Glossary of Terms

Glossary of Terms

A

Advance
Mortgage Loan
Auction
Sale of a property to the highest bidder
Application Fee
Cost to the purchaser forp rocessing a mortgage application. Also, the cost to a potential tenant for processing a rental application to obtain a rental property
Applicant
Person hoping to rent a property
Appreciation
Increase in the value of a property
Appraised Value
Estimated value of a property by a surveyor

B

Balance Outstanding
The amount of loan owed on a property at any one time
Bridging Loan
A temporary loan advanced to help buy a new property before the existing property has been sold
Buildings Insurance
Insurance against the cost of repair or rebuilding of a property from scratch following structural damage, such as flooding, fire or storm
Blog
An online entry used to launce something of particular, link to other sites of interest e.g. new reports, reply to comments made by the general public
Break Clause
A term occasionally used in a tenancy agreement that allows a tenant to leave before the tenancy period comes to an end, without incurring a financial penalty

C

Chain
A number of linked property sales where exchange of contracts must happen simultaneously and each sale depends on the next
Closing Date
The date for submission of offers when more than one party show interest in a property
Completion Date
Completion of the legal transaction when all monies and documents have been exchanged. This is also when the vendor’s solicitor will instruct the estate agent to release the keys to the purchaser
Contents Insurance
Insurance against accidental damage or theft of all moveable contents, including furniture, appliances and belongings
Contract
A formal agreement between the buyer and the seller, usually prepared by a solicitor, detailing the terms and conditions of the sale from which neither party can withdraw without financial penalties
Covenant
A condition, contained within the Title Deeds or lease, that the buyer must comply with, which is usually applied to all future owners of the property. A restrictive covenant is one which prohibits the owner or future owners from doing something with or on the property
Commission
A figure paid to the agent for business undertaken
Conveyancing
A transfer of legal title of property from one person to another, necessary for the transfer of ownership
Credit Scoring
Used by a lender when a purchaser makes a mortgage application. This helps them decide whether to accept your application, the amount they are prepared to lend you and what rate of interest you’ll pay Also used by a referencing company when assessing a potential tenant

D

Deeds
Legal documents assigning ownership of a property and/or land
Deposit
Sum of money that represents the personal capital that the purchaser is putting toward the purchase of a property
Disbursements
Fees, such as Stamp Duty, Land Registry and search fees on top of conveyancing which you normally pay via your solicitor
Draft Contract
Unconfirmed version of the contract
Down Valuation
Where a surveyor undervalues a property and the lender restricts the amount you can borrow

E

Early Repayment Charge
A charge made by the mortgage lender if the borrower terminates a mortgage in advance of the terms of the particular mortgage
Equity
The difference between the value of a property and the amount of mortgage owed
Energy Performance Certificate (EPC)
Assesses the energy efficiency of buildings, measured on a A-G scale. With ‘A’ being the most energy efficient and ‘G’ being the least. If you are buying or selling a home you now need a certificate by law

F

Fixtures and Fittings
All non-structural items included in the purchase of a property
Fixed Price
Offers are invited at the price shown
Freehold
Ownership of the property and land upon which the property is situated
Financial Services Authority (FSA)
regulator of all providers of financial services in the UK
Furniture and Furnishings (fire) (safety) Regulations 1988 & 1993 (amendment)
regulations that set levels of fire resistance for domestic upholstered furniture, furnishings and other upholstered products. These regulations determine whether such products are compliant or not.

G

Gazumping
The practice by a seller accepting a higher price than that previously agreed with someone else
Gazundering
The practice by a purchaser lowering his offer just before the exchange of contracts
Gas Safety Regulations 1998
Stipulates that a gas safety check must be carried out on each appliance by a GAS SAFE REGISTER engineer
Ground Rent
Regular payment required under a lease from the owner of leasehold property payable to the freeholder
Guarantor
In some circumstances, a guarantor is required to countersign a lease on behalf of a tenant when renting a property

H

Homebuyers Report
A more thorough survey report commenting on the structural condition of most parts of the property that are readily accessible
Houses in multiple occupancy (HMO)
where common areas exist and are shared by more than one household e.g. bathrooms, toilets, kitchen

I

IFA
Independent Financial Advisor
Instruction
When a vendor instructs an estate agent to market a property
Inventory
A list of items provided in a rented property. This should be agreed, signed and dated both by the landlord and the tenants. It will serve as a check list when ending the tenancy should a dispute arise as to the condition of the contents

J

Joint Agency
Where two estate agents work together to market a property
Joint Mortgage
A mortgage where there is more than one individual named responsible for the mortgage

L

Land Certificate
A Land Registry certificate proving ownership of property
Land Registry
The Government organisation that holds records of all registered properties
Leasehold
To be given ownership pf a property but not the land it is built on. This normally requires payment of ground rent to the landlord. A leasehold is normally offered for either 999 years, 99 years or slightly shorter terms
Local Authority Search
An application made to the appropriate Local Authority requesting details of any planning or other matters which might affect the property being sold
Landlord
a person who leases land or property
Lendor
the party offering a loan e.g. bank, building society or mortgage company, applicable to a lending fee
Listed Building
building that has certain characteristics related to age, rarity, architectural merit and/ or method of construction. A listed building cannot be demolished, extended or altered without special permission from the local planning authority

M

Maintenance Charge
A charge made towards the upkeep of a leasehold property
Mortgage Deed
A legal document relating to the mortgage lenders interest in the property
Mortgage Offer
A formal written offer made by a bank or building society to lend an approved amount to purchase a property
Money Laundering
financial crime of processing illegally gained money
Mortgage
a long term loan secured by a property and paid in installments over a set period of time to the lender

N

Negative Equity
When the value of a property is less than the outstanding sum owed on a mortgage
NHBC Scheme (National House - Building Council)
standard setting body for new and newly converted homes in the UK

O

Offer
A bid made by a prospective purchaser, this is not legally binding
Offers Over
Offers are invited above the price shown
Ombudsman
Individual professional bodies who investigate complaints on behalf of customers against estate agents, solicitors and insurance companies

P

Portable Appliance Test (PAT)
electrical testing by a certified engineer on any piece of equipment with a plug to inspect if they are safe in conjunction with the Electrical Equipment (Safety) Regulations 1994

R

Repayment Mortgage
Monthly interest combined with capital repayment against the original sum borrowed
Repossesion
When loans are in default the mortgage lender can repossess the property and sell it so they can repay the debt
Retention
Holding back part of a mortgage loan to buy a property until repairs to the property are completed to the satisfaction of the mortgage lender

S

Sale Agreed
A verbal agreement between vendor and purchaser that a property has been agreed at a specific price
Searches
Checks of local council records for planning applications and restrictions
Sole Agency
When a single estate agency acts on behalf of a vendor to sell a property
Stamp Duty
A tax paid to the government by the purchaser upon completion
Subject to Contract
Words used to indicate that an agreed sale is not yet legally binding
Survey
An inspection made by a qualified surveyor on behalf of the mortgage lender or purchaser. The main types of survey are a Valuation Report (for mortgage purposes), Homebuyers Report (more in depth survey also covering general conditions) and a full structural survey (examining structural detail)
Service Charge
also known as maintenance charge, covering the cost of repairing and maintaining the external and/or internal parts of a communal building, payable to the landlord
Short Let
When a property is let for a short period usually less than six months.

T

Title
The ultimate record of ownership of a property, found in the title deeds
Transfer Deeds
The Land Registry document that transfers legal ownership from vendor to purchaser
Tenancy Agreement
A tenancy agreement is a legal agreement in writing that sets out the rights and responsibilities of both landlord and tenant. It will contain details such as the length of the agreement, the rent payable, and landlord and tenant obligations.
Tennant
Someone who pays rent to live in a property for a period of time

U

Under Offer
When the vendor accepts an offer on a property but contracts have not been exchanged

V

Variable Interest Rate
Rate of interest payment that fluctuates inline with general interest rates
Vendor
The seller of a property
Verbal Offer
An offer from a prospective purchaser which is not legally binding on either party
Valuation
Appraisal of the value of a property

Y

Yield
income generated from a property