Here are some commonly used terms in the property world & their explanation
Absent landlord
Self-explanatory. If the freeholder is not around they will not be able to carry out any of their obligations under the lease, for example repairing and insuring the building or resolving disputes between leaseholders. This means the property may fall into disrepair and cause issues later with a sale or mortgage of the property as well as the practical implications of the disrepair.
Absentee Landlord
A landlord who does not live at and rarely visits the property they let.
Acceptance
This is the document that requires a signature when accepting a lender’s mortgage offer.
Annual Percentage Rate (APR)
The full cost of a loan. By full cost, we mean everything including interest rates, fees and all over costs.
ARLA Property Mark
Association of Residential Lettings Agents is the UK’s professional body for letting agencies https://www.arla.co.uk/
Arrangement fees
Fees charged to arrange your loan by your mortgage lender or broker.
Assign
Assigning the right or interest in a property to another person.
Assured shorthold tenancy (AST)
A rental agreement covering a fixed period and a fixed rental price.
Auction
When a property is sold by auction competing buyers bid money for a property and the highest bid wins. There are different rules regarding Exchange & Completion so you must read the buyers pack carefully e.g. https://www.cliveemson.co.uk/
Base rate
This is the rate of interest that the Bank of England charges for lending to other banks. Your lender will offer you an interest rate that will be a certain percentage above the base rate.
Break clause
This is a clause that can be included in a fixed-term agreement between a landlord and a tenant. It allows both the landlord and tenant to end the tenancy earlier than first planned in the original fixed term. A notice period is required usually between 1 & 3 months
Bridging loan
A stop-gap loan that helps someone purchase property before they have received the money for their existing property usually having larger fees
Capital
The total amount of money you have in property, investments or deposits.
Closing date
The date in which your solicitor must finalise the buyer’s offer in writing to the seller’s solicitor.
Conditions of sale
A contract that includes both the duties of the seller and the rights of the buyer.
Completion
When the buyer receives the door keys and can enter their new home!
Completion statement
A document your solicitor issues that includes every transaction and cost associated with the sale or purchase
Contract
Legal documentation which includes terms between the seller and buyer. The contract will also include a date in which the completion should be finalised.
Contract race
This is when more than one potential buyers are given draft contracts. The first potential buyer to sign the contract gets the property.
Conveyancer
A person who deals with the legalities of buying or selling properties. To buy or sell, you will need a conveyancer.
Conveyancing
The process of transferring the ownership of a property.
Covenants
Positive or Restrictive Covenants are a formal agreement between two or more people. A provision, or promise, contained in a deed to land. Land may be subject to a covenant which affects or limits its use. This is known as the burden of a covenant. A covenant may give a landowner some say over what is permissible on neighbouring property. This is called the benefit of a covenant. A covenant can be very important as it could affect the value of land or its intended use. https://www.isonharrison.co.uk/blog/covenants-on-a-property-explained/
Deeds
A legal document that confirms the legal ownership of a property.
Deposit
The sum that is paid on exchange of contracts to legally bind the contract. It is commonly and 10% of the purchase price for residential property, but can be as low as 5%. Purchasing using a BTL [buy to let] mortgage the deposit is usually higher aroung 45%.
Disbursements
These are fees on top of legalities and conveyancing. Land Registry fees, mortgage redemptions costs, local searches & Stamp Duty (SDLT tax).
Draft contract
An initial contract that can be altered during the conveyancing of a sale. It becomes a finalised contract on the day of Exchange of Contracts.
Easement
Rights concerning your property. For example, a neighbour’s water pipe may run through your back garden. Practically this means that if something happened to your neighbour’s water supply & the pipework ran under your property or land, you have to been given warning that tradespeople may need to access your back garden.
EPC Energy Performance Certificate
This shows the energy efficiency and carbon emissions of a property & offers an indication of how expensive heating bills will be. Grade from A (perfect) to G (very bad). The property’s EPC can be viewed here https://www.gov.uk/buy-sell-your-home/energy-performance-certificates
Equity
This is how much of a property you own. Subtract the value of your property from the amount of mortgage you owe. E.g. current market value of property = £250k less your mortgage of £150k gives you equity of £100k.
Fixtures and fittings
Fixtures are items that are fitted within a property. During the conveyancing sale process you will be given a form to complete detailing all the fixtures & fittings. This form will be sent to your buyer so they know what is included in the sale. Fixtures are integral fridge freezers or the lavatory. Fittings are items that are not physically attached, but that could be included in the sale. E.g. shed, carpets, light fittings, and curtains. It is also possible to negotiate a separate sale price for leaving a dishwasher in the property for instance
Gazumping
When a sale is agreed & a second offer comes in at a higher price. This is highly frowned upon but it does happen. If a seller agrees to the higher offer they must tell the potential buyer immediately. This sometimes results in a ‘buying war’ & it has been known for properties to change hands for a price higher than the property value
Gazundering
The opposite of gazumping & again frowned upon but is a tactic to be aware of. This is when a buyer lowers their offer at the last minute just before exchanging contracts or on receipt of survey results
Ground rent
An annual charge for the leaseholder of a property paid to the freeholder
Gas safety record
A landlord this must issue a Gas Safety Certificate annually by a CORGI registered engineer. The engineer safety checks all gas appliances, pipes and flues.
Inventory
All the contents in a rental property. It should also note the condition of items before a new tenant moves in so there can be no disputes regarding damage claims. Photographic evidence is necessary
Land Registry
Records of land ownership and any charges against the property (such as a mortgage). These records can be seen here https://www.gov.uk/government/organisations/land-registry
You can obtain the details of any property for a small fee
Leasehold
A document that confirms & sets out in detail how a property is to be used.
Lease
A document confirming a tenant is legally abiding in premises for a confirmed length of time & details everything that must be adhered to. E.g. no caravan to be parked on the land or no smoking inside the house
Listed building
A listed building is one that has special historic or architectural interest. These buildings often possess obligations and restrictions regarding their use, repair and maintenance. https://historicengland.org.uk/listing/what-is-designation/listed-buildings/
Local authority search
If you are purchasing a property, your conveyancer will enquire as to whether any matters are affecting the property. E.g. coal mine search, chancel search, water authority search, radon search
Maisonette
A maisonette is a two-storey flat, where your front door is your own. This means that you can exit your home directly to the outside, as opposed to a regular flat where you have a shared corridor.
Mortgage valuation
A professional report stating the value of the property.
Multiple agent instructions
If you are desperate to sell or rent a property, you may instruct more than one estate or letting agent.
NAEA
The National Association of Estate Agents, the UK’s leading professional body for estate agents. https://www.naea.co.uk/
Ombudsman
An official appointed to investigate individuals’ complaints against a company or organization, especially a public authority. https://www.tpos.co.uk/members/codes-guidance
Open market value
The current price of a property i.e. what an estate agent has valued it at
Open Day Viewing
Your estate agent will arrange to open your property to numerous viewings. Different viewers can view the property simultaneously.
Peppercorn rent
A very low rental cost.
Preliminary enquires
The buyer’s conveyancer will send the seller’s conveyancer any questions about the property & vice versa
Repossession
If you fail to pay your mortgage repayments, your lender may take ownership of your property.
Service charge
Most leasehold properties include charges for services such as maintenance & sometimes additional insurances.
Shared freehold
A freehold can be owned by a limited company or by numerous owners.
Stamp Duty
This SDLT is a tax paid to the government when a property changes hands. The amount of tax payable is dependent on the property type, size and cost. https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Sole selling rights
If an estate agent is granted sole selling rights, they will earn the agreed fee no matter who buys the property. Even if someone purchases the property who was not introduced by the estate again they can still claim the fee
Structural Survey
A surveyor will report any & all that can be seen; problems or defects of a property as well as its overall condition. This is so the buyer can know in advance how much to budget for remedial action & the mortgage lender can identify that their money is safe
Survey Report
Not as detailed as a structural survey and slightly different. Simply offers an easily read report of the physical condition of a property and what needs attention.
Tenant
A person who has temporary possession of a property whilst paying rent
Tenancy agreement
An agreement that governs the occupation of the property by the tenant.
Vendor
Legal name for the seller.
