Property jargon buster
Buying, selling, renting and letting property can be overwhelming and there’s an enormous amount of terminology that can confuse an already daunting process. At KP Living we like to keep things simple, so have created a guide that decodes some of the most common words and terminology used in the property industry.
The price a vendor or landlord is hoping to achieve for their home.
Assured Shorthold Tenancy (AST)
A tenancy agreement is a legal contract between landlord and tenant. The agreement contains the terms and conditions of a tenancy, such as the duration of the agreement and the rental amount payable by the tenant. An Assured Shorthold Tenancy is the most common type of tenancy agreement used.
A clause in a contract that allows a person to terminate the contract early; this can be included in a fixed term agreement allowing either the 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 short-term temporary loan taken out to cover the interval between two transactions, enabling someone to purchase a home before selling his or her existing property.
Most people who sell their properties are also buying at the same time. Therefore there can be a chain of a number of sellers, which depend on each other for the sale and purchase of their new properties. A chain can be complicated but a good estate agent will keep it moving.
The final step in the legal process of transferring ownership of a property. Completion is the point at which the purchase price for the property is paid, the transfer documents are dated and the buyer receives the keys.
In law, conveyancing is the transfer of legal title of property from one person to another, or the granting of an encumbrance such as a mortgage.
The legal title documents that prove ownership of a property. Often these deeds will be held by the mortgage lender if a mortgage is lodged against the property.
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 Energy Performance Certificate (EPC) shows the energy efficiency and carbon emissions of a property and gives an indication of the fuel bills. It’s shown 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.
Exchange of contracts
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.
Fixtures and fittings
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.
A drawing that helps establish the dimensions of a property (although it may not always be to scale).
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.
Where a sale is agreed to a buyer at a certain price and then the seller accepts a higher offer from another buyer.
Where a buyer reduces their accepted offer prior to exchanging contracts.
An annual fee levied by the freeholder on the leaseholder of a property.
Special mortgages require borrowers to appoint someone who will be responsible for their debt should they fail to pay. In some cases, tenants may also appoint a guarantor, so the landlord can be assured of receiving rent.
A report designed in a standard and easily read format that tells a buyer about the physical condition of a property. It lists defects and grades their seriousness and need for attention. It’s not as detailed as a structural survey.
Houses in Multiple Occupation (HMO)
This term covers many categories of housing where a house is ‘occupied by persons who do not form a single household’. Examples include a house split into separate bedsits, hostels and shared accommodation for students. Landlords of HMO’s have extra responsibilities, such as ensuring there are enough bins.
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 apartments but can also apply to houses. The term of a lease varies but is commonly 99, 125 or 999 years.
An institution that lends funds to assist the borrower with a property purchase.
Where more than one estate or letting agency firm is instructed by a seller or landlord to market a property for sale or rent. Only the agent who introduces a successful buyer or tenant is paid.
A process, normally managed by an estate agent, where several house hunters are given a time for a few hours when they can all go and view a property for sale instead of separate, private viewings.
These are conducted by your conveyancer 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.
Share of freehold
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 apartments within that building.
Where only one estate or letting agency firm is instructed by a seller or landlord to market a property for sale or rent.
Subject to contract
Where contracts are still not exchanged and nothing is yet legally binding on either seller, buyer, landlord or tenant.
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.
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.
Valuation (or market appraisal)
A term often used by estate agents to cover the process of them giving an opinion of the market value of a property.
This is done by the lender’s surveyor to verify the property is worth the purchase price for mortgage purposes.