Estate Agent Terminology Explained

Estate Agent Terminology Explained

When the time comes to buying a home and engaging with estate agents and solicitors, the terminology can become quite confusing to anyone not used to regularly buying or renting a property.

We thought it would be a good idea to eliminate the jargon and make speaking with property professionals an easier task!

A

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.

Advance – A mortgage loan – the amount of money a lender agrees to lend you.

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.

Appraisal – Similar to the term ‘valuation’, it is usually carried out by an estate agent to determine the current value of a property.

AST (Assured Shorthold Tenancy) – It gives the landlord the right to claim their property back after a specific period of time.

Auction – one of the quickest ways of buying a home. Exchange happens as soon as the hammer falls and you are locked into paying, so be prepared.

B

Bailiff – Official who repossess your possessions or house if you cannot keep up on your mortgage repayments.

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”.

Bridging Loan – a temporary loan given to help buy a new property before the existing one has sold.

BTL (Buy to let) – the purchase of property(s) for the specific purpose of letting it out.

C

Capital – The sum borrowed in a mortgage.

Chain – A number of linked property sales where exchange of contracts must take place simultaneously. This can be long or short, the more properties involved, the more complicated the chain.

Chain Free – this is usually present whereby a buyer is not dependent on the seller finding another property first, before selling their property. I.e. the chain stops at this seller.

Completion Date – Completion of the legal transaction with all monies and documents having been distributed. This is also when the seller’s solicitor will instruct the estate agent to release the keys.

Contract – the formal agreement between buyer and seller, prepared by the solicitor or conveyancer, detailing the terms and conditions of the sale.

Conveyancing – the legal work behind buying and selling properties.

Covenant – the terms of any given tenancy agreement, including obligations of the tenant and the landlord.

D

Deeds – the legal documents that assign ownership to the property or land

Default – where pre-arranged payments are missed, for example a mortgage payment.

Deposit – a lump sum of money that a buyer puts down towards the purchase of a property

Deposit Protection Service (DPS) – a scheme authorised by the government for landlords and letting agents where tenant deposits are paid into for the duration of their tenancy. The amount is then paid back at the end of the tenancy when agreed by both parties.

E

Early repayment charge (ERC) – this is a charge made by the lender if a borrower pays off their mortgage before the end of the agreed term.

Equity – the amount of a property that you own. The difference between the value of your home and the mortgage that you still owe. It becomes negative equity when you owe more than the property is worth.

Exchange of contracts – the point of sale that become legally binding and where neither party can withdraw without a financial implication.

F

Fixed price – offers only at the stated price

Fixtures and fittings – depending on whether you are buying or renting, it will determine parts of the building or contents that are included in the sale / rental agreement. With a purchase, the seller will complete a fixtures and fittings document which states all items that will be staying or leaving the property which must be agreed upon. With regards to renting, this could include curtains, or furniture / appliances.

Freehold – ownership of the property that the land is situated on

Full structural survey – this looks at the main aspects of the property, such as the walls, roof, foundations, plumbing, electrical wiring, drains, joinery etc.

G

Gazumping – the term used when a seller accepts a higher price other than the price originally agreed with someone else.

Gazundering – the term used when a buyer lowers their price just before exchange of contracts.

Ground rent – the annual fee a leaseholder pays a freeholder.

Guarantor – a person in place who agrees to repay a loan or debt if someone is unable to pay.

H

HMO (House in Multiple Occupation) – A property where multiple independent occupants reside, a student property for example. They are treated differently to the average property, with more rules and regulations.

Home buyers report – a standard report to inform a buyer of the structural condition of a property from what is easily accessible. This is not in an in-depth report like a structural survey or include testing of systems.

I

IFA – an independent financial advisor

Instruction – when a seller instructs an agent to act on their behalf to market a property

Inventory – A list on items within a rental property when tenants first move in which includes the condition of the items/property. This is then used for when the tenants finish their tenancy to show dilapidation, often includes photos or existing damage.

Indemnity – a policy put in place to protect against mortgage payments defaulting.

J

Joint agents – where two agents are instructed to market a property.

Joint tenants – where two or more tenants form part of the agreement on a property. If one tenant leaves, their share of the property is passed to the others.

L

Land certificate – a certificate proving ownership of a property.

Land registry – a government organisation that holds all the records of all registered properties within England and Wales.

Leasehold – Ownership of a property but not the land that it is built on which usually results in an annual fee (ground rent) required to the landlord.

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

Local authority search – an application submitted to a local authority in order to gain planning permission or any matters concerning a property being sold

LTB (Let to Buy) – A residential property that is rented out in order to purchase another residential property.

M

Maintenance service charge – many leasehold properties are subject to a charge to pay for the upkeep or maintenance of the property. This may include buildings insurance too.

Mortgage – a long term loan to fund the purchase of a property.

Mortgage deed – a letter from the lender detailing the conditions of a mortgage

Mortgage offer – a letter from the lender offering the loan and its conditions.

Mortgage term – the length of time period that a mortgage is to be repaid

N

Negative equity – the value of a property is less than the outstanding amount owed on a mortgage.

O

Offer – a bid made by a prospective buyer, this is not legally binding

Offers over – bids are invited for over the stated price

Ombudsman – independent professional body who investigates complaints on behalf of customers against estate agents, solicitors or insurance companies.

P

Power of attorney – the legal authority for a representative to act on behalf of another who is unable to do so. Unwell, living abroad etc.

Probate – the legal process of proving a will is valid and the process involved in dealing with a property or possessions of a person who has died.

R

Repossession – when a lender takes back a property when the owners cannot afford to pay the mortgage repayments.

Retention – holding back part of a mortgage loan until repairs to a property have been satisfactorily completed.

Right of way – a person’s legal right to use a particular part of an adjoining property in order to gain access to part of their own property.

S

Sale agreed – a verbal agreement from the seller. This is not legally binding

Searches – checks that are taken place of local council records for planning applications or restrictions

Shared ownerships – this is a scheme which enables people who can’t afford the deposit and mortgage on 100% of a property to buy a share of the property (between 25% and 75% of the property’s value) and then pay rent on the remaining share.

Sole agency – instructing only one agent to act on a seller’s behalf. This will mean only one fee will be owed on completion.

Solicitor – a legal professional who works on behalf of a buyer or seller when a property is being bought or sold dealing with all legal obligations and checks involved in the property.

Stamp duty – a government tax paid by a buyer on completion of the sale

Survey – an inspection made a qualified surveyor. This can be in the form of a homebuyer’s report, a full structural survey or a valuation report.

T

Tenants – people who live in a property that is owned by someone else

Tenancy agreement – the terms and conditions of a rental agreement, also known as a rental agreement

Title – the legal right to ownership of a property

Title deeds – the document that shows the ownership of a property

Transfer deeds – the land registry document that transfers legal ownership from seller to buyer

U

Under offer – when a seller has accepted an offer on their property the contracts have not yet been exchanged.

V

Valuation – when a professional conducts an assessment of a property to establish the correct market value

Valuation fee – a charge that is made in order to conduct an inspection of the property, often used in a mortgage lending application.

Variable interest rate – the rate of interest that may fluctuate over a given period of time, in line with general interest rates.

Vendor – the legal name given to a seller of a property.

Vetting – the process of performing a background check on someone

If there’s anything else that comes up while you are buying or selling your property, please feel free to get in touch, we’re here to help!

 

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