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Property glossary - Jargon explained

Published: 12th September 2018

Property glossary - Jargon explained

When speaking with property professionals, new buyers and sellers can sometimes feel like they’ve been transported to a foreign country where they don’t speak the language.

Generally speaking, property professionals don’t set out to blind their clients with jargon, they’re just so used to the property market themselves, they can forget that other people don’t understand the terminology they use every day.

If you ask a property professional to explain a term, they will usually do so quite happily, but since everyone likes to feel knowledgeable, here’s a quick property glossary to get your started.

Acceptance

Signing a document in which you agree to accept a lender’s mortgage offer.

Arrangement fees

Fees paid to a mortgage lender (or mortgage broker) for their work in arranging the loan.

Assign

To transfer an asset (in this case a property) from one person to another.

Bridging loan

A short-term loan typically used in situations when a person buys a new property before they have sold their old one and hence have to pay for two mortgages.

NB: If you are planning on using funds from a Help to Buy ISA to help finance a property purchase, you should be aware that these funds are only released upon completion. Therefore, you may need to look at getting a bridging loan to pay the initial deposit, which you would then repay with the money in your Help to Buy ISA. If you have a Lifetime ISA, then you can withdraw funds to pay for a deposit on a house.

Building inspection

Please see homebuyer survey

Chain

A situation in which a property transaction depends on one or more other property transactions. If you have a choice of more than one offer for a house, the presence or absence of a chain could be a factor which influences your decision as to which offer to accept.

Completion

The point at which the sale is completed and the keys are handed over.

Completion statement

A list of all the costs associated with the actual purchase, excluding the cost of any mortgage arrangement.

Contract

If a seller accepts a buyer’s offer, the seller (via their solicitor) will send the buyer a draft contract detailing the conditions of sale. The conditions of sale are the terms on which the seller proposes to sell the property to the buyer.

These will vary from one sale to another, but they will include a proposed completion date, so that both parties know when, exactly, the keys to the property will physically change hands. Contracts can be subject to negotiation, during which time the property is generally termed as “sold, subject to contract”, but once all has been agreed, buyer and seller will both sign a copy of the final contract and their solicitors will arrange for the two contracts to be exchanged.

At this point the sale is legally-binding but not complete. What that means is that, in principle, either party can still withdraw from it but would have to expect to pay a penalty for doing so.

Conveyancer

A person who undertakes conveyancing, which is the legal process of transferring a property from one owner to another.

Covenants

Any rules relating to what can and cannot be done with the property. These are typically set out in title deeds and/or leasehold documentation. Title deeds are the documents which prove ownership of a property.

Deposit

Strictly speaking, the term deposit is short for exchange deposit and is a form of security given by the buyer to the seller upon exchange of contracts, usually this is 10% of the purchase price.

The term “deposit” is also used with reference to mortgages and people sometimes specify “mortgage deposit” for clarity, although this is actually inaccurate. When discussing mortgages the term “deposit” is usually used as shorthand for the difference between the purchase price and the amount borrowed and the confusion probably arises because of the fact that, buyers would put down a 10% exchange deposit and then get a mortgage for the remaining 90% of the purchase price. If, however, a buyer had more funds available, they could take out a mortgage for a smaller amount, say 80% of the purchase price and fund the remaining 10% of the purchase themselves. In this case, from the seller’s perspective, they would still receive the 10% deposit but a mortgage lender would treat the buyer as having a 20% deposit.

Disbursement

The various costs of buying a property, such as Land Registry fees and stamp duty.

Easement

Rights other parties hold in relation to a property, for example the right to access the garden in order to carry out work on their own property.

EPC

Energy performance certificate, an assessment of a property’s level of energy efficiency.

Exchange

Buyer and seller both need to sign a contract for the sale of a home and each must provide the other with a copy of the signed contract. At present time, this involves sending physical documents from A to B, however legal changes which came into effect on 6th April 2018 have opened the door to electronic conveyancing, which would be in line with the Land Registry’s Business Strategy 2017-2022 and the government’s general move towards digitisation in general.

NB: The buyer becomes responsible for insuring a property from the point of exchange.

Fixtures and fittings

Fixtures are considered to be a part of the house and are automatically included in the sale. Fittings are considered to be part of the owner’s moveable property and are usually excluded in the sale unless otherwise agreed.

Freehold

Outright ownership of a property, conferring the right to live in it indefinitely.

Gazumping/Gazundering

Gazumping is when a seller accepts an offer but pulls out before exchange to accept a higher offer from another buyer. Gazundering is when a buyer lowers their offer just before completion.

Home buyer survey

There are actually a total of 6 types of survey, of which, the mortgage valuation survey is the most “high level” and essentially just serves to satisfy the lender that they have a decent chance of recouping their money if the property has to be sold. Relying on this survey can be very risky and so potential home buyers may well wish to spend a little more money on a more in-depth survey. These are listed below in order of most high level to most in depth.

  1. Mortgage valuation survey
  2. RICS Condition Report
  3. New-build snagging survey
  4. RICS HomeBuyer Report
  5. RICS Building Survey
  6. Building or full structural survey

Land Registry

The government department in charge of keeping records relating to property (and land). They charge a fee for their services called the Land Registry fee.

Leasehold

The right to live in a property for a specific and finite length of time and possibly subject to certain conditions, such as the payment of a maintenance charge.

Share of freehold

Where the freehold is owned by a limited company with shareholders, usually the occupants of the building to which the freehold relates.

Stamp Duty Land Tax (SDLT)

Generally just known as Stamp Duty, a tax on property transactions.

Tenure

The manner in which a property is held by the owners, e.g. freehold or leasehold.

If you found this article useful and you are considering selling your Manchester property then please contact our local area experts at Indlu who are more than happy to answer any questions you may have. Alternatively, why not use our free online valuation tool to see how much your property is worth!

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