time period. They expect to have the money repaid back with interest added – your mortgage company is a lender.

LTV: Loan to Value. This ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchase.

M

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.

O

Offers over: This is the lowest price a seller will accept for their home. It’s common in Scotland for those properties not sold at a Fixed price.

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.

P

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

Redemption: This is the moment when you pay off your mortgage

Right Of Way: The legal access to a piece of property so as to access your own property.

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 2% and rising to 12% for homes above £1.5 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.

T

Tenure: The type of ownership of a property such as Freehold or Leasehold

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.

U

Under Offer: When a property has had an offer accepted but contracts have not been exchanged.

V

Valuation: This is done by the Estate Agent provide an opinion on your property’s current market valuation.

Vendor: The person who is selling a property.

Viewing: This where a potential purchaser looks around a house they interested in; possibly with the owner or the Estate Agent.

 

Feel free to post any comments or requests for explanations of any other terms you’ve come across which aren’t listed here.

Call us on 0114 2413430 for free avdice on most property related issues. We’re here to help.