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Jargon Buster

Trying to understand property related jargon?

A

Agreement in Principle

The pre-qualification of a borrowers potential to obtain a mortgage.

Applicant

A person, registering with an Estate Agent who wants to start the search for a property.

Appraisal Price

An estimated selling price given to a property.

Appreciation

The increase of a property’s value, caused by market conditions.

APR (Annual Percentage Rate)

This rate assumes certain fees and costs on a mortgage, and is intended to help the borrower compare different products and lenders.

Arrangement Fee

A potential fee charged by a mortgage lender.

Arrears

The overdue amount of payments missed on a mortgage.

ASSURED SHORTHOLD TENANCY (AST)

An assured shorthold tenancy offers the landlord a guaranteed right to repossess his/her property at the end of the term stated in the tenancy agreement.

Auction

The sale of a property to the highest bidder with a legally binding contract at the drop of a hammer.

B

Bank of England Base Rate

The rate set by the bank of England which influences interest rates charged by lenders.

BREAK CLAUSE

A Break clause is in English property law a term in a tenancy agreement that allows a tenancy to come to an end before the end date stated in the tenancy. A break clause may be enforced by either the landlord or the tenant.

Buildings Insurance

Insurance which provides cover if the structure of a property is damaged.

Bungalow

A property all on one level (ground floor).

Buy to Let Mortgage

A mortgage which has been processed on a property which has been purchased to rent out.

C

Capital

The amount of money you have in a property after deducting mortgage owed and costs. (Also known as equity)

Chain

A chain is formed when a buyer is reliant on the sale of their own home to purchase a new property.

Charge

The order of which a person or company is entitled to the property.

Commission

A fee charged for conducting business.

COMMON AREAS

The order of which a person or company is entitled to the property.

COMPANY TENANCY

This form of Tenancy Agreement is used where a company is the tenant. There’s no additional statutory protection; both landlord and tenant are bound only by the terms of the written agreement.

Completion

This is the final stage of the home buying process when the property is transferred legally to the buyer.

Contents Insurance

Insurance which provides cover if the owners belongings are damaged.

Contract

An agreement which is legally binding between the buyer and the seller of a property.

Contract Race

The race between two parties to exchange contracts first on a property purchase.

CONVERSION

The sub-division of a residential property into bedsits, self-contained flats or maisonettes.

Conveyancing

The legal process (usually carried out by a solicitor) followed to purchase a property.

Council Tax

A charge levied by local councils and is charged dependant on bandings.

Covenants

The rules and regulations that govern what can and cannot be done usually held in the title deeds or lease.

CREDIT CHECK

A check to reveal history of credit card repayments, outstanding debts, arrears and County Court Judgments usually conducted by external companies and used to check a potential tenants financial suitability to rent.

CREDIT HISTORY

A history of an individual’s or company’s past borrowing, including information about late payments and bankruptcy.

D

Data Protection Act

Sets rules and regulations of how your personal information can be held or used.

Deeds

Legal title documentation that proves ownership of a property.

DEFLATION

A situation in which prices are falling.

Deposit

The money paid to a solicitor to ensure the purchase of a property.

DEPOSIT PROTECTION SCHEME (DPS)

All deposits being paid by a tenant for an Assured Shorthold Tenancy must be registered with a recognised deposit protection scheme within 14 days.

Depreciation

The decline or reduction in the value of the property caused by market conditions.

Detached

A property that stands alone, with no other connected building.

DEVELOPMENT

An older property that has been refurbished and modernised or a newly built premises.

DILAPIDATION

Damage to a property or contents that exceeds acceptable wear and tear.

Disbursements

Various fees paid to your solicitor. Can include land registry fee and search fee.

Down valuation

When a lender restricts the amount of borrowing based on a surveyors market valuation.

Draft Contracts

The preliminary contract drawn up by a solicitor (conveyancer).

Due Diligence

A process of performing duties to the generally accepted professional standard.

E

Early Repayment Charge

An extra charge on some mortgages, if you repay some or the entire loan before a specified date.

End Terrace

The properties at each end of a line of terraced properties.

Endowment Mortgage

A mortgage where the interest only is paid to the lender which often requires a separate insurance policy with the aim to pay off the mortgage at the end of the agreed term.

Energy Performance Certificate (EPC)

An EPC measures the energy efficiency of a property using an A to G grade. It’s a legal requirement to have a valid EPC commissioned before a property can be marketed.

Equity

The amount of money you have in a property after deducting mortgage owed and costs. (Also known as capital)

Excess

The initial sum paid on an insurance claim.

Exchange

The point at which signed contracts are physically exchanged, legally binding the sale/purchase of a property.

F

Financial Services Authority (FSA)

The independent regulatory body for the financial services in the UK.

Fixed Rate Mortgage

A mortgage in which the agreed interest rate will stay the same for an agreed length of time.

Fixtures and Fittings

Items that is included in the sale of a property.

Freehold

Where the owner of the property also owns the land on which it’s built.

Full Structural Survey

An inspection of the structure of a property conducted by a surveyor who will issue a detailed report regarding any possible defects.

Further Advance

An extra loan secured against a property.

G

GAS SAFETY REGULATIONS

The landlord must ensure that a gas safety check is carried out by a CORGI registered engineer prior to a let and then annually after that.

Gazump

When the vendor accepts a higher offer from a third party after already agreeing the sale with someone else.

Gazundering

When the vendor accepts a lower offer from there buyer before the point of exchange.

Ground Rent

An annual charge levied by the freeholder to the leaseholder.

Guarantor

A third party who promises to pay a borrowers debt if that borrower defaults.

H

HANDOVER

The time when tenants are allowed occupation of a property.

HIGH RENT TENANCY

Refers to a tenancy agreement where the annual rent is over £25,000 per annum, also known as a contractual tenancy.

Higher Lending Charge

A fee, potentially charged by a lender where the loan is above a pre-set percentage of the value of the property.

HIP (Home Information Pack)

Under the provisions of the Housing Act 2004 a Home information pack (HIP), sometimes called a Sellers Pack, must be provided before a property in England and Wales can be put on the open market (suspended on the 21st May 2010).

HOLDING DEPOSIT

This is usually a nominal amount (£100 +) that will be asked for when a tenant applies for a tenancy of a property. The agreed amount is often non-refundable.

Home Buyer Survey and valuation

A survey report on the property which is not as detailed a full structural survey that assesses the condition of a property and its value.

HOUSES IN MULTIPLE OCCUPANCY (HMO)

A building of three floors or more which is to be occupied by three or more people and where these people live as more than one household and share facilities such as bathrooms, toilets or cooking facilities.

I

IFA (Independent Financial Advisor)

A qualified and regulated individual who can advise on your mortgage and insurance needs.

Individual Savings Account (ISA) Mortgage

An interest only mortgage which is designed to pay off a loan at the end of the period.

Inflation

The general increase in price over a period of time.

Interest Only Mortgage

A mortgage where the monthly payment consists of only the interest, meaning no capital is repaid.

INVENTORY

Details the contents of a property including the state and condition and includes the fixtures and fittings. They should be checked in with the tenant at the start of the tenancy and checked out at the end.

J

Joint Tenants

The form of ownership for two parties where if one of them dies, the deceased share of the property automatically transfers to the remaining party, giving them full ownership (regardless of the terms of the will)

K

KFI (Key Facts Illustration)

A summary of the information relating to a mortgage that you wish to apply for.

L

Land Registry

The department that registers the legal title of an area of land.

Landlord

The owner of a property that is rented out.

LANDLORDS REFERENCE

A reference given by a previous landlord, which confirms an applicant’s history of payment of rent and previous conduct as a tenant.

Lease

The legal agreement between the landlord and tenant.

LEASE AGREEMENT

The legal agreement between the landlord and tenant that reflects the terms of the negotiations between them and sets out their basic legal rights.

Leasehold

The ownership of a property but not the land on which it’s built (usually applies to flats).

Legal Fees

The amount of money paid to your solicitor (conveyancer).

Lender

A party typically bank or building society that lends money for the purpose of buying a property.

LETTING

An agreement to let a particular property.

LESSOR

Refers to the person responsible for granting a lease, usually the landlord.

Listed Building

A building which is considered to be of special architectural or historic interest.

Loan to Value

The percentage of a loan against the value of the property.

LONG LET

A long let is a tenancy that typically lasts for a period of six months or more.

Local Authority Search

The process where a solicitor (conveyancer) checks with the local council regarding any outstanding or future issues which may affect the property.

M

Maintenance Charge

Charged by the freeholder to the leaseholder, this cost is for the up keep of any communal parts of a building.

Maisonette

A self-contained apartment usually over two floors, often with its own front door.

Mid Terrace

A property in the middle of a row of properties.

Mortgage

A loan by which the borrower can purchase a property.

Mortgage Valuation

A survey carried out on behalf of a mortgage lender to check the value of a property.

MPP (Mortgage Payment Protection)

An insurance that pays your monthly mortgage payment if you’re unable to work because of redundancy, sickness or accidents.

Multi Agency

When more than one Estate Agent has an agreement to market a property at the same time.

N

Negative Equity

A situation where the value of the property is less than any outstanding loans secured against it.

NOTICE PERIOD

The amount of notice that the landlord must give the tenant to end the tenancy and vice versa.

O

OCCUPANCY RIGHTS

These are contained within the tenancy agreement and give the tenant right of occupancy of the property.

Offer

The amount of money a buyer is prepared to pay for a property.

OIEO

Offers in excess of the price listed.

OIRO

Offers in region of price listed.

Open House

A scheduled period of time in which a property is designated to be available for viewing for potential buyers.

Open Market Value

The price which a property should achieve on the open market.

P

PARTIES

Landlord and tenant (and possibly a guarantor) who come together to sign a tenancy agreement are collectively known as ‘Parties’ to the agreement.

Payment Holiday

An option with some mortgage lenders that allows you to stop paying mortgage payments for a set period of time.

PERIODIC TENANCY

A nominal periodic rent usually paid annually.

PCM (Per Calendar Month)

Refers to a Rental figure and stands for per calendar month.

Peppercorn Ground Rent

A nominal periodic rent usually paid annually.

Pied à Terre

A property kept for temporary, secondary or occasional occupation.

Premium

A monthly amount payable for any insurance policy.

PREMIUM LEASE

Where rent for the property is paid in full up front.

Probate

The administration of a property by an executor of a will following the death of the owner.

PROPERTY MANAGEMENT

A professional or company responsible under an agency agreement for the maintenance and management of a property.

Public Liability Insurance

Insurance that covers injury or death to anyone on or around your property.

Purchaser

A person who’s buying a property.

R

Redemption

When a mortgage is fully repaid.

REFERENCES

Allows a landlord to check a tenancy applicant’s suitability to be able to pay the rent and also the applicant’s track record in earlier rentals.

Remortgage

The refinancing of a property by switching from one lender to another.

RENEWAL OF CONTRACTS

Renewing a contract that has expired or will shortly expire.

Repayment mortgage

A mortgage when the monthly payment consists of interest and capital, gradually reducing the debt over a period of time.

Repossession

When the mortgage lender takes possession of the property due to the non-payment of an agreed loan.

RESIDENT LANDLORD

Where the landlord occupies part of the dwelling as his main or principle home and lets the rest of the property.

Retention

Where a mortgage lender retains part of the loan until specified work has been completed.

S

Search

A request for information directly relating to the property.

Semi Detached

A property which is joined to one other house.

SERVICE CHARGE

The cost of repairing and maintaining external or internal communal parts of a building charged to the landlord. (Also known as maintenance charge)

SITTING TENANT

A person occupying a property who’s legally protected against being removed.

SMS (Short Message Service)

Commonly known as text messages.

Sole Agent

When a vendor uses only one Estate Agent to sell their property (often resulting in cheaper commission).

Solicitor (conveyancer)

A legal expert handling the legal process for the sale or purchase of a property.

Sought After Location

An area within a town, that is popular for potential buyers.

STANDING ORDER

An instruction that the tenant makes to their bank for payment of rent, normally the same day every month.

Standard Variable Rate

A mortgage lenders flexible standard interest rate.

Studio Flat

A property consisting of one main room incorporating cooking, living and sleeping facilities, usually with a separate bathroom/shower room.

SUBLET

A qualified person to estimate the value of property and complete structural surveys.

Subject to Contract

The term used to confirm a property purchase is not yet legally binding.

Surveyor

A qualified person to estimate the value of property and complete structural surveys.

T

Tenant

A person who rents a property and pays an agreed monthly rent to the landlord.

TENANCY AGREEMENT

A legal binding document to protect the rights of the landlord and the tenant setting out the terms of the rental arrangements.

TENANCY

The temporary occupation of a property by a tenant.

Tenants in Common

The ownership of a property where each party owns a pre-determined percentage.

Tenure

The conditions on which a property is held, i.e. Leasehold or Freehold.

Terraced house

A property that forms part of a connected row of houses.

TERMINATION

Refers to the ending of a tenancy.

Title Deeds

Documents showing the legal ownership of a property.

Town House

A property laid out over three floors, often with the lounge on the first floor.

Tracker Mortgage

A type of mortgage where the monthly payment can change, often dependant on changes in the bank of England base rate.

U

UTILITIES

These are normally electricity, gas and water and may be referred to as services which, under most circumstances, the tenant is responsible for paying.

Under Offer

The term given to a property which has had an acceptable offer made, but prior to exchange of contracts.

V

Vacant

A name given to a property where there are no current occupiers.

Valuation

A basic survey of a property to estimate its value.

VAT (Value Added Tax)

A legal charge levied against some goods and services.

Vendor

The name given to the owner of a property being sold.

VOID PERIOD

Period of time when a property is empty/unoccupied by a tenant.

Viewing

When a potential buyer physically attends a property to look around.

W

Will

A legal document that details what happens to a person’s assets upon their death.

Y

Yield

Income from a property calculated as a percentage of its value.

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