Jargon Buster
As if the whole experience wasn’t daunting enough, you’re bound to hear a lot of property jargon being thrown about. We promise this isn’t just used to confuse you! However, we have compiled a short list of property terms to help assist you with the house buying process:
Anti-money laundering checks: Identity, address and financial checks completed to help prevent money laundering and property fraud.
Annual percentage rate of charge: The estimated total yearly cost of a mortgage, including interest and certain fees, shown as a percentage.
Chain: The sequence of buyers and sellers; most people who sell their property are also buying at the same time. Therefore, a chain can involve multiple sellers who depend on each other to complete their sales and purchases. For example, if one buyer or seller drops out, the chain may collapse, delaying or cancelling the paperwork for the properties in the chain.
Chain Free: This is when the owner of the property does not need to sell the property to buy another; therefore, it is offered as chain free.
Completion Date: The date when the transaction (either the sale or purchase of a property) is completed, i.e. the date you become the owner.
Completion Statement: A statement from the solicitor detailing all financial transactions, including all costs.
Conditions of Sale: The terms by which the buyer and seller agree to sell/buy the property. The Law Society sets standard conditions. The lawyer sets special conditions.
Contract: The legally binding agreement specifying details of the house sale or house purchase. The contract legally commits both the buyer and the seller to the transaction. The house seller’s conveyancing lawyer draws up two copies of the same contract, and each party signs their own copy. When both parties are ready to legally commit, the two contracts are exchanged.
Conveyancer: The property lawyer who manages all of the matters arising from the sale of a house or the purchase of a house. Can be a solicitor or a licensed conveyancer.
Conveyance or Transfer: The legally binding document that transfers the rights, burdens and the benefit of the land.
Council for Licensed Conveyancers: A regulatory body for conveyancing with whom all conveyancers should be registered.
Deeds: A legal title document that provides historical information about the property.
Deposit: The amount paid to exchange contracts. Only refundable in exceptional circumstances. Contracts provide for 10% of the purchase/sale price, but this can often be negotiated down.
Disbursements: Out-of-pocket expenses paid by the solicitor/licensed conveyancer on the buyer’s behalf, such as stamp duty, land registry charges and search fees.
Early repayment charge: A fee that may apply if you repay, overpay or change your mortgage before an agreed period ends.
Easement: A right given to the house owner over an adjoining property (e.g. right of way).
Equity: This is what you actually own – the difference between the market value of your property and the amount of the loan you still owe to your lender.
Exchange of Contract: The point at which both parties are committed to the transaction.
Fixtures and Fittings: A list of the items at the property, which are either included or excluded from the agreed price.
Flexible Mortgage: Mortgages that are flexible in terms of how you pay the loan back.
Freehold: One of the two current tenures of land recognised by English law. This recognises the whole of the land, not just a building.
FSA: The Financial Services Authority (FSA) is an independent body concerned with consumer protection in the financial market.
Gazumping: When the house seller accepts a higher price offer from another house buyer after the initial offer has been accepted.
Gazundering: When a buyer reduces their offer shortly before contracts are exchanged.
Ground rent: A payment that some leaseholders must make to the freeholder under the terms of their lease.
Indemnity Insurance: A policy that can protect the property owner or mortgage lender against financial loss caused by certain legal issues, such as missing building regulations approval, restrictive covenants or unclear access rights. It does not correct the underlying problem, and coverage depends on the individual policy.
Land Registry Fees: Fees paid by your conveyancing lawyer on the buyer’s behalf to register the ownership of property with the Land Registry.
Land Registry: A government office that stores records of land ownership and any charges, like a mortgage.
Leasehold: The second current tenure of land recognised by English law. This is for a term of years, not unlimited. There will be a Landlord who will own the freehold. This usually relates to a flat or apartment.
Lease length: The number of years remaining on a leasehold property’s lease.
Licensed Conveyancer: A licensed conveyancer is a specialist property lawyer, trained and qualified in all aspects of property law. Licensed conveyancers provide adequate consumer protection and ensure conveyancing services are delivered economically and efficiently.
Loan-to-value: The mortgage amount shown as a percentage of the property’s value.
Management pack: Documents provided by the freeholder or managing agent that contain information about a leasehold property, its charges, and management.
Memorandum of sale: A document confirming the agreed price and the details of the buyer, seller and their legal representatives.
Mortgage Deed: The legal agreement that gives the lender a legal right to the property.
Mortgage Fees: Normally charged by your financial advisor. These cover their work on behalf of your bank or building society.
No onward chain: The seller does not need to complete the purchase of another property before selling their current home.
Redemption Fee: An early repayment charge that your existing mortgage lender can charge if you pay off your mortgage early or move to a different mortgage.
Restrictive covenant: A legal condition that limits how a property or piece of land can be used or altered.
Searches: A method of checking matters that may affect the value of the property. The only obligatory one before an exchange is a Local Authority Search, which covers items such as road maintenance and planning applications. The search covers the property, not the surrounding area.
Service charge: A payment towards maintaining, repairing, managing or insuring shared areas and services.
Sold subject to contract: The seller has accepted an offer, but the sale is not legally binding because contracts have not been exchanged.
Source of funds: Evidence showing where the money being used for the deposit or property purchase has come from.
Stamp Duty: Stamp duty has changed significantly, and the current rates run until 31st March 2021.
In one of the biggest changes to the property market in some time, Chancellor Rishi Sunak has introduced a stamp duty holiday that is now in place and runs until 31st March 2021. This £4bn stimulus to the property market has a single purpose: to stimulate the market and encourage potential buyers onto the property ladder.
“The average stamp duty bill will fall by £4,500 and nearly nine out of 10 people buying a main home this year will pay no stamp duty at all,” said Sunak in his summer statement.
Click here for more information
Survey: A report produced by a building surveyor for the purpose of determining the value of the property and if it is structurally sound.
Subject to Contract: A provisional agreement between the house buyer and the house seller that is not legally binding.
Tenure: The legal way a property is owned, such as freehold or leasehold.
Title register and title plan: Land Registry documents showing ownership, registered rights and restrictions, and the property’s general boundaries.
Transfer Document: The final document that transfers the property from the house seller to the house buyer.
Under offer: An offer is being considered or has been accepted, but the parties have not exchanged contracts.
Vacant possession: The property will be empty of occupants and belongings on completion, apart from anything agreed to remain.
Valuation Survey: A survey to allow a property value to be determined for mortgage purposes. This is not to be confused with a structural survey.
Vendor: Another term for the person selling the property.
White Hot Property: A property that has been acquired by a developer or financial institution as part of a part-exchange, repossession or probate transaction and is priced to achieve a quick sale.
Cardwells Estate Agents has offices in Bolton and Bury, and our sales areas cover much of Lancashire. We have property for sale around the North West, including Manchester. We will be happy to help with any part of the home-buying process, whether you just need some advice on the jargon or you’ve set your heart on a property but aren’t sure what to do next. Call one of our branches (we also cover Walkden and Worsley) or visit us to see exactly what we can do for you.