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The property world is full of words and expressions that may be unfamiliar to anyone who is not regularly buying, selling, letting or renting a home. This guide will help to shed light on what they all mean…
A landlord described as “absent” is one who cannot be contacted. If the lessees wish to create a Right To Manage Company but are unable to contact the landlord, they are free to make a legal application to acquire the right to manage.
The document you need to sign when accepting a lender’s mortgage offer.
The total cost of a loan, taking into account interest charges, arrangement fees and other costs, shown as a percentage.
The ARLA Propertymark (formally the Association of Residential Letting Agents), is the UK’s foremost professional body for letting agents and of which Centrick is a proud member.
These are fees charged by a mortgage lender or broker to arrange a loan.
To transfer the right or interest in a property from one person to another.
A widely used rental agreement where the tenant is an individual and net rent does not exceed £25,000 a year. It covers a fixed period, so both parties know the date the property will be vacated.
The rate of interest which the Bank of England charges for lending to other banks. These banks then use it as a benchmark for the interest rates they charge when lending money to consumers, often stipulating an interest rate “X% above the base rate”.
The terminology of best and final offers allows all interested parties to have the opportunity to submit a final qualified offer to be put forward to the owner. This is a common practice to follow in such cases when several interested parties are all bidding against one another and gives all parties an opportunity to submit their “best and final” offer by a proposed date. This subsequently allows the legal owner to conclude the offer process and commence the sales progression.
A clause sometimes agreed between the landlord and tenant to be inserted in a fixed term agreement, typically if the initial fixed term is for a year or more. A break clause will usually allow either landlord or tenant to give written notice after a particular date or period of the tenancy in order to end the tenancy earlier than the original fixed term.
A temporary short-term loan enabling someone to purchase a property before selling his or her existing property.
A report on the physical condition of a property. The surveyor will look at all accessible parts of the property and give a written report on defects or issues affecting it. See also HomeBuyer Report. Not to be confused with a mortgage valuation (see below).
Capital, also known as equity, is an asset that is less liquid than cash. It represents the amount of money you have put into a property, investment or deposit.
A chain is formed when several property sales and purchases are inter-dependent. A chain can be complicated but a good estate agent will be able to help keep it moving.
A time and date by which your solicitor must submit the buyer’s best offer in writing to the seller’s solicitor.
The point at which the sale of the property is concluded and the buyer receives the keys.
A document which your solicitor or conveyancer will provide as a record of all the financial transactions and costs.
The specific items in a sale contract that govern the rights of the buyer and the duties of the seller.
The legal document detailing the agreement of terms between the seller and buyer. When a sale is agreed, a draft contract is sent to the buyer by the seller’s legal representative and at exchange of contracts both parties are bound to a date on which to complete the sale.
Where two or more purchasers are given a draft contract and the first one to exchange contracts buys the property.
A representative, solicitor or licensed conveyancer, who deals with the legal aspects of buying or selling a property. The buyer and seller will each appoint their own conveyancer.
The legal process of transferring the ownership of a property.
Rules governing the property in its title deeds or lease.
References requested for a tenant applying to take up rented accommodation. Many agents and individual landlords use external companies who will contact the applicant’s employer, landlord and check the tenant’s credit history, providing a report on their financial suitability to rent.
The date on which you become the owner of the property and can move in, having paid all money due.
The Deeds also known as Title Deeds are the legal documents which prove the ownership of a property. For an agent to comply with regulations for anti money laundering purposes they must be able to verify ownership by having sight of the property title deeds, and to retain a copy of such on file for 5 years from the conclusion of the transaction.
A term used to describe a sale to a purchaser who has to sell their property before being in a financial position to proceed.
When buying: The amount of money paid by the buyer on exchange of contracts, usually 10% of the purchase price.
When renting: A monetary sum held by the landlord or agent for security against damage to a property or a breach of the tenancy terms. This is usually the equivalent to six weeks’ rent but may vary. If the deposit is for an Assured Shorthold Tenancy (AST), then it must be protected by one of the approved tenancy deposit protection schemes.
Items that have been damaged during a tenancy. The tenant is usually responsible for the cost of repair or replacement.
The items in addition to legal fees in conveyancing. These may include Stamp Duty Land Tax, Land Registry fees, search fees, mortgage redemption costs and any other expenses. All conveyancers should be able to estimate the likely level of disbursements before the transaction commences.
The new title deed, which is required in order to transfer the title of the property into your name.
The initial version of the contract. This may be amended during the course of the sale but becomes final at the point of exchange of contracts.
A right that affects a property – such as the right of neighbours to pass over an access path or the right of the water company to have their pipes and drains running under the property.
A liability imposed on the owners of a property which is binding on subsequent owners of it.
Questions which are raised by the buyer’s conveyancer, often about survey or property information forms.
The Energy Performance Certificate (EPC) shows the energy efficiency and carbon emissions of a property and gives an indication of the fuel bills. It is displayed as two graphs – the energy efficiency and environmental impact of the property. Each is graded from A (the best) to G (the worst).
Your equity in your property is how much of it you own. It is the difference between the value of your home and the mortgage you still owe. Negative equity occurs when you owe more to your lender than the sale price of the property.
The buyer and seller both sign the contract for sale and at a certain time and date the conveyancers action the exchange. At this point, the sale is binding and no terms may be altered.
The price the seller should accept for their property, although there is no guarantee and it might be possible to negotiate.
When buying: Fixtures are items that have become part of a building or land and are therefore included in the sale. Fittings are not attached to the building or land and so are not included in the sale unless otherwise agreed. The seller will complete a fixtures and fittings form that will confirm what is included in the sale, what isn’t included, and what is for sale separately.
When renting: Items usually provided in a letting that may include curtains, carpets, blinds, light fittings, kitchen units and appliances. In some cases it may also include furniture. It is advisable to check what is provided and not to assume that items will be provided.
The broadest form of property tenure guaranteeing that occupation continues for an indeterminate period of time. This contrasts with leasehold, which is always subject to a specified period of occupation.
A certificate that states all gas appliances, pipework and flues are safe. It is a legal requirement for all landlords and must be provided every year by a CORGI registered engineer after a safety check.
Where a sale is agreed to a buyer at a certain price and then the seller accepts a higher offer from another buyer. Note that until contracts are exchanged estate agents are bound by law to tell a seller about any offer they receive for a property.
Where a buyer reduces their offer just on the point of exchanging contracts.
The annual charge levied by the freeholder on the leaseholder of a property.
Someone who guarantees an obligation of another. For example, if a person was below an acceptable age to take out a mortgage, the building society may request one of the parents to act as guarantor. This makes the parent personally responsible for the debt should the child default on payments.
A report designed in a standard and easily read format that tells a buyer about the physical condition of a property. Lists defects and grades their seriousness and need for attention. Not as detailed as a structural survey. Not to be confused with a mortgage valuation (see below).
Information on the property, which contains a property questionnaire prepared by the seller, a report on its condition and an energy report.
A list of the contents of a rental property. The inventory will note the condition of items and will form the basis of a dilapidation report at the end of the tenancy. It often includes photographs of specific items and existing damage/defects.
A government office which is responsible for holding records of land ownership and any charges, including mortgages, against the property.
A fee charged by the Land Registry to record the change of ownership of a property.
The legal document governing the occupation by the tenant of a premises for a specific length of time. At the end of the period the property reverts to the owner.
The use and occupation of a property by way of a lease agreement for a certain period of time. A lease is frequently applicable to flats but can also apply to houses. The term of a lease varies but is commonly 99, 125 or 999 years.
Buildings of special architectural or historic interest. A listed building may carry certain obligations and restrictions governing its use, repair, and maintenance.
A buyer’s conveyancer makes a formal enquiry to the local authority to find out if there are any matters affecting the property that is being purchased.
Many leasehold properties (especially flats) are subject to such a charge which pays for items such as the insurance and maintenance of the building.
A flat with its own private entrance.
The Modern Method of Auction is growing in popularity across the UK as a more purchaser-friendly option than a traditional auction, but retaining a greater certainty and speed of sale for the vendor. Whilst the purchaser still pays a non-refundable reservation fee, the Modern Method of Auction allows purchasers with a mortgage to purchase an auction property and has realistic completion timescales. The Modern Method of Auction is similar to an auction on eBay, purchasers can bid on a property online from anywhere in the world, within a set timeframe, the highest bidder, wins. Main Difference to traditional Auction: The buyer is responsible for paying the auctioneers fees rather than the seller.
At the point when you agree in writing via your solicitor to all the points in the contract, the agreement is known as the conclusion of missives and you are now bound by the terms of the contract.
Very commonly and incorrectly referred to as a “mortgage survey”, the mortgage valuation is carried out by a surveyor acting on behalf of a lender to provide them with a professional report stating the value of the property. The purchaser usually pays the fee for this valuation.
Where more than one estate or letting agency firm is instructed by a seller or landlord to offer a property for sale or to rent.
The NAEA Propertymark (formally the National Association of Estate Agents), the UK’s leading professional body for estate agency and of which Centrick is a proud member.
Where the sale value of a property is less than the amount outstanding on the mortgage.
This registers your interest in a property so that you will be told if any other offers are made on it. It does not oblige you to buy the property.
After an applicant has viewed it is important to consider whether they will be making an offer for the property. All offers must be recorded and passed onto the vendor straight away in order to comply with legislation, and must be followed by the words ‘subject to contract’ to ensure that no binding contract comes into being before the necessary legal and financial arrangements have been made.
This is when an offer has been accepted SSTC, but the instruction from the vendor to the agent is that it is to remain on the market until contracts have been exchanged. The agent must confirm this to the buyer in writing and ensure that all marketing materials are updated including portal descriptions “that an offer has been accepted subject to contract”.
Prior to the production of a memorandum of sale the buyer must complete anti money laundering compliance to enable the offer and memorandum of sale to be passed onto solicitors. A memorandum of sale is the summary of the parties, price agreed and main terms and conditions for the property sale which is sent out to the vendor, purchaser and both sets of solicitors when a sale is first agreed.
An offer has been accepted but exchange of contracts has not taken place. Nothing is binding on either the vendor or purchaser until contracts are exchanged.
A process, normally managed by an estate agent, where several house hunters are given a time of a few hours when they can all go and view a property for sale instead of separate, private viewings.
The likely sale price of a property assuming a willing seller and a willing buyer, with a reasonable period of publicity and marketing and no special factors affecting the property.
A very low sum of rent or ground rent. In the past it was, literally, a peppercorn.
When a sale is agreed, the buyer’s conveyancer will send the seller’s conveyancer a standard list of questions about the property.
A term used to describe the sale of a property where the owner is deceased.
A sale conducted at a certain time by an auctioneer, either online or at a physical location, where competing buyers bid openly for a property and the highest bid wins. The purchase is binding on the fall of the hammer.
The Property Ombudsman offers a free and independent service for resolving disputes between sales and letting agents, which are members of The Property Ombudsman, and buyers/sellers of residential property in the UK and of which Centrick is a proud member.
The person buying a property.
If a mortgage is not paid over a period of time, the lender may ultimately take ownership of the property by the process of repossession.
Sales progression is an essential part of selling a property and it is a service that is provided by the Agent, which begins with the offer being accepted, the property chain being identified and managed and continues right through all of the legal proceedings until the exchange of contracts and completion of the sale. The offer is the tip of the iceberg, Sales Progression is when the hard work really commences.
These are conducted by your lawyer to check if there is anything that might affect the current or future value of the property. It is compulsory to have a local authority search before exchanging contracts.
This is when the freehold of the property is owned by a limited company and the shareholders are the owners of the property, usually the owners of flats within that building.
Where only one estate or letting agency firm is instructed by a seller or landlord to offer a property for sale or to rent.
Where an estate agency or person is granted “sole selling rights” by the seller of a property, they will be able to claim an agreed fee regardless of who actually introduces the buyer.
The tax paid to the government by the purchaser of a property. Rates of SDLT can vary. Changes in December 2014 mean that the tax rates are “banded” progressively in the same way as income tax. Nothing is payable on the first £125,000 of the purchase price. From £125,001 to £250,000 2% is payable and from £250,001 to £925,000 the rate is 5%. £925,001 to £1.5 million is 10% and over £1.5 million it is 12%.
The Chancellor of the Exchequer Philip Hammond has abolished stamp duty for first time buyers on homes worth up to £300,000.
Where contracts are still not exchanged and nothing is yet legally binding on either seller or buyer.
Structural damage caused to a property due to its sinking into the ground.
This is a report prepared by a qualified building surveyor to check the structure for any faults. Home owners can choose from three main types of structural survey, depending on how much information they want.
Possession of a property by a tenant under the terms of a lease.
The legal agreement governing the occupation of a property by a tenant.
An insurance-based scheme run by The Dispute Service Ltd. for the protection of tenancy deposits and the resolution of disputes between landlords, agents and tenants concerning the return of deposits at the end of a tenancy. It is one of three schemes approved for tenancy deposit protection. TDS has recently launched a Code of Recommended Practice. This Code of Practice sets out the recommended requirements which letting agents and landlords should meet as members of the Tenancy Deposit Scheme. Centrick is a proud member of this scheme.
The person who has temporary possession of a property under a lease or tenancy agreement.
The mode of holding ownership of a property: for example, leasehold or freehold.
Conditions included in the title deeds, including restrictions on use, rights and obligations.
Documents detailing and confirming the legal ownership of a property.
The final legally binding document that transfers the property and all its rights from the seller to the buyer.
A property becomes “under offer” when a seller accepts an offer from a buyer and the legal processes of the transaction begin.
A term often used by estate agents to cover the process of them giving an opinion of the open market value of a property.
The person selling a property.
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