Bernards Jargon Buster – an A to Z of property terms
We’re often asked to clarify some of the terminology used in the property industry. Here’s some popular terms simply explained to help our landlords, tenants, buyers and sellers cut through the jargon.
This is an estimate of a property’s current value according to an estate agent or surveyor.
A fee charged by some lenders to cover the administration of arranging a mortgage.
The amount of money that is overdue on your mortgage or payment owed to a landlord.
The marketed price that a seller is hoping to achieve for a property.
Assured shorthold tenancy (AST)
A rental agreement where net rent does not exceed £25,000 a year and lasts for a fixed period.
A clause agreed between a landlord and a tenant that can be inserted into a fixed term agreement which allows either the landlord or tenant to give written notice after a set period of time, in order to end the tenancy earlier than the original fixed term.
This is a detailed report on the construction of a property.
This is the person who is buying a property (also known as the purchaser).
A chain is formed when several property sales and purchases are interdependent, for example the purchase of one property can only occur after another has been sold.
A surveyor, accredited by the Royal Institute of Chartered Surveyors (RICS), who is employed to carry out a survey on a property.
The fee payable to an estate agent – typically a percentage of the property price or it can be a fixed fee.
Completion is when the sale of a property is finalised and the legal transfer of ownership passes from one party to another.
Conditions of sale
Terms defined in the contract which set down the rights and duties of both buyer and seller.
A clear ‘snapshot’ of the condition of your potential purchase. It’s the most basic survey that you can have on a property.
This is the binding document both the buyer and seller sign to complete the sale or purchase of a property. It can also be known as an agreement.
The name for all the legal work involved in transferring the ownership of a property from one party to another.
Legal documents proving ownership of a property or land. They may contain mortgages and leases, conveyances, contracts for sale and wills.
The money you’ll need to pay upfront when buying a home. Typically, the deposit is payable on exchange of contracts and the remainder is paid at completion.
Fees that are paid by the solicitor on behalf of the buyer. These range from stamp duty and local authority searches to money transfer fees.
The last house in a row of similar houses that are joined together.
Energy Performance Certificate (EPC)
A certificate that details how efficiently a property uses energy with a ranking between A-G (with A being the most efficient). An EPC is legally required for properties being marketed for rent as well as for sale.
The portion of the property value without a mortgage or loan secured against it. It comprises any increase in the value of your home, as well as your deposit and the capital you have paid off the loan.
A type of scheme which allows you to release some of the equity in your property through either a lifetime mortgage or a home reversion plan.
Exchange of contracts
The point at which signed contracts confirming the intention to transfer ownership between buyer and seller are physically exchanged. At this stage the parties become legally bound by the terms. You’ll have to pay the deposit at this point.
This term refers to someone who is buying their first property. However, it can also be used to describe someone who is buying a home without selling one.
Fixtures and fittings
The non-structural items in a property that should be listed as included in a sale, although there may be negotiations about what exactly that includes. Fixtures are items that have become part of a building or land and are included in the sale. Fittings are not attached to the building or land and so are not usually included, unless agreed.
A drawing that helps establish the dimensions of a property (although it may not be done to scale). You can have 2D and 3D floorplans and this helps buyers and sellers visualise the rooms and layout.
If you own the freehold, you own the building and the land that it stands on outrightß indefinitely. If you’re buying a flat or an apartment, you can also own a share of the freehold.
When a seller has agreed an offer in principle on a property but later accepts a higher offer from another party.
When the buyer has made an offer that has been accepted but then reduces the offer just before exchanging contracts.
An annual fee paid by the leaseholder to the freeholder of the property.
Help to Buy
Help to Buy is a government scheme aimed at helping people with small deposits to buy their first home or move up the property ladder by providing an equity loan of up to 20% of the property value. It only applies to new-build properties.
A report carried out by a surveyor on behalf of a buyer to assess the value and condition of a property and highlight any major defects. It is a more comprehensive survey than a condition report, but not as extensive as a building survey.
Houses in Multiple Occupation (HMO)
If a home has at least three tenants which form more than one household and the toilet, bathroom or kitchen facilities are shared, it’s classed as an HMO.
Independent Financial Adviser (IFA)
An independent financial adviser offers unbiased and unrestricted advice from the whole of the market.
Two estate agents jointly instructed by a seller to market a property.
Equal holding of a property between two or more persons. If one party dies, their share passes to the survivor(s).
The government office responsible for recording ownership of land and any charges against the property in England and Wales.
Ownership and right to occupy a property by way of a lease agreement for a given period, usually subject to an annual payment of rent to the owner of the freehold.
Buildings that have been registered as being of special interest and has preservation orders on it. A listed building may carry certain obligations and restrictions governing its use, repair, and maintenance.
Local authority search
Checks carried out by the solicitor with the local council regarding any future development issues that might affect a property and/or the surrounding area.
Charge to a tenant or leaseholder made by a landlord to cover the costs of maintaining a property.
A property that is part of a larger building, but has its own private entrance. Can either be on one floor or split-level.
Where two or more estate agents are instructed by a seller to market a property. Only the agent who introduces a successful purchaser is paid.
Indication from a potential buyer of a willingness to purchase a property at an indicated price. An offer is not legally binding in England and Wales and can be withdrawn or changed at any time prior to exchange of contracts.
Open market value
The price that a property would be likely to achieve if it were available for sale.
The traditional means of buying and selling property, ie, where the price and sale terms are negotiated directly between the seller and purchaser or their estate agent.
When the owner of a property dies and leaves the property in their will, probate is the official process for proving the will is valid.
Return on investment
The amount you get back in comparison to the amount you put into an investment.
Property occupied for private or domestic purposes.
Right to Buy
A government scheme that allows eligible council tenants in England to buy their home at a discounted price.
A solicitor will make enquiries to the local authority and Land Registry to ensure there aren’t any matters that will adversely affect the property or the surrounding area.
The process of building your own home. For most people this involves choosing builders, architects and surveyors to undertake the work.
The person who is selling the property. Also known as the vendor.
Share of freehold
If you are buying a flat with a share of the freehold, you become part of the group of people or company that make decisions and organise the maintenance of the building.
The option to buy a share of a property from a housing association. You’ll then pay an ‘affordable rent’ on the share of the property you don’t own.
Where a seller instructs one agent only to market their property.
Stamp Duty Land Tax
The tax paid to the government by a buyer on the purchase of a property. Rates vary between 1% and 4% depending on the purchase price.
A flat with just one principle living area containing both cooking and sleeping facilities with a separate bathroom or shower room.
Subject to contract
A provisional agreement prior to the exchange of contracts that is not yet legally binding, so either party can still pull out of the transaction.
Tenants in common
An optional method of shared home ownership (not necessarily in equal shares). If an owner dies, the owner’s stake in the property is passed to their heirs, rather than to the other owners of the property.
Property where both side walls are shared with adjoining properties.
Documents showing the legal rights to ownership of a property.
Status of a property from the point at which a seller has accepted an offer until exchange of contracts.
Refers to services such as gas, electricity, water, sewage and broadband.
A property that has been vacated by any previous occupants upon the completion of the purchase.
An assessment or survey conducted by a qualified professional such as a Chartered Surveyor to establish an estimate of the current market value of a property.
This is a person who is selling a property. They may also be known as the seller.
The income generated from a rental property stated as a percentage of the property value.
Posted on October 23, 2019.