Property jargon explained

Property jargon explained

The world of real estate can be complex and quite confusing to the novice. The property market is riddled with an enormous amount of complicated terminology and unusual phrases that cloud an already daunting process. Whether you’re an unexperienced beginner to buying or renting, or you’ve been navigating property for years, our ‘Property jargon explained‘ article can help you along the way. We’ve done our best to make it as comprehensive as possible, but if you think we’ve missed any terms, just let us know and we will be sure to make additions to our list.

Acceptance

Commonly known as an Acceptance Letter, this is a document signed and handed back to a mortgage lender to confirm acceptance of their offer.

Agreement in Principle (AIP)

This is the term used to refer to a document from a mortgage lender that confirms it will lend you a certain amount based on your earnings and usually a credit search and credit score.

Annual Percentage Rate (APR)

APR alludes to the total percentage cost of the property loan every year inclusive of interest as well as any additional fees.

Appraisal

An appraisal is an estimate of a property’s current value. This valuation is carried out by an estate agent or surveyor.

Arrangement fee

An arrangement fee is a payment charged by some lenders to cover the administration of arranging a mortgage.

Arrears

Arrears refers to an amount of money that is overdue on a mortgage. If this amount remains unpaid it may result in the repossession of a property by the lender.

Asking price

An asking price is the figure a seller will be comfortable achieving for their property.

Assignment

In the property sphere an assignment means the transfer of a right, title or claim to a property from one party to another.

Assured Shorthold Tenancy (AST)

This is the most common type of tenancy agreement used by landlords to let residential properties to private tenants. An AST gives a tenant the legal right to live in a rented home for a set amount of time.

Auction

Method of sale whereby a property is sold to the highest bidder. If the reserve price (the minimum the owner is willing to sell the property for) is not reached, then it remains unsold.

Bank rate

The bank rate or base rate is simply the interest rate set by Central Bank of every nation. A change in the bank affects the interest rate payable on a variable mortgage.

Break clause

break clause is a provision in a lease which gives leeway to either the landlord or the tenant (or both) to end the lease early.

Bridging loan

A bridging loan is a high-interest temporary sum of money lent to offer short-term access to money. It covers an interim period between two transactions, usually the buying of one house and the selling of another.

Building insurance

Building insurance policy covers the cost of repairing any structural damage to your property from events such as a fire or flooding.

Building Survey

A building survey is also known as a structural survey. This survey is a detailed report on the construction and structural integrity of a property.

Buyer

A buyer or purchaser is a person who is buying or purchasing a property.

Buy-to-let mortgage

Buy-to-let (BTL) mortgages are designed specifically for buying a property that will be rented out, usually for investment purposes.

Capped rate

The highest interest rate payable on a mortgage for an agreed period.

Capital

Capital refers to any amount of money put into either buying a property or that is paid as a deposit.

Chain

A chain references a series of property sales that are reliant on each other. In most instances people need to sell their current property so they can afford their next property. Equally the people the property is sold to will most likely need to sell their current property so they are in a position to afford the other one.

Charge

The ‘hold’ a lender has over the equity in a home.

Chartered surveyor

A chartered surveyor is an accredited professional involved in all aspects of property and construction surveyance. Their range of expertise extends from supervising large mixed-use developments to planning domestic extensions.

Commission

Simply put this is a fee payable to a real estate agent. It is usually calculated as a percentage of the property price.

Completion

Completion alludes to the period when the sale of the property is finalised. At this juncture the legal transfer of property ownership has passed from one party to another.

Compulsory purchase order

Commonly termed a CPO, a compulsory purchase order enables a Government through the local authorities to procure property. This is regardless of whether the owner is interested in selling or not. A CPO is granted where adequate evidence exists to demonstrate how the purchase would benefit the public. It must also show how to property owner will be  adequately compensated.

Conditions of sale

Terms defined in a contract of sale which clearly stipulate the rights and duties of both buyer and seller.

Condition Report

condition report is a basic level survey that records the physical condition and state of repair of a property.

Contents insurance

An insurance policy designed to  cover the financial cost of repairing or replacing personal household possessions and furnishings

Contract

A contract is a binding agreement both the buyer and seller sign to finalise the sale or purchase of a property.

Conversion

The alteration of the use of a property or part of a property from one use to another.

Conveyancer

A suitably qualified individual who handles the legal and administrative process of transferring the ownership of a property from one party to another.

Conveyancing

Conveyancing is the term used to refer to all the legal work involved in transferring the ownership of a property from one party to another.

Covenant

A covenant is a legal stipulation set out in a lease agreement or title deed highlighting what can and cannot be done in relation to a property.

Credit report

A detailed record and history of a person’s ongoing and repaid debts.

Declaration of trust

A Declaration of Trust, also known as a Deed of Trust is a legal agreement drawn up by a conveyancer. This legally-binding document records the financial arrangements between joint owners of a property, and/or anyone else with a financial interest in the property.

Deeds

Title Deeds are legal documents that provide proof of ownership of a property or land.

Deposit

Loosely speaking a deposit is the money paid upfront when buying a home.

Detached

Detached refers to a stand alone property that has no shared walls with any adjoining property.

Default

Default refers to an instance where a borrower fails to make the agreed payments. Usually this applies to a mortgage, but can apply to any kind of loan.

Development

Development in real estate is quite a broad term that applies to properties that have been newly built or have recently undergone a sizeable refurbishment.

Disbursements

Disbursements are the fees that are paid by a solicitor on behalf of a buyer.

Downpayment

A downpayment or deposit is an amount paid by a buyer to a seller on exchange of contracts to secure a property – usually 10% of the purchase price.

Duplex

A flat that is split over two floors.

Early Redemption Charge (ERC)

ERC is a financial penalty on the premature termination of a mortgage deal.

Endowment mortgage

This is a mortgage linked to an endowment insurance policy. The endowment insurance policy is intended to repay the capital sum on maturity.

Energy Performance Certificate (EPC)

An EPC is a certificate that details how efficiently a property uses energy. Additionally the certificate provides an estimation of energy costs and offers suggestions on how to improve efficiency.

Equity

Equity is the difference between the market value of a home and the amount owed to the lender who holds the mortgage.

Equity release

Equity release is the use of financial arrangements that provide the owner of a property with funds derived from the value of the property while enabling them to continue using it.

Estate agent

An individual, group or organisation that arrange the selling, renting, or management of properties and other buildings.

Exchange (of contracts)

The point at which signed contracts confirming the intention to transfer ownership between buyer and seller are physically exchanged.

First-time buyer

A term used to reference someone buying their first property.

Fixed rate mortgage

A fixed rate mortgage comes with an interest rate that’s ‘fixed’ for a defined period.

Fixtures and fittings

The non-structural objects in a property which are sold with the property, both those which can be removed and those which cannot.

Floorplan

A floor plan is a drawing to scale showing a view from above that helps establish the dimensions of a property.

Freehold

Outright ownership of a propertyand the land on which it stands.

Further advance

Additional funds provided by a lender to a borrower and secured on the property as part of the mortgage debt.

Gazumping

Gazumping is an instance where a seller accepts a verbal offer on a property from one potential buyer, but then accepts a higher offer from another party.

Ground rent

A fee paid by the leaseholder to the freeholder of a property.

Guarantor

A guarantor is an individual appointed by a borrower to be responsible for their debt should they fail to fullfil their obligations.

Homebuyer report

This is a more comprehensive report than a Condition Report. It is carried out to determine the worth and state of a property and highlight any flaws.

Improvement grant

An endowment given by a local authority towards the cost of repairing or improving a property.

Instruction

The confirmation given by a property owner to a real estate agent to market a property on their behalf.

Interest

Interest refers to a charge for the privilege of borrowing money. Interest is in most instances articulated as an annual percentage rate.

Interest-only mortgage

An interestonly mortgage is a type of mortgage in which the mortgagor is required to pay only interest with the principal repaid in a lump sum at a specified date.

Joint agents

This is a term that references multiple real estate agents under instruction by a seller to market a property.

Joint Tenants/ joint tenancy

Simply put this is the equal holding of a property between two or more persons.

Land Registry

The government institution mandadated with recording ownership of land.

Land Registry fees

Set amounts payable to the Land Registry to register ownership of a property.

Landlord

The owner of property (such as land, houses, or flats) that lets out their property to tenants.

Lease agreement

Also known as Tenancy Agreement, this is a legal document detailing terms, conditions and set periods of tenancy.

Leasehold

Leasehold is the legal right to live in or use a building or piece of land for an agreed period of time.

Lender

An organisation that lends funds to assist borrowers with the purchase of property.

Lessee

Lessee is the other term for a tenant and refers to a person(s) who holds the lease on a property.

Lessor

Also known as a landlord, this is a person who grants a Lease on a property.

Listed building

A structure of special interest that has special value and preservation orders on it.

Local authority search

Any checks carried out with the local council regarding any future development issues that might affect a property or the surrounding area.

Maintenance charge

A fee extended to a tenant or leaseholder by a landlord to cover property maintanence costs.

Maisonette

A self-contained living space that is part of a larger building and that has its own entrance.

Mortgage

A mortgage is a debt instrument from a bank or building society which is used to fund the purchase of property. The property is held as security with the borrower obligated to pay back with a predetermined set of payments.

Mortgage Deed

A document drawn to express the terms and conditions of a loan secured on a property.

Mortgage Term

The period over which a mortgage will be repaid.

Mortgage Valuation

A mortgage valuation is a survey carried out at the lender’s discretion to ascertain property value and determine the maximum amount to be loaned on the property.

Multiple Agency

Refers to instances were two or more estate agents are marketing a property.

Negative Equity

Negative equity occurs when the value of real estate property falls below the outstanding balance on the mortgage used to purchase that property.

Offer

An expression of interest and willingness from a potential buyer of a willingness to purchase a property at an indicated price.

Open Market Value

Open market value is the price at which a property would trade in a competitive market.

Preliminary Enquiries

Preliminary enquiries is an initial set of questions from a buyer or their representative in relation to a property that are aimed at a seller prior to exchange of contracts.

Premium

A premium is a monthly fee payable on an insurance policy.

Probate

Probate is the official process designated to prove the validity of a will in which a property has been included by the late owner.

Purchaser

The purchaser or buyer is the person (or people) buying a property.

Redemption

Redemption is the describes the completion of the full and final repayment of a mortgage.

Redemption Figure

This is the figure required to fully repay a mortgage including interest and any penalties.

References

References are sources of information which include doing credit checks, contacting employers and getting in touch with past landlords.

Repayment Mortgage

A repayment mortgage has monthly repayments consisting of capital combined with interest.

Repossession

Repossession refers to the action of retaking possession of a property in the event of defaults on mortgage payments

Return On Investment (ROI)

An amount gotten in comparison to the amount put into an investment.

Residential Property

Property occupied for private or domestic purposes.

Security

Assets (property) used to secure a mortgage loan.

Self-build

The process of building your own property with the aid of contractors.

Seller

A seller or vendor is a person (persons) selling a property.

Semi-detached

A semi-detached property shares one of its walls with an adjoining property.

Service charge

A service charge is an amount given to the landlord by the tenant or leaseholder to cover costs of maintaining a property.

Shared ownership

The option to buy a share of a property. You’ll then pay an ‘affordable rent’ on the share of the property you don’t own.

Sole agency

A single agent exclusively marketing a property.

Solicitor

A solicitor is a duly qualified legal expert. This professional prepares the documents on behalf of buyers or sellers throughout the property purchase process.

Stamp Duty

The tax paid to the government by a buyer on the purchase of a property.

Standard Variable Rate Mortgage

A type of mortgage where market conditions dictate interest rates.

Structural survey

Also known as a building survey. This survey is a detailed report on the construction and structural integrity of a property.

Studio apartment

A flat with just one principle living area containing both cooking and sleeping facilities.

Survey

Report on the condition of a property.

Surveyor

Qualified expert who carries out the survey of a property.

Tenant

Person (or entity) who is entitled to occupy a property under the terms of a tenancy agreement.

Tenancy agreement

Legal document detailing terms whereby a landlord grants rights to a tenant to occupy a property for a specified period.

Tenure

Tenure refers to the conditions on which property is held, that is leasehold or freehold.

Terraced

Property where both side walls are shared with adjoining properties.

Title deeds

Documents showing the legal rights to ownership of a property.

Under offer

Status of a property from the point at which a seller has accepted an offer until exchange of contracts.

Utilities

Refers to services such as  electricity and water.

Valuation

An analysis of a property to ascertain its current market value.

Vendor

Vendor is the other term for a seller and refers to a person(s) who is selling a property.

Yield

The income generated from a rental property stated as a percentage of the property value.

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