Jargon Buster Glossary

Absent landlord

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.

Acceptance

If you wish to accept a lender’s mortgage offer this document will need to be signed and return to the lender.

Administration fee

A payment which is charged to cover the costs of processing a property rental application. This is paid by the tenant and will be taken from the initial monies once the tenancy starts.

Agreement fee

A payment which is charged to cover the costs of drawing up a tenancy agreement. This is usually shared between the landlord and tenant.

Amortisation

The gradual elimination of a liability, for example, a mortgage through regular payments over a set time period or the amount paid by way of capital or principle repayments on a loan annually.

Annual Equivalent Rate (AER)

A notional rate that is often quoted on interest paid on savings and investments. It aims to demonstrate what your interest return would be if the interest was compounded and paid annually instead of monthly (or any other period).

Annual percentage rate (APR)

The APR is a compound interest rate figure used to compare different mortgages. Defined by law, it includes repayments on the loan plus any mortgage related fees such as booking, arrangement or basic valuation fees. The APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations.

Applicant

The name given to a potential purchaser, often used by estate agents/auctioneers.

Appraised value

The appraised value is the value of a property, as estimated by a surveyor.

Appreciation

The increase in the value of a property as a result of changes in market conditions.

Arrangement fees

Fees charged to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed or capped rates.

Asset

Any form of property owned by a person, including currency, stocks and enforceable claims against others.

Asset Valuation

An asset valuation is an assessment of the value of your assets.

Assign

To transfer the right or interest in a property from one person to another.

Association of Residential Letting Agents (ARLA)

ARLA is the only professional body that is solely concerned with the regulation of Letting Agents, and for 25 years has been actively promoting the highest standards across every aspect of residential letting and management. ARLA member firms are required to work within the codes of practice, which covers the key stages of Letting and Management of property.

Assured shorthold tenancy (AST)

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.

Auction

A means of selling a property whereby it is listed at an auction. If the property does not reach the reserve price then it is not sold. If it does reach the reserve then the auctioneer's hammer falls that represents an exchange of contracts and the successful bidder is legally obliged to pay a 10% deposit and sign a memorandum of sale before leaving the auction. Structural surveys and searches would have to be made in advance by a bidder.

Authorised guarantee agreement (AGA)

AGA is a common requirement on granting a lease. The outgoing tenant gives an AGA to the landlord if it assigns the lease, guaranteeing that the incoming tenant or assignee will pay the rent and observe the covenants specified under the lease.

Base Rate

The lowest rate of interest a bank will charge when it lends money, used as a benchmark to set interest rates for borrowers. This rate is set by the Bank of England and is reviewed several times a year. Lenders will charge borrowers a margin above the base rate.

Bear Market

A stock market in which share prices fall steeply, typically 15%-20%.

Beneficial Owner

Refers to a person who owns land and is entitled to it for his own benefit. Not, for instance, a trust that holds the land for the benefit of another.

Break clause

A clause in a lease giving either or both parties the right to terminate a lease in specified circumstances

Bridging loan

A short-term loan commonly used to cover or 'bridge' the overlap between the purchase of a new property and the sale of an old one.

Broker's fee

Fee charged by a broker for locating the most appropriate mortgage.

Building survey (full structural survey)

A full inspection of the property, conducted by a chartered surveyor, who will write a detailed report setting out the soundness of a property and any property defects. Suitable for any house, particularly older properties and those that have been poorly maintained as well as properties that have been extensively altered or extended, or any property due to be altered or extended.

Buildings insurance

An insurance policy that pays the cost of repair or rebuilding in the event your property is damaged or destroyed. Most mortgage lenders will require buildings insurance to be taken out as a condition of their loan.

Bull Market

A market where prices roar ahead, increasing significantly.

Buy-to-let mortgage

A type of mortgage specifically designed for people buying a property with the intention of letting it out.

Capital

The amount of money either put into buying a property or the deposit placed on a property. Also known as equity.

Capped-rate mortgage

A capped-rate mortgage sets a maximum rate of interest that the lender can charge, but only for a specified period.

Caution

Entries on the land register protecting the interests of a third party. Any applicant for first registration of title is notified to him/her whereupon he/she can take appropriate action to protect his/her interests.

Cesspits

If you live in the country in the UK you may not have access to public sewers so a cesspit captures sewerage from the property. Cesspits are typically emptied on a monthly basis.

Chain

Chain refers to a situation that occurs when a buyer is reliant upon completion of the sale of their existing property in order to complete on the purchase of the new property.

Charge

If a property owner uses his security in the property to service a loan, a charge is registered and certified. This entitles the lender to be regarded as a secured creditor who will be paid from the proceeds of a sale in the event of a default on the loan.

Charge Certificate

A certificate issued by the Land Registry to a lender giving evidence of the lender's charge over the property.

Chartered surveyor

A surveyor is someone employed to carry out a building survey to check for any problems with the property you are looking to buy. If a surveyor is “chartered” it simply means he/she is suitably qualified and a member of the Royal Institution of Chartered Surveyors (RICS).

Client money protection (CMP)

CMP is an insurance scheme that covers any money handled by your letting agent, whether you are a landlord, tenant or other client. Provided by professional bodies such as ARLA.

Collateral

Property pledged as a guarantee for the repayment of a loan.

Commission or Fee to the Estate Agent/Auctioneer

The sum of money paid to the agent, usually on completing the transaction on a sale or let property, although legally it is payable on exchange of contracts.

Common areas

Common areas are areas of land or buildings, such as gardens, hallways, recreational facilities and parking areas, where more than one resident shares access.

Comparative search

A comparative search looks at the actual sale values of similar properties in the same area as your property. This search is normally carried out by a surveyor and should give an indicative sale price for a property.

Completion

The completion date is the day on which money is transferred from the buyer's to the seller's solicitor. It is the date that the buyer becomes the legal owner of the new property and gains access to the property.

Completion statement

A document which your solicitor or conveyancer will provide as a record of all the financial transactions and costs.

Conditions of sale

The conditions of sale are the details that determine the rights and duties of the seller and buyer. These may be national, statutory or the Law Society's conditions.

Contents insurance

This is insurance which a tenant should consider to protect their belongings such as furniture, jewellery, pictures and items of value against fire, damage and theft. You should ask for it to include cover to re-house you in the event of fire or flood damage rendering the let property uninhabitable.

Contract

A contract is a legal agreement entered into by the vendor and purchaser of a property that only becomes binding on exchange of contracts, i.e. when both parties have signed the contract and the purchaser has handed over the agreed deposit (if any) to the vendor.

Contract Race

This involves two or more purchasers who want to buy the same property. Either purchaser or vendor can instigate it although usually it is the latter. The winner is the first purchaser to exchange contracts.

Conveyancer

A conveyancer is a qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.

Conveyancing

Conveyancing is the legal process transferring ownership from vendor to purchaser.

Council of mortgage lenders (CML)

The Council of Mortgage Lenders devised the Mortgage Code to ensure lenders treat customers fairly.

Council tax

Tax charged to the person living in the property such as the tenant (or property owner if the property is empty). It is a contribution to local services such as police, waste collection and the fire service. The council tax varies depending on the property’s value and is set annually by the individual Local Authority and paid monthly.

County Court Judgement (CCJ)

Whenever someone fails to pay for something and is subsequently taken to court, the magistrate may issue a County Court Judgement against that individual to pay the outstanding debt that will only be removed when the debt is cleared.

Covenant

The covenants are rules and regulations governing the property, contained in its Title Deeds or Lease.

Credit check

The procedure by which a check is made on the credit history of a mortgage applicant, usually conducted by one of the large dedicated credit check agencies on behalf of a prospective lender. The check will include items such as credit card repayments, outstanding debts, arrears and County Court Judgements.

 Credit history

A history of an individual's open and fully repaid debts. By checking a credit history it helps a lender to assess the likelihood that a prospective borrower will maintain their mortgage repayments.

Credit Rating

An assessment of a person`s likelihood of keeping up - or otherwise - on the repayments on thier loan. A credit rating is usually based on a person`s credit history.

Credit Reference Agency

A company that collects and stores financial and public records dealing with the payment history of a prospective borrower. Most lenders will employ a Credit Reference Agency to check your payment records as part of their assessment of your application.

Credit Report

A report prepared by a Credit Reference Agency and which details the credit history of an individual. The credit report will be used by a lender to help assess the applications of prospective borrowers.

Credit search references

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.

Debt Service Cover Ratio (DSCR)

The ratio of net operating income to debt payments on a investment real estate. It is a popular benchmark used in the measurement of an income-producing property's ability to cover its mortgage payments. The higher this ratio is, the easier it is to borrow money for the property.

Deeds

Deeds are legal documents proving ownership, generally held by the mortgage lender.

 

Deeds release or discharge fee

The fee charged by lenders at the end of a mortgage term to cover the administrative costs of transferring the property ownership documents to the borrower.

Delayed Completion

Completion can take place anytime after exchange of contracts. If this takes longer than 28 days it is referred to as delayed.

Deposit

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.

The Deposit Protection Service

The DPS is the only custodial scheme authorised by the Government; it is free to use and open to all landlords and letting agents. It requires a tenant’s deposit to be paid over to the DPS for the duration of the tenancy. This amount is then paid back at the end of the tenancy when an agreement between both parties has been reached.

Depreciation

Depreciation is the decline or reduction in the value of a property caused by changes in market conditions (the opposite of appreciation).

Detached

Term used to describe a property that stands alone and is separated from all others.

Development

A newly built residence or an older property that has been refurbished and modernised.

Dilapidations

This term principally covers proceedings whereby a landlord, by service of a ‘schedule of dilapidations’ seeks either to enforce a tenant’s repairing obligations under a lease of business premises, or claims compensation for lack of repair by the tenant at the end of the lease term.

    Disbursements

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.

Disbursements Fees

Disbursement fees are paid by the buyer's solicitor on the buyer's behalf - such as stamp duty, land registry and search fees.

Discounted Cash Flow (DCF)

A method of evaluating an investment by estimating future cash flows and taking into consideration the time value of money.

Discounted Rate

A mortgage with an interest rate lower than the lenders' Standard Variable Rate (SVR).

Down valuation

When the lender restricts the amount you can borrow after the surveyor's valuation report indicates the property is not worth the sum sought.

Draft contract

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.

Early repayment charge (ERC)

A charge levied by the lender as a penalty if a mortgage is paid off within a specified period.

Easement

A legal right that one person has over a property he or she doesn’t own. A positive easement is a right to do something on another person’s property. A negative easement is the right to prevent the owner of the property from doing certain things.

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortisation. EBITDA equates to operating revenue minus operating expenses plus other revenue.

 

 

Endowment mortgage

Interest-only repayments combined with monthly premiums into an endowment policy designed to pay off the loan at the end of the term.

Energy Performance Certificate (EPC)

A legally required assessment of how energy efficient a residential property is. It is valid for 10 years and is required for all properties that are advertised for sale or rent unless the property is a listed building. An EPC measures the energy efficiency of a property using a scale of A-G.

Engrossment

The formal and final version of a document prepared by a solicitor ready for signing and sealing following agreement of the final draft between the parties.

Enquiries

Questions which are raised by the buyer’s conveyancer, often about survey or property information forms.

Equitable Interest

Legal rights in a property that do not include the right to sell its legal title.

Equity

In housing terminology this is the difference in the value of the property and the amount outstanding on any loan secured against it. If the size of the outstanding loan is greater than the market value of the property, you have negative equity.

Equity Release

The mortgage taken out on a home that is already fully owned, typically in order to make use of the capital tied up in it.

Exchange of contracts

The point at which signed contracts are physically exchanged, legally binding the seller and buyer to the sale and purchase of a property at the agreed price.

Execution

Signing, sealing and delivering a deed in front of an independent witness.

Existing Liabilities

Your financial outgoings, such as loan repayments, regular fees or child maintenance before taking out a mortgage. Borrowers are obliged to disclose all such outgoings as part of the mortgage application process.

Financial services authority (FSA)

An independent body that regulates the financial services industry in the UK.

Fixed rate mortgage

A fixed mortgage is one in which the interest rate is set for an agreed period of time.

Fixtures and fittings

All non-structural items included in the purchase of a property, e.g. carpets, curtains, curtain rails, wall lights, cooker etc.

Flexible mortgage

A flexible mortgage is an arrangement whereby you can increase or decrease your mortgage.

Flying Freehold

A flying freehold is formed when part of a freehold property overhangs a different freehold property or land.

Freehold

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

Full Repairing and Insuring (FRI)

Refers to the lease terms obliging the tenant (as opposed to the landlord) to carry out all repairs and maintenance to the building both internally and externally. Many (but not all) leases to retail or commercial tenants are on this basis.

Gas safety record

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.

Gazumping

When a seller accepts a higher offer from a third party on a property that they have already agreed to sell to someone else prior to exchange of contracts.

Gazundering

A term used to denote a situation where the purchaser lowers his offer immediately prior to exchange of contracts.

Gearing

Using loaned funds to progress investments. For example, buying a house with a small deposit and the rest with a mortgage and then selling the property on at a higher price, making a profit. Leverage is another word for gearing.

GIA (gross internal area)

The GIA refers to the total area within the perimeter walls of a property and makes no allowance for the space occupied by staircases, walls, WCs etc. This measurement is the standard measurement given for industrial property.

Ground rent

Applies to Leasehold properties and is a sum paid annually to the Freeholder by the Leaseholder

Guarantor

A guarantor is someone who promises to pay the borrower's debt if the borrower defaults. 


Guide Price

Usually referred to in auction catalogues. The guide prices are often subject to change and are not necessarily what the property will sell for. Sometimes the reserve price is higher than the guide price.

Higher lending charge

An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value.

Homebuyer's survey and valuation

This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.

Household insurance

An insurance policy that protects against loss or damage to the property caused by fire, some natural causes and acts of vandalism.

 

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.

IFA

Independent Financial Adviser.

Illiquid

An investment is said to be illiquid if it can’t easily be turned back into cash quickly and at a low cost.

Improvement Grant

A grant made by the local authority towards the cost of repairing or improving property.

Inflation

Inflation is the general rise in prices over time.

Instruction

The term used when the estate agent is formally instructed by a property owner to market the property, usually by private treaty, in order to find a purchaser. The resulting contractual agreement confirms the terms under which the instruction is offered by the vendor and accepted by the estate agent.

Interest charges

Interest charges are the charges that banks make on a loan, calculated as a percentage of the amount borrowed.

Interest-only mortgage

An interest-only mortgage is a type of mortgage in which the borrower only repays the interest on the loan for the duration of its term and repays the full loan amount at the end of the mortgage period.

Internal Rate of Return (IRR)

This is used to measure development or investment opportunities. It takes into account all of the income streams, in terms of the initial outlay, net rental or other income, and growth in capital value of the asset. Most importantly it takes into account the timing of each payment or distribution.

 

Internal repairing (IR) lease

Under this type of lease the landlord retains responsibility for structural and external repairs without reimbursement. The tenant's only responsibility is for repairing the inside of the let premises and contributing towards the maintenance of any common parts via a traditional service charge.

Joint income

Joint income is the total gross income of the two borrowers in a joint mortgage.

Joint tenants

A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner's will).

Land Certificate

A certificate issued by the Land Registry as proof of ownership.

Land registration

The process of registering the legal title of an area of land with the Land Registry, typically handled by a solicitor.

Land Registry

A Government department where details of properties with a registered title are recorded along with any charges e.g. mortgages.

Land Registry Fee

A Charge Levied by a solicitor to register ownership of an area of land with the land Registry.

Lease

A contractually binding agreement that grants a right to exclusive possession or use of property, usually in return for a periodic payment called rent.

Leasehold

Leasehold is a type of ownership in which a person owns a property, but not the land on which it is built. The owner of the Freehold will grant a lease on the property for a specified length of time.

 

Legal charge

Legal charge is a mortgage on the property.

Lender

The party, typically a bank, building society or mortgage company offering the loan.

Lessor

The person/company who grants a lease i.e. the landlord.

Lien

The legal right of one person to hold the property of another as security for a debt.

Listed building

A building officially listed as being of special architectural or historic interest, which cannot be demolished or altered without prior local government approval.

Loan to Value Ratio (LTV)

Loan to value is the proportion of the value of the property on which the lender is prepared to loan.

Local authority search

Procedure whereby a buyer's solicitor checks with the local council regarding any outstanding enforcement or future development issues that might affect the property or immediate area.

Loan security valuations

Loan security valuations are arranged when you need to borrow money. Instruct a chartered surveyor to carry out a loan security valuation of your property to provide the valuation to your bank.

London Inter Bank Offered Rate (LIBOR)

The rate of interest at which banks offer to lend money to one another in the wholesale money markets in the City of London.

Maintenance charge (or service charge)

The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.

 

Maisonette

A maisonette is a self-contained apartment (usually on two floors) in a larger house with its own entrance from the outside.

Mezzanine floor

Mezzanine floor is an intermediate floor that can be installed post construction, height permitting, to provide additional storage / space.

Mortgage

A mortgage is an amount of money advanced by a lender such as a bank or building society on the security of a property and repayable over a long period of time.

Mortgage payment protection (MPP)

This is an insurance designed to pay your monthly mortgage for a limited period, usually a year if you are unable to work through illness, disability or redundancy.

Mortgage broker

Someone who advises buyers on the types of loans available and helps to process any subsequent application.

Mortgage deed

The mortgage deed is a legal document that confers ownership or title to a property.

Mortgage Indemnity Guarantee (MIG)

An insurance policy taken out by a lender against any loss caused by a mortgage default. MIG is typically required for loans with an LTV of 90% or higher. Also known as Mortgage Indemnity Fee and as Mortgage Indemnity Premium.

Mortgage Offer

The letter or advice from the lender offering a loan and setting out the terms and conditions upon which it is offered.

Mortgage rate

The standard variable interest rate quoted by all mortgage lenders, it normally varies in line with the Bank of England base rate. All discounted rates are based on this mortgage rate.

Mortgage term

The mortgage term is the period of time over which a mortgage loan must be repaid.

Mortgage valuation

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.

Mortgagor

The borrower and owner whose property is secured for the loan.

Multiple Agency

A situation where two or more agents are acting on behalf of the vendor. The agent who introduces a successful purchaser is the only one paid.

National Association of Estate Agents (NAEA)

NAEA is the UK's leading professional body for estate agency. Its international members are bound by strict rules of conduct to ensure they offer you the highest level of integrity and service, while the association's entry qualification means you can be sure you are dealing with an professional property agency. The Frost Partnership is a member.

National House-Building Council (NHBC scheme)

A type of building guarantee available on some newly built homes under which defects occurring within a specified time after construction are remedied.

Negative equity

A situation in which the value of a property has fallen to below the level of the loan secured on it.

NIA (net internal area)

The NIA is defined as the usable space within the perimeter walls of a property. It excludes areas such as the WCs, space occupied by solid dividing walls, staircases etc. NIA is the standard figured quoted for office space.

Net Present Value (NPV)

A method used in evaluating investments whereby the net present value of all cash outflows (such as the cost of the investment) and cash inflows (returns) is calculated using a given discount rate, usually a Required Rate of Return. A positive NPV means the investment is acceptable.

Nominal Interest Rate

An interest rate which has not been adjusted for inflation.

Non-Recoverable Expenses

Outgoings incurred by a landlord of a property which cannot be recovered from a tenant via, for example, a service charge. These may typically include property management and letting agency fees, an allowance for vacancies and rent arrears, an allowance to cover the costs of refurbishment of vacant units in order to re-let and possible certain items of maintenance cost depending upon what is referred to in the lease.

Offer

A sum of money that the buyer offers to pay for a property. Making an offer on the purchase price with the intention of purchasing Part-Possession: The term used when a property is being sold, where a tenant has legal right of occupation.

Offer of a loan

A formal document approving the mortgage you have requested and detailing the Terms and Conditions that will apply.

Open house (or open viewing)

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.

Open market value

The estimated amount for which a property should sell assuming there is a willing buyer and a willing seller involved in an arms-length transaction. This assumes there has been adequate marketing and that parties had each acted knowledgably, prudently, and without compulsion.

Peppercorn Rent

A term used to denote a trivial amount of ground rent.

Penalties

A specified charge that is levied by the lender under certain circumstances, usually for full or part repayment within a specific period linked to a discount, tracker, fixed or other product type.

Pied à terre

A property kept for temporary, secondary or occasional occupation.

Preliminary enquiries

A set of questions raised by the solicitor of the purchaser and sent to the vendor via his solicitor, prior to exchange of contracts. They ask for clarification of specific points about the property that is being sold and the present vendor's ownership of it.

Private Treaty (For sale by Private Treaty)

Sale of a property by private treaty is the method employed by most estate agents, preparing descriptive details of the property and quoting a definitive asking price. Details are circulated – by post, email, website, local paper etc: potential buyers may view the property and either agree to buy at the asking price or submit an offer to purchase. Agreement to buy at this stage (for England and Wales) is subject to formal contracts being prepared and those contracts being signed and exchanged between the vendor and the purchaser.

Probate

The official process of proving the validity of a will. In many cases part of the estate will involve a property, which might need to be valued for Inheritance Tax purposes. A probate valuation is generally a negotiated value with the district valuer representing the Inland Revenue. A sale cannot proceed to exchange of contracts until probate has been granted.

Property Alerts

Automatic email property alert service provided by The Frost Partnership, highlighting properties you might be interested in.

Property auctions

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

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.

Public liability insurance

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

Purchaser

A purchaser is a person who is buying a property.

Rate

The annual rate, expressed as a percentage, of interest on a loan.

  Real Estate Investment Trusts (REITs)

These are pooled funds allowing investors to buy into property without actually owning buildings. The funds can invest in commercial and residential property and do not pay tax on rental incomes or capital gains on properties within the fund, but the investor pays tax on dividends and unit appreciation.

Real Interest Rate

The rate of interest, less the current rate of inflation. For example, if a bank account pays 6% interest and inflation is 3% then the real rate of interest is 3%.

Redemption Penalty

A penalty levied by the lender when the borrower pays off a mortgage.

Registered Land

Land (including buildings on it) the title to which is registered at the Land Registry and legal ownership is guaranteed.

Re-mortgage

Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to take advantage of any equity gained by a rise in value.

Rent guarantee

Rent guarantee is an insurance that landlords take out to protect from loss of rent or fees involved with evicting non-paying tenants.

Repossession

The legal procedure by which a defaulting borrower is deprived of thier interest in the mortgaged property, typically involving the forced sale of the property at public auction.

Reserve Price

Usually referred to in an auction catalogue as the minimum price at which a seller is willing to sell.

Retention

An amount held back from the initial loan by the Lender until certain repairs or improvements have been completed or in some cases to cover possible road charges on a new estate.

Right of Way

An individual's legal right to use a particular part of a property, in order to gain access to any particular part of his own property.

Royal Institution of Chartered Surveyors (RICS)

RICS is one of the most respected organisations for professionals involved in land, property, construction and associated environmental issues. With around 100,000 qualified members in some 140 countries, RICS is one of the most respected organisations and globally recognised. Our Surveyors are members of the Royal Institution of Chartered Surveyors, qualified to carry out surveys and valuations on commercial and residential properties throughout the UK and certified to carry out the popular RICS approved Homebuyers reports and valuations.

Searches

A term used to denote the physical and written procedure for determining any adverse effects in or on a particular property, whether already in effect or planned to take place.

Self Certification

A mortgage intended for borrowers who are unable to categorically prove thier income by conventional means such as payslips and fully audited accounts, but can provide alternative evidence and thereby demonstrate the level borrowing is affordable. Typically the lender will charge higher rates of interest, or require a larger deposit.

Self Invested Personal Pensions (SIPPs)

SIPPs allow complete control over pension savings and where they are invested. SIPPs may be used to invest in stocks and shares, government securities, unit trusts and investment trusts. SIPPs may also be used for commercial property, insurance company funds, traded endowment policies, deposit accounts with banks and building societies, and National Savings products. They may, under certain circumstances, be used for residential property investment.

Semi-detached

A property that is joined to one other house.

Senior Debt

Debt that has priority of claim ahead of other financial obligations.

Service charge

Service charges are paid by the owner and cover the cost of providing various services (i.e. maintenance and repair of the building and common parts, provision of heating, lighting and security).

Shared Equity

A Scheme whereby a borrower purchases part of a property and the other part is purchased by a third party, such as a housing corporation. A shared equity scheme differs from shared ownership in that no ongoing rent is paid to the third party. However, any future increases to a property`s value results in the third party`s share of equity in the property increasing proportionately. In other words, a borrower does not fully benefit from future increases in a property`s value.

Share of freehold

Where the freehold on which the property stands is owned by a limited company and the shareholders of that limited company are the owners of the property.

Sitting Tenant (Tenant in situ)

A sitting tenant occupies the property as a tenant, and has legal rights without a lease. Any sale would be subject to any rights of a tenant who has occupation. A property with a sitting tenant can often have a much reduced asking price.

Sole agent

When a seller chooses only one estate agent to sell their property.

Sole occupancy

Sole occupancy is a property that is occupied (lived in) only by the mortgage applicant(s) and their direct family.

Sole Selling Rights

Where one agent has complete control of the sale, and is entitled to his fee however the property is sold.

Solicitor

A solicitor is a legal expert handling all documentation for the sale or purchase of a property.

Stamp duty

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%.

Standard Variable Rate

The standard interest rate (SVR) set by lenders, and which is subject to increasing or decreasing at the discretion of the lender. The standard variable rate often applies at the end of any fixed, capped or discounted period.

Structural Survey

A survey of the condition of a property, undertaken by a qualified surveyor, and for which the surveyor is responsible. A structural survey is the most detailed - and most expensive - of the property reports available. Also known as a "Building Survey".

Studio flat

A studio flat consists of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.

Subject to contract

Legal terminology that indicates an agreement is not yet legally binding and depends upon the terms yet to be agreed within the contract.

Subletting

Where the tenant lets part or all of the premises to a subtenant, as permitted by the terms of the lease. It differs from assignment in that the head lessee remains responsible to the landlord for the payment of rent and fulfilment of other obligations.

Sub-Prime Loans

Loans or mortgages given to borrowers with poor credit records who are often unable to obtain more conventional loans. Borrowers put down little or no cash themselves.

Superior Lease or Head Lease

This is the lease that the landlord holds. This is often the case in a property where the owner has the leasehold interest, but another individual owns the freehold. There is then this lease under which the Property owner is responsible for the obligations/covenants. When a property is let the tenant renting also has to comply with any of these obligations - e.g. not to hang out washing on a balcony etc.

Surveyor

A professional person qualified to estimate the value and condition of land and property.

 

 

Tenancy agreement

This is the legal document that agrees the terms and conditions of letting a property between a landlord and tenant. The agreement explains the rent to be paid, the date it should be paid, the rights and responsibilities of a landlord and tenant and under what circumstances the agreement can be terminated.

Tenancy at Will or Licence

After contracts are exchanged a purchaser may seek to take possession of a property before financial and legal completion. This could be to carry out repairs and decorations or to take up residence early. This can often be organised and a licence arranged between both parties' solicitors. The purchaser paying an appropriate rate of interest on the balance of the outstanding monies (i.e. purchase price less deposit paid) instead of rental.

Tenancy Deposit Scheme (TDS)

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.

Tenant

A person or organisation who is entitled to occupy a property under the terms and conditions of a tenancy agreement.

Tenants in common

A form of ownership by two or more people in which if one of them dies, their share of the property forms part of their estate and does not automatically pass to the other(s).

Tender – For Sale by Tender

This is the situation where the asking price is not actually stated, but offers are invited. Details of the property are prepared, circulated and advertised and the closing date for the tender is noted. In most cases the vendor will reserve the right to refuse the highest offer, thereby not being committed to sell. Offers tendered are usually opened in the presence of the vendor's solicitors, at a prescribed date and time. An acceptance of an offer by the vendor constitutes an immediate contract, and in most cases, the party tendering will have made their financial arrangements and have had a structural survey carried out in advance.

Tenure

Refers to whether a property is freehold or leasehold.

 

 

Terraced house

A property that forms part of a connected row of houses separated only by shared dividing walls.

Title – Absolute

The highest form of tenure available.

Title – Abstract

A summary of title documentation used in the Conveyancing of unregistered properties to prove that the vendor has the right to sell.

Title Deeds

These are legal documents describing the rights and liabilities that are attached to the property and prove ownership of property.

Title insurance

An insurance policy which a buyer can take out to allow a sale to complete where there is a potential problem with the documentation in proving legal ownership of some part of the land they are buying.

Title Report

Solicitors' certificate confirming that the title of the property is acceptable. A Lender must have a Title Report before an advance cheque for the mortgage monies can be issued.

Title search

An investigation carried out by a conveyancer or solicitor into the history of ownership of a property. The search will check for liens, unpaid claims, restrictions or any other problems that may affect ownership.

Tracker mortgage

A type of mortgage whereby any changes in the rate of interest charged follow exactly ('track') another, specified, interest rate or index. Typically a tracker mortgage will track the Bank of England base rate.

Transfer deeds

The Land Registry document that transfers legal ownership from seller to buyer.

 

 

Under offer

When the vendor has accepted an offer for his home but contracts have not yet been exchanged. Either party may still withdraw from the transaction. The agent will often display a board saying "Sold subject to contract" at this point.

Underpayment

Situation where repayments are reduced so that the mortgage is not repaid by the end of the agreed term. Some mortgages (flexible mortgages) allow for a specified level of underpayment.

Unencumbered

A property that has no loans or borrowings secured on it.

Vacant Possession

The previous occupants must vacate the property before you move in, including any tenants.

Valuation (or market appraisal)

A term often used by estate agents to cover the process of them giving an opinion of the open market value of a property.

Valuation (Mortgage)

A simple survey carried out on a property for the benefit of the lender. Because the report is carried out for the lender, if the surveyor makes a mistake you have no legal claim against him. Mortgage lenders will insist on this before lending.

Valuations for litigation or matrimonial proceedings

Property valuers undertake valuations in connection with matrimonial proceedings.

Value

The price of a property under normal conditions, i.e. when the buyer is not forced to buy and the seller not forced to sell.

Variable base rate

The basic rate of interest charged on a mortgage. This may change in reaction to market conditions so monthly payments can go up or down.

Vendor

The owner of the property to be sold.

Victorian period property

A property built between approximately 1837 -1901.

Writ of Summons

Mode of commencing legal proceedings.

Yield

Refers to the financial income from an investment. The income yield on an investment is the annual dividend or interest payment, multiplied by 100 and divided by the market price.

Yield – Net

Rate of return on an investment after subtracting all expenses, such as commissions, costs of purchase, and taxes.

Yield – Gross

The return on an investment before deducting costs or losses incurred in procuring and managing the investment.

 

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