Lockings Solicitors

Buying and Selling Property — Jargon Buster

house key

Buying and selling property means understanding a lot of unique and often confusing words, acronyms, and phrases. So it makes sense to have as good an understanding of those terms as possible. While your conveyancing solicitor will be able to explain any terms you don’t understand, we’re here to help you make sense of those unfamiliar words and phrases.

So, to help you have a smoother buying or selling experience, here is the Lockings jargon buster.

Affordable Housing

These are homes built by housing associations or registered providers. These organisations will have received government subsidies to reduce construction costs.

Agreement in Principle

You will need to get an Agreement in Principle from your mortgage lender before you make an offer on a property. Your Agreement in Principle will confirm the lender has informally agreed to a mortgage of a set amount. It’s important because it lets sellers know buyers are prepared and that the property is within their budget.

Annual Percentage Rate (APR)

The basic rate of interest.

Arrangement Fee

You’ll be charged this administration fee by lenders who have arranged your credit. When buying a property, your arrangement fee will relate to your mortgage. Your lender must disclose any arrangement fees under the Consumer Credit Act 1974. However, not every UK mortgage lender will charge an arrangement fee.

Arrears

If you start to fall behind on your mortgage payments, you are in arrears. If you don’t attempt to resolve those arrears, your mortgage provider may repossess the property.

Asking Price

This is the listed price of the property, but it’s not a price set in stone. Rather it’s how much the seller hopes to get for the property.

couple shopping for a house

Auction

A property auction is when properties aren’t advertised in the usual way and are instead open to bids. The buyer who makes the highest bid will be able to buy the property. These days, property auctions can take place in person or online.

handshake

Building Survey

The buyer will hire a property surveyor to do a thorough inspection — or building survey — of the property’s structure. This survey will reveal any subsidence, dampness or other issues that may mean extensive repairs and costs.

Bridging Loan

A bridging loan is often used when selling and buying property simultaneously. This short-term loan can cover the overlap between purchasing a property and selling your old one.

Buy to Let

Property buyers looking for an investment will often purchase a Buy to Let property. They will rent out the property to tenants, whose rent will usually cover the monthly cost of the mortgage (and may provide additional income).

Buyer

This term simply refers to the person buying the property, also often referred to as the purchaser.

Capped Rate

You can expect to pay a capped rate for the first few years of your mortgage — the highest interest rate you will pay for your mortgage during that period. If you agree to a capped rate, your mortgage provider will not be able to increase interest rates for the designated period.

County Court Judgement (CCJ)

You will receive a CCJ if you fail to pay any money you owe. If you have a debt that you pay off after receiving a CCJ, it will remain visible on your credit account for up to five years, although it will be marked as “satisfied”.

Chain

A property chain is when multiple people buy and sell at the same time. The person you want to buy a property from may not be able to sell quite yet as they’re waiting for an offer to be accepted on the property they want to buy. Alternatively, your buyer could be delayed by the sale of their home. Property chains can get very long, and one misstep by a single buyer or seller can slow everyone down. First-time buyers aren’t in a chain and so are often preferred by sellers.

Commission

An estate agent will need to be paid a commission, which is usually a percentage of the property’s total price.

Common Areas/Common Parts

These are any hallways, staircases or other spaces used by the inhabitants of a freehold building with leasehold tenants (a block of flats, for example).

common hallway

Completion

Completion day is when the sale of a property is completed. All money has been transferred to the relevant parties, usually by the conveyancing solicitor. On completion day, you will be given the keys to the property and so can move in.

Contents Insurance

This is the insurance policy that covers any possessions in your home in the case of theft, damage or loss. While there is no legal requirement to have contents insurance, it can be useful, especially on moving days when damage is more likely. Mortgage lenders may also require you to have buildings insurance, so check with your lender.

Contract

There’s a lot of legal admin involved with selling and buying property, but the contract is simply the legal agreement between the seller and the buyer.

Conveyancing

This is one of the major parts of the house buying process carried out by your conveyancing solicitor. You can find out everything you need to know about conveyancing with our free downloadable conveyancing guide. But basically, conveyancing involves checking the legal status of the property and carrying out property searches.

Covenant

This will be written into the contract (or sometimes on the mortgage deeds). It’s all about restrictions on how the land can and can’t be used — for example, the general public may require pathway access, or the property cannot be used for business purposes.

Credit Report/Credit Score

It’s always a good idea to know your credit score before looking around at mortgages. Your credit score is an ongoing record of your debts — repaid and ongoing. A mortgage lender will look at your credit report to see if you are good with debt. A poor credit score isn’t going to prevent you from getting a mortgage, but it will affect the kind of mortgage you can get and the repayment terms you can expect to be limited to.

Deeds

Often shortened to “deeds”, the title deed is a document signed and sealed before being delivered to the buyer on completion day. Once the buyer receives the deeds, they are the legal owner of the property.

Deposit

This will be the down payment you make when your offer on a property is accepted. The deposit is intended to secure your property purchase, so other buyers can’t jump in and outbid you at the last moment. The deposit is usually calculated as a set percentage of the total property price.

Disbursements

There are a few additional costs when you want to buy a property. These include your stamp duty obligations and any obligatory land registry fees. Disbursements are when your solicitor makes those payments, adding the total costs to your final bill.

Energy Performance Certificate (EPC)

An Energy Performance Certificate is just that: a document that lets you know how energy efficient the property is. They are now a legal requirement, so all sellers must have an EPC available. Once you have your EPC, it will remain valid for ten years. It can be accessed online at any time through the EPC register.

Equity

Technically, if you buy a house using a mortgage, you don’t actually “own” that property; your mortgage lender does. You legally own the property; it’s just that if you sell your home, what you owe the mortgage company will have to come out of the sale proceeds. So you look at how much your home is currently worth, take away any money you still owe on your mortgage, and that equals your equity. When property prices drop, you may owe more on a mortgage than the property is worth, known as having “negative equity”.

Exchange

This is when the buyer’s and seller’s solicitors exchange contracts and agree on a completion date. Once the contracts are exchanged, the purchase and sale agreement is legally binding and there will be financial repercussions if the buyer or seller pulls out.

Freehold

Freehold property is when the owner owns the property and the land it is built on.

First Charge

This term is used by mortgage lenders a lot. It simply means that the debt you owe them is prioritised over any additional debts secured against the property.

Fixtures and Fittings (F&F)

These are the non-structural items in the property. Fixtures will (generally) be items fixed to the property, and fittings are those only attached to the property with a screw or a nail (such as pictures and mirrors).

Fixtures include electric sockets, fireplaces, fixed furniture (such as in the kitchen), built-in wardrobes etc. Fittings include carpets, ovens, refrigerators and anything else free-standing.

A common way to differentiate between fixtures and fittings is to imagine flipping the property upside down. What falls is a fitting, and what stays in place is a fixture. It’s important to know where you stand with fixtures and fittings if you’re buying, and always get clarification as to what is included in the property price. Misconstruing the F&F can lead to disputes, which is sadly common.

handyman

First Time Buyers (FTB)

A commonly used term and acronym for people buying a property for the first time.

Gazumping

Gazumping is on the rise in the UK. It’s when you’ve had an offer accepted on a property — only for another buyer to swoop in and make a better offer that the seller then accepts.

Gazumping is not illegal as no formal contracts have been signed, but it can be frustrating, especially if you have already made payments for conveyancing or for a survey to be carried out. At Lockings, we work on a “no-sale, no-fee” basis, so if the sale does fall through, you will only be liable for any disbursements paid.

Gazundering

This is when a buyer who has had an offer accepted suddenly makes a lower offer just before the exchanging contracts in a bid to get the property at a lower price. As long as no contracts have been exchanged, gazundering is a legal ploy.

Ground Rent

This is any rent paid by a holder of a leasehold property to the freeholder. It occurs when a freehold property gets sold with a long lease.

Gas Safety Certificate (GSC)

This certificate confirms that a property’s gas appliances and outlets meet all necessary regulations and are safe. You need to update your GSC annually.

Home Buy Agent

If you use some form of Help to Buy scheme, it will be processed by a Home Buy Agent.

Housing Association

These are not-for-profit organisations whose goal is to make more homes affordable and available.

Interest-Only Mortgage

When you get an interest-only mortgage, you will only pay off the mortgage’s interest every month. You won’t be paying off any of the money you borrowed, so you will still owe that amount when the mortgage term ends. Generally, this kind of mortgage is only used by those looking to buy an investment property and who have an alternative source of income they can use to pay off the mortgage at the end of the term.

Joint Tenants

If two or more people own the property and are named in the title deed, they are joint tenants. If one of those tenants dies, their share of the property passes to anyone else named in the title. This will happen automatically and overrules anything in the deceased’s will. So if you become a joint tenant, you must have an up to date will.

Land Certificate

This is a legal document issued by the Land registry that acts as proof of property ownership.

Land Registry

The Land Registry is the government department that manages and updates the land register — a complete register of all property in the UK. The register is updated every time a property changes owners. The register also holds details of any charges and restrictions on a property.

Land Search

This is one of the searches carried out by your conveyancing solicitor. It’s a formal application for a thorough inspection of the land and can cover everything from local mines, connected sewers, and land boundaries.

Leasehold

A leasehold is when you own a property, but you don’t own the land the property occupies (unlike a freehold). Flats often fall into this category. Technically, it’s more of a long-term tenancy where you pay a lump sum (with your mortgage), so you can own the property for a specified number of years. However, you can sell the property before the lease expires.

Lifetime ISA

This government scheme means that if you can save up to £4,000 a year, the government will add 25% of the total when it comes to buying a house. It’s a complicated subject, but this quick guide from the government can help to clarify the details.

Listed Building

Usually an older building, a listed building is any property registered and protected as a building of either historical importance or special interest. If you buy a listed building, you won’t be able to make changes to it without permission from the relevant local authority.

beautiful house

Local Search

Your solicitor will carry out a local search on your behalf as part of the conveyancing process. The local search looks primarily at any local planning proposals submitted to the local council, such as a new road, supermarket, or school and so is extremely important.

Mortgage

A loan that you take out so you can buy a property. Also referred to as a mortgage loan. It’s simply an agreement between you and your mortgage lender to buy a property when you don’t have the savings to pay for it outright.

Mortgage Offer

When you apply for a mortgage, your application will be processed and then an offer of a mortgage will be issued. This is your mortgage offer and it’s beneficial for working out what kind of price range you can afford.

Mortgage Term

This is how long you have to repay your mortgage. In the UK, the average mortgage term is 25 years, although there are lenders who will allow longer periods than this. It is also possible to find mortgage lenders with terms of two-to-five years and some of just six months.

Non-Standard Construction

Homes made of brick or stone with a slate or tile roof are classed as “standard construction”. Any property that doesn’t have these features and is constructed of a different material may be considered non-standard construction.

Examples of properties considered to be of non-standard construction include thatched cottages, homes with flat roofs, listed buildings, and prefabricated houses, among others. It’s important to know that if you are interested in a property of non-standard construction, you may find it harder to find a mortgage lender.

Ombudsman

An ombudsman is a public servant, and they will investigate and resolve any complaints made by an individual about the service they receive from a business. You can contact a property ombudsman if you think you have been treated badly or even lied to by an estate agent, property surveyor, or solicitor.

Per Calendar Month (PCM)

A term commonly used by mortgage lenders when discussing repayment terms.

Pre-Contract Enquiries

Buyers want to ask questions about a property before they make an offer. The buyer’s solicitor will make those pre-contract enquiries through the seller’s solicitor.

Probate

When someone dies, the named executor of their will needs to officially get clearance to act as executor before transferring assets to the will’s beneficiaries. Probate is a fairly large subject, so we’ve created this free downloadable probate guide to what it is and why it’s important. The process of probate is one of the reasons why having a will is so important, especially if you own a property.

Remortgage

You can switch a mortgage from one lender to another without moving house. This is an important term to know about because remortgaging can cut your living costs quite substantially. The mortgage sector is fiercely competitive, so it’s always worth testing the market every couple of years to see if there are better rates and cheaper mortgages available.

Repayment Mortgage

Repayment mortgages are when you pay back the interest on your mortgage every month, along with a small part of the actual mortgage. It’s the most common kind of mortgage in the UK.

Retention

If you want to buy a property that needs some substantial repair work, your mortgage lender might hold back some of the loan until the work is complete. This is what’s known as retention.

Registered Institute of Chartered Surveyors (RICS)

When a buyer uses a surveyor to inspect the structural integrity of a property, they should always use a surveyor registered with RICS.

Stamp Duty Land Tax (SDLT)

This is the tax you will have to pay the government when buying a property. There are exemptions, especially for first time home buyers. You can find out more about stamp duty in our short guide.

Sold Subject To Contract (SSTC)

SSTC means the seller and the buyer have agreed upon a sale, but no contracts have been exchanged yet. While the sale isn’t yet complete, when a property is considered SSTC, no other potential buyers can arrange viewings.

Survey

Your mortgage lender will conduct a survey of the property to ensure the value is correct.

STB

A common abbreviation used by solicitors, brokers, and estate agents to refer to second-time buyers.

Vendor

This is the person selling a property (or a piece of land).

The Lockings Jargon Buster for Buying and Selling Property

It’s not easy to memorise all of those acronyms and terms, but don’t panic. As long as you understand the terms relevant to you, you’re in a good place. And don’t forget that your solicitor will always be available to explain anything you don’t recognise.

At Lockings, we have made it a priority to always speak in plain English. We know how challenging the law can be, and we know that buying or selling a home can be a stressful time made worse by legalese and mystifying acronyms. So if you’re buying or selling a property, why not get in touch with our friendly office team? Once we find out more about what you need, you can get a FREE consultation with one of our specialists.

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