Jargon buster – Part One - 18/08/20
We understand that many of the words and phrases we use every day might be unfamiliar to those who are first-time buyers or indeed don't work in the property industry. In part one of our jargon-busting series, we dissect some of the words and phrases you might come across if you're buying or selling a property.
Agreement in principle
An estimate of how much money a mortgage provider would be willing to lend you based on your income. Speaking to a mortgage advisor to get one puts you in a stronger position when you make an offer on a property.
A full structural assessment of a property. This type of survey is recommended for older properties or listed buildings.
Several buyers and sellers are dependent on each other for the sale to be completed. A property is chain-free when neither the seller nor buyer are relying on another purchase or sale to proceed.
The date the ownership of property officially transfers from seller to buyer – there's no going back! Generally, on the completion date, you get the keys to your new home.
The most basic form of a survey which summarises the condition of a property and flags up any apparent problems.
The legal process of transferring ownership of a property from the seller to the buyer. Buyers and sellers must appoint a solicitor to do their conveyancing.
The legal documents which prove who owns a property. They will 'transfer' into your name when you buy a new property. Keep them safe!
The fees and taxes a solicitor will have to pay out to other organisations, such as water companies or the Land Registry, as part of the house-buying process. Buyers will be charged disbursement fees on top of the conveyancing fee.
EPC (Energy Performance Certificate)
A certificate which measures how energy efficient a property is. The EPC assessment a buyer receives will also explain how a property's rating can be improved, such as by adding insulation or upgrading the boiler.
The land the property is built on is owned by the occupier and guaranteed forever.
When a seller accepts a higher offer on a property after already accepting a previous offer, it might seem unfair. Still, there is nothing in law which bans this as accepting an offer is not legally binding.
When a buyer lowers their offer at the last minute after previously making a higher offer, the seller is forced to accept or risk having to find another buyer.
An annual fee the owner of a property must pay to a leasing company if it is leasehold.
The most common type of survey which highlights any problems in a property that could cause damage and need future repairs, such as damp or subsidence. A Homebuyer is recommended for homes that are in a reasonable condition.
A company or person owns the land the property is built on for a period of time (usually 99, 125 or 999 years). If the lease is due to expire within the next 70 years, some mortgage companies will not lend to you.
Loan to Value (LTV)
The size of the mortgage a lender is prepared to offer you as a percentage of the value of the property you are buying. For example, if you put down 10% deposit, the LTV will be 90%. The smaller the LTV, the higher your deposit will need to be.
Memorandum of Sale
A document which details the possible buyer's interest in buying a property and the seller's terms of the sale. It is not legally binding! It just confirms that a price has been agreed and both the buyer and seller want to go through with the purchase.
A sum each household on a development, or within an apartment in a block, must pay each year for the upkeep of an area or a service that they have communal use of. For example, cleaning and lighting communal hallways or maintenance of shared gardens.
A buyer purchases a percentage of the total value of a property and then pays rent on the remaining share, which is owned by a housing association. This is a good option for first-time buyers who want to own their home but can't afford a deposit or mortgage to buy one outright.
If you buy a newbuild property, the developer will inspect it and fix any small problems, or 'snags' before you move in.
Sold subject to contract
An offer has been accepted, but no legal contracts have been exchanged so the buyer or seller can still pull out. 'Under offer' means the same thing.
Stamp Duty Land Tax
A percentage of the total cost of a property which must be paid as tax to the Government. Currently, any property which is valued under £500,000 is exempt, as are first time buyers. For high-value properties, the rate is between 3% and 12%.
This is just another word for the seller!