Property Jargon - What Does Your Agent/Solicitor Mean?

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.

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

The document you need to sign when accepting a lender’s mortgage offer.

Annual Percentage Rate (APR)

The total cost of a loan, taking into account interest charges, arrangement fees and other costs, shown as a percentage.

Appraisal 

An old-fashioned word meaning an estimate of a property’s current value according to an estate agent or surveyor.

ARLA Propertymark

The ARLA Propertymark (formally the Association of Residential Letting Agents), is the UK’s foremost professional body for letting agents.

Arrangement fees

These are fees charged by a mortgage lender or broker to arrange a loan.

Arrears

The amount of money that is overdue on your mortgage. If left unpaid it may result in the lender repossessing the property.

Asking price

The price a seller is hoping to achieve for their home.

Assignment

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

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

Method of sale whereby a property is sold to the highest bidder. If the reserve price (the minimum the owner is willing to sell the property for) is not reached, then it remains unsold.

Base rate

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”.

Break clause

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.

Bridging loan

A temporary short-term loan enabling someone to purchase a property before selling his or her existing property.

Building inspection/Structural survey

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).

Buildings insurance

An insurance policy that covers any structural damage to your property from events such as a fire or flooding. If you need a mortgage, building insurance will be a condition of the loan.

Buyer

Straightforward. The person who is buying a property (also known as the purchaser).

Buy-to-let mortgage

A mortgage designed specifically for buying a property that will be rented out, usually for investment purposes

Capped rate

The highest interest rate or ‘cap’ you will pay on your mortgage for an agreed period – usually the first few years of the loan.

Capital

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.

Chain

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.

Charge

The ‘hold’ a lender has over the equity in your home. For example, if you owe ￡40,000 and fail to keep up repayments, you can be forced to sell your home to repay the debt.

Chartered surveyor

A surveyor, accredited by the Royal Institute of Charted Surveyors (RICS), who is employed to carry out a survey on a property.

Closing date (Scotland only)

A time and date by which your solicitor must submit the buyer’s best offer in writing to the seller’s solicitor.

Commission

The fee payable to an estate agent – typically a percentage of the property price.

Completion

The point at which the sale of the property is concluded and the buyer receives the keys.

Completion statement

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

Compulsory Purchase Order

Often referred to as a CPO, a Compulsory Purchase Order allows local authorities to purchase property regardless of whether the owner wants to sell. However, the CPO must demonstrate how the purchase would benefit the public and adequately compensate the homeowner.

Conditions of sale

The specific items in a sale contract that govern the rights of the buyer and the duties of the seller.

Condition report

A clear ‘snapshot’ of the condition of your potential purchase. It’s the most basic level of survey you can buy and is suitable for new-build homes and properties in good condition.

Contents insurance

An insurance policy designed to cover any loss or damage to your possessions such as furniture, tech and appliances. It’s not essential but is often a good idea whether you own your home or rent.

Contract

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.

Contract race

Where two or more purchasers are given a draft contract and the first one to exchange contracts buys the property.

Conversion

Changing a property or room from one use to another. For example, converting a church into a home, converting a house into flats, or converting a loft into a bedroom.

Conveyancer

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.

Conveyancing

The legal process of transferring the ownership of a property.

Covenants

Rules governing the property in its title deeds or lease.

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.

Date of entry (Scotland only)

The date on which you become the owner of the property and can move in, having paid all money due.

Declaration of trust

An agreement drawn up by the conveyancer sets down ‘who gets what’ if the property is sold or one owner buys out the other. It’s a good idea for cohabiting couples or friends buying together.

Deeds

The legal documents that prove the ownership of the property.

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 a tenancy deposit protection scheme authorised by the Government; it is free to use and open to all landlords and letting agents. The custodial version of the scheme 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, providing the tenant has paid rent and bills, has not damaged the property and met the obligations of their tenancy agreement. The DPS also offers an insured option whereby the deposit is held by the landlord or the agent and the tenant pays the scheme to insure it.

Detached

Refers to a property that stands alone and has no shared walls with an adjoining property.

Default

When a borrower fails to make the agreed payments. Usually this applies to a mortgage, but can apply to any kind of loan.

Development

Properties that have been newly built or have recently undergone a sizeable refurbishment.

Dilapidations

Items that have been damaged during a tenancy. The tenant is usually responsible for the cost of repair or replacement.

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.

Disposition (Scotland only)

The new title deed, which is required in order to transfer the title of the property into your name.

Doer-Upper

An older property in need of some maintenance.

Downpayment

The amount paid by the buyer to the seller on exchange of contracts to secure a property – usually 10% of the purchase price. Also known as a deposit.

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.

Duplex

A flat that is split over two floors.

Early Redemption Charge

Often abbreviated to ERC, this is the financial penalty you’ll be charged to terminate a mortgage deal early – for example, in year three of a five-year fixed mortgage.

Easement

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.

Edwardian

Properties built between 1901 and 1910 during the reign of King Edward VII. Typical features include red brickwork, wooden doors with stained glass windows, elegant carved wooden porches, sash windows, dark wood floors, and decorative fireplaces.

End-of-terrace

The last house in a row of similar houses that are joined together.

Endowment mortgage

An interest-only mortgage that is combined with monthly payments into an endowment policy. The loan is paid off in a lump sum at the end of the term. Endowments have received bad press in recent years as many fell well short of their forecast value.

Enquiries

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

EPC

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).

Engrossment

The final version of a document (usually a deed or statute) prepared by a solicitor.

Equity

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.

Equity release

A type of scheme which allows you to release some of the equity in your property through either a lifetime mortgage (where you borrow against a percentage but the loan’s not repaid until you die) or a home reversion plan (where you sell a percentage). Only available to the over-55s.

Estate agent

The person who advertises and arranges viewings of a property on behalf of the seller. Fees are usually charged as a percentage of the selling price, although online agents offer upfront packages.

Excess

The agreed fixed sum that you’ll have to pay if you make a claim on an insurance policy. 

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.

First-time buyer

Usually refers to someone who is buying their first property. However, it can also be used to describe someone who is buying a home without selling one.

Fixed price (Scotland only)

The price the seller should accept for their property, although there is no guarantee and it might be possible to negotiate.

Fixed rate mortgage

A mortgage deal that comes with an interest rate that’s 'fixed' for an initial defined period, typically for two, three or five years.

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.

Floorplan

A drawing that helps establish the dimensions of a property (although it may not be done to scale).

Flying freehold

When part of a freehold property overhangs or underlies another freehold, such as when a room is situated above a shared driveway or a balcony extends over another property.

Freehold

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.

Further advance

Extra money provided by a lender to a borrower and secured on the property as part of the mortgage debt. This may or may not be at the same interest rate.

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

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.

Gazundering

Where a buyer reduces their offer just on the point of exchanging contracts.

Georgian

Homes built between 1714 and 1830 during the reigns of King George (I to IV). Typical features include stucco fronts, tall sash windows and ceilings with decorative plasterwork.

Ground rent

The annual charge levied by the freeholder on the leaseholder of a property.

Guarantor

Some 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.

Help to Buy

Help to Buy is a government scheme aimed at helping people with small deposits to buy their first home or move up the property ladder by providing an equity loan of up to 20%. It only applies to new-build properties. The current scheme is available until March 2021 when it will be replaced by a different one which will last until 2023.

Help to Buy ISA

The Help to Buy ISA closed on 30 November 2019 to new applicants. It is a tax-free savings account designed to give first-time buyers saving for a deposit a cash boost. For every ￡200 saved into a Help to Buy ISA, the government will throw in an additional ￡50. The maximum bonus you can receive is ￡3,000, which would apply to savings of ￡12,000. So if you are a first-time buyer saving for a deposit of up to ￡15,000, you’ll be able to reach your target faster. 

HomeBuyer Survey/Report

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).

Home Report (Scotland only)

Information on the property, which contains a property questionnaire prepared by the seller, a report on its condition and an energy report.

Houses in Multiple Occupation (HMO)

If a home has at least three tenants which form more than one household and the toilet, bathroom or kitchen facilities are shared, it’s classed as a HMO. Examples include a house split into separate bedsits, hostels and shared accommodation for students.

Improvement grant

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

Independent Financial Adviser (IFA)

Looking for help with your finances? An independent financial adviser offers unbiased and unrestricted advice from the whole of the market. They’ll also have to tell you upfront how they charge.

Individual Savings Account (ISA)

The interest paid on cash ISAs is free from tax, so you keep all the interest earned. You can save a set amount into an ISA every year (which runs April 6 to April 5).

Inventory

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.

Instruction

When a property owner asks an estate agent to market their property for sale.

Interest

That unavoidable part of a mortgage or loan. Expressed as a monthly fee or annually (see APR), it is the fee charged by a lender to the borrower as compensation for the loss of the asset (usually either cash or consumer good). Interest is calculated as a percentage of the amount borrowed or the amount outstanding.

Interest-only mortgage

Mortgage where only the monthly interest charges are repaid initially. The mortgage amount itself i.e. the ‘capital’ is not paid off. The full mortgage must be repaid at the end of the term, though often through an ISA, endowment policy or pension plan. This type of mortgage has become more difficult to obtain since the Mortgage Market Review in 2014.

Joint Agents

Two estate agents jointly instructed by a seller to market a property.

Joint Tenants/ Joint Tenancy

Equal holding of a property between two or more persons. If one party dies, their share passes to the survivor(s).

Land Registry

A government office which is responsible for holding records of land ownership and any charges, including mortgages, against the property.

Land Registry fee

A fee charged by the Land Registry to record the change of ownership of a property.

Lease

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.

Leasehold

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, 250 or 999 years. Short leases are unattractive to mortgage lenders, with anything lower than 60 years likely to be difficult to mortgage.

Lender

Institution that lends funds to assist the borrower with a property purchase.

Lender's legal fees

Fees incurred by the lender in arranging a mortgage that are passed on to the borrower

Listed building

Buildings of special architectural or historic interest. A listed building may carry certain obligations and restrictions governing its use, repair, and maintenance.

Loan-to-value (LTV)

Percentage indicating the ratio of a mortgage loan on a property to its market value.

Local authority search

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.

Maintenance charge or service charge

Many leasehold properties (especially flats) are subject to such a charge which pays for items such as the insurance and maintenance of the building.

Maisonette

A flat with its own private entrance.

Missives (Scotland only)

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.

Mortgage

Long-term loan obtained from a bank or building society which is used to fund the purchase of a property where the property is held as security. You will need to prove an income and a good credit score.

Mortgage Deed

Document containing the terms and conditions of a loan secured on a property.

Mortgage Indemnity Guarantee (MIG)

Fee levied by lenders to protect them against the borrower defaulting. They are very rarely, if ever, charged now.

Mortgage term

The period over which a mortgage will be repaid. Traditionally this was 25 years, but depending on age this can go up to 30.

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.

Multiple agency

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.

NAEA Propertymark

The NAEA Propertymark (formally the National Association of Estate Agents), the UK’s leading professional body for estate agency.

Negative equity

Where the sale value of a property is less than the amount outstanding on the mortgage.

NHBC (National House Building Council) Scheme

A guarantee offered on some newly built homes for structural defects occurring within a specified time after construction.

Note of interest (Scotland only)

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.

Offer

Indication from a potential buyer of a willingness to purchase a property at an indicated price. An offer is not legally binding in England and Wales and can be withdrawn or changed at any time prior to exchange of contracts.

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 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.

Peppercorn rent

A very low sum of rent or ground rent. In the past it was, literally, a peppercorn.

Pied-a-terre

Literally translates to ‘foot on the ground’ but normally refers to property that is kept for temporary or occasional occupation. They are often used for part of the working week or year as a secondary residence.

Preliminary enquiries

When a sale is agreed, the buyer’s conveyancer will send the seller’s conveyancer a standard list of questions about the property.

Premium

Amount payable on an insurance policy, usually paid monthly.

Private treaty

The traditional means of buying and selling property, ie, where the price and sale terms are negotiated directly between the seller and purchaser or their estate agent.

Probate

When the owner of a property dies and leaves the property in their will, probate is the official process for proving the will is valid. For inheritance tax purposes the property may need to be valued and this is typically carried out by the district valuer who represents the Inland Revenue. Contracts cannot be exchanged on a property until probate has been granted.

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.

Purchaser

The person buying a property.

Redemption

Completion of the full and final repayment of a mortgage.

Redemption figure

Amount required to fully repay a mortgage including interest and any penalties. This may incorporate an early redemption charge.

Repayment mortgage

Mortgage with monthly repayments consisting of capital (the amount you borrowed) combined with interest. It has become the most common type of mortgage since the Mortgage Market Review was introduced in 2014.

Repossession

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.

Return on investment

The amount you get back in comparison to the amount you put into an investment.

Residential property

Property occupied for private or domestic purposes.

Right to Buy

A government scheme that allows eligible council tenants in England to buy their home at a discounted price.

Searches

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.

Searches

Your solicitor will make enquiries to the local authority and Land Registry to ensure there aren’t any matters that will adversely affect the property or the surrounding area. Searches typically cost between ￡250 and ￡300 and the money will need to be transferred to the solicitor early on in the buying process.

Security

Property used to secure the mortgage loan.

Self-build

The process of building your own home. If you are a builder then this can be taken literally, but for most people this involves choosing builders, architects and surveyors to undertake the work.

Seller

The person who is selling the property. Also known as the vendor.

Semi-detached

A type of property where one side wall is shared with an adjoining property.

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 flats within that building.

Shared ownership

The option to buy a share of a property (between 25% and 75%) from a housing association. You’ll then pay an ‘affordable rent’ on the share of the property you don’t own. 

Sole agent

Where only one estate or letting agency firm is instructed by a seller or landlord to offer a property for sale or to rent.

Sole selling rights

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.

Solicitor

A professionally qualified legal expert who will prepare the documents on behalf of the buyer or seller throughout the process of purchasing a property. Responsibilities include conducting searches, collecting funds and arranging and overseeing the exchanging and completion of contracts.

Stamp Duty Land Tax (SDLT)

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. If this is not your first home purchase, nothing is payable on the first ￡125,000 of the purchase price but from ￡125,001 to ￡250,000, two per cent is payable and from ￡250,001 to ￡925,000 the rate is five per cent. ￡925,001 to ￡1.5 million is 10 per cent and over ￡1.5 million it is 12 per cent.

The Chancellor of the Exchequer Philip Hammond abolished stamp duty for first time buyers on homes worth up to ￡300,000.

Stamp duty holiday

A temporary pause of SDLT payments up to a set threshold. Until 31 March 2021 there is a stamp duty holiday in England and Northern Ireland on all properties up to ￡500,000.

Standard variable rate (SVR) mortgage

A type of mortgage where interest rates vary at the discretion of the lender based on market conditions. If you have a mortgage deal with a discount rate, at the end of the discounted period it will revert to a standard variable rate.  

Structural survey

See Building Survey – the new name for a structural survey.

Studio flat/apartment

A flat with just one principle living area containing both cooking and sleeping facilities with a separate bathroom or shower room.

Subject to contract

Where contracts are still not exchanged and nothing is yet legally binding on either seller or buyer.

Survey

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.

Tenancy

Possession of a property by a tenant under the terms of a lease.

Tenancy agreement

The legal agreement governing the occupation of a property by a tenant.

Tenancy deposit

A refundable sum of money paid to your landlord at the start of your tenancy. 

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. 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.

Tenant

The person who has temporary possession of a property under a lease or tenancy agreement.

Tenants in common

An optional method of shared home ownership (not necessarily in equal shares). If an owner dies, the owner's stake in the property is passed to their heirs, rather than to the other owners of the property.

Tenure

The mode of holding ownership of a property: for example, leasehold or freehold.

Terraced

Property where both side walls are shared with adjoining properties.

Title burdens (Scotland only)

Conditions included in the title deeds, including restrictions on use, rights and obligations.

Title deeds

Documents detailing and confirming the legal ownership of a property.

Tracker mortgage

A tracker mortgage usually follows the Bank of England base rate. As a result, your mortgage repayments can go up or down.

Transfer document

The final legally binding document that transfers the property and all its rights from the seller to the buyer.

Under offer

A property becomes “under offer” when a seller accepts an offer from a buyer and the legal processes of the transaction begin.

UK Finance (formerly the Council of Mortgage Lenders)

The main trade body (but not regulator) that represents UK mortgage lenders. Members include banks and building societies. UK Finance promotes good practice, collects and publishes data about the mortgage market and liaises with the government.

Utilities

Refers to services such as gas, electricity, water, sewage and broadband

Vacant possession

A property that has been vacated by any previous occupants upon the completion of the purchase.

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.

Vendor

The person selling a property.

Victorian

Homes built between 1837 and 1901 during the reign of Queen Victoria. They are one of the most common types of period property in the country as a result of the Industrial Revolution. Typical features including red brick fa?ades, bay windows and fireplaces with cast iron hearths.

Yield

The income generated from a rental property stated as a percentage of the property value. For example, if a property was bought for ￡100,000 and rented for ￡600 per calendar month, the annual yield would be 7.2%.