When it comes to buying a house, there can be a lot to get your head around; lengthy contracts, difficult to read paperwork and not to mention the confusing language - what does it all mean?
Here is a list of terms that will help you get to grips with the jargon...
Vendor: this is another term for the seller.
Freehold: a type of ownership which means you own the building and the land it sits on.
Leasehold: this is where you own the property but not the land it is built on – for example, you may own a flat, but not the building it sits in. (See my Blog on Tenure)
Flying Freehold: a legal term to describe a freehold property which overhangs or underlies another freehold. Common cases include a room situated above a shared passageway in a semi-detached house, or a balcony which extends over a neighbouring property and of course the Hebden Bridge under and over-dwellings.
Conveyancing: a legal description of the work that is done in order to transfer ownership of a property from one person to another. this can be undertaken by a solicitor or a Licensed Conveyancer.
Property Information Form (PIF): a standardised questionnaire, completed by the seller, giving information about the property.
Official copy entries: official copies of the registered title to a property, obtained from the Land Registry.
Bridging loan: a temporary short-term loan which enables a buyer to purchase a property before selling their existing property.
Equity: equity, or capital, represents the amount of money a homeowner has put into a property. This value is built up over time as the owner pays off the mortgage and the market value of the property appreciates
.
Off Plan: when a property is bought at the planning stage before it has actually been built.
Mortgage Valuation: a report for the mortgage lender to assess the market value of a property and ensure they are lending appropriately.
Home Buyers survey: a survey report for buyers, that will assess the condition of a property and identify any problems, defects and unwelcome hidden issues both inside and outside the property. It will often include a valuation too.
Building survey: a comprehensive report into the physical state of the property, this is also sometimes referred to as a full structural survey.
RICS: Royal Institute of Chartered Surveyors.
Buy To Let: acquiring a property as a commercial venture, to Let Out and not live in oneself.
Mortgage Offer: a formal written offer to lend money on a property. The Mortgage Offer will contain all the terms and the conditions upon which the money is loaned.
Mortgage Deed: a document the borrower signs to agree to the terms set out in the Mortgage Offer. This document is sent to the Land Registry who register the Mortgage as a Financial Charge on the property which is shown in the Charges Register.
Covenant: a covenant is a provision or promise that has been written into a deed which may affect or limit the use of the property or land. There are two different types of covenant, positive and restrictive. A positive covenant is an obligation which requires some form of action (such as maintain a fence or wall), whereas a restrictive covenant limits or prevents the use of land in a specified way.
Easement: an easement is the right of one landowner to make use of another nearby piece of land for the benefit of his own land, for example, a private right of way.
Chain: a chain is formed when several property sales and purchases are connected and inter-dependent on one another.
Environment search: a search that the conveyancer carries out, to check whether there are any environmental issues affecting a property. These may include matters such as flooding, contaminated land and landfill.
Drainage/water search: a search carried out by the conveyancer for the purchaser to check whether the property is connected to mains water and drainage and whether there are any other issues relating to drainage/water affecting the property.
Mining search: a search to identify whether a property is located over or close to disused mine shafts or located in an area with active or historic mining (coal, tin etc) which may affect the property.
EPC: an Energy Performance Certificate (EPC) shows the efficiency of a property and gives an indication of how much the energy bills will cost. It is displayed as two graphs – the energy efficiency, and the environmental impact of the property. Each is graded from A (the best) to G (the worst).
Under offer: if a property is under offer it means that the seller has accepted an offer from the buyer but the contracts have not yet been exchanged.
Exchange of contracts: the point where both parties are committed to the transaction and it becomes legally binding; both the buyer and seller can walk away at any point before the contracts have been exchanged.
Completion date: when the transaction is to conclude and ownership of the property passes from the seller to the buyer. Normally, the vendor’s solicitor will ask the estate agent to release the keys to the buyer at this time.
Snagging: snagging is where the developer of new build properties touches up paintwork, adjusts appliances and fixes any other faults within the property. A snagging survey is usually completed prior to the buyer moving in, in order to spot minor cosmetic issues and check the quality of workmanship.
Stamp Duty: a lump-sum tax that anyone buying a property or land over a certain price in England, Northern Ireland and Wales must pay. The current threshold for residential properties is £125,000 and £150,000 for non-residential land and properties, however the rate you pay will vary depending on the overall purchase price and your personal circumstances.
Land Registry: HM Land Registry is the Government office charged with authenticating sales of property and transferring the property into the Buyers name. The Land Registry holds the records of all property in the United Kingdom. All purchases must be registered at the Land Registry for which a fee is payable.
Base rate: the interest rate which is set by the Bank of England for lending to other banks. It is generally used as a benchmark for the interest rates banks charge when lending money to customers.
Fixed rate mortgage: with a fixed rate mortgage, you pay a set rate of interest on your mortgage for a fixed period, so you know exactly what you'll be paying each month.
Tracker mortgage: this is a mortgage with an interest rate linked to the Bank of England rate, or another base rate. The interest rate will go up and down depending on this rate, irrespective of the mortgage lender.
Variable rate mortgage: with a variable rate mortgage, the interest rate can change at any time. They are partly influenced by the Bank of England base rate but other factors come into play as well. The interest rate you pay on a variable rate mortgage can change even without base rate moving and similarly base rate might come down but your mortgage rate stays the same.
Redemption Figure: the repayment amount needed to pay off an existing mortgage on a property, usually the amount of debt outstanding plus any fees.
Retention: where the lender holds part of the mortgage advance back until specified repair works to the property have been completed.
Chancel Repair Liability: an ancient law, which still crops up, whereby a homeowner can be asked to pay towards repairs of a local parish church.
Indemnity Insurance: an insurance policy to cover a defect relating to the property or title. It will cover the buyer and mortgage lender in the event of any loss of value to the property due to this defect.
Radon: Every home contains radon but the levels are usually low. It is a radioactive gas formed from the uranium found in rocks and soils and the chances of a higher level depend on the type of ground. The amount of radon varies over time and from room to room in a home. Testing can be done but requires over three months to allow for variations in levels. Radon detectors are available for monitoring levels.
Deposit: sum of money usually 10% of the Purchase Price paid the buyer to the Seller’s solicitor on exchange of contract. Non-refundable if the Buyer does not proceed on completion day.
Fixtures & Fittings: generally speaking a fixture is understood to be any item that is fixed to the floor or walls, and a fitting to be any item that is free standing or hung by a nail or hook. There are no set rules as to what sellers need to leave behind but they do have to itemize exactly what is and what is not being left in the sales contract.
Gazumping: when a seller withdraws from a sale in favour of a newer often higher offer for the property.
Gazundering: when a buyer decides to reduce their offer at the last minute, pressurising the seller to accept a lower offer or risk jeopardising the sale.
Subject to contract: an agreement that is not yet legally binding, in conveyancing this is up until an exchange of contracts.
You may have more jargon that needs busting - just ask us!
Tel: 01422 842007
Email: enquiries@clairesheehan-estateagents.co.uk