Dictionary: Property Terms
Buying or selling a property may be one of the most important transactions you undertake in your life.
At Harrods Estates we have the knowledge and expertise to provide a first class service and in order to help you understand the UK buying and selling process please find below an alphabetical glossary for some of the most common terminology that you may come across whilst making those all important decisions, with dictionary definitions to explain them.
However, whilst this list addresses a wide range of matters, it is not intended as a substitute for professional advice nor does it cover every point of relevant law.
Harrods Estates would always strongly advise that specialist legal and financial advice be sought. Should you find that you have any further enquiries arising from this, please do not hesitate to contact a member of our team on: +44 (0) 20 7225 6506.
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Assignment – the transfer to another of a right, interest or title to property (this can include for example a lease, insurance policy etc).
Auction – the sale of a property to the highest bidder.
Bridging Loan – a temporary loan providing financial cover which allows a buyer to complete on the purchase of a new property before selling a previously owned property.
Building Survey (prev. a Full Structural Survey) – a complete inspection of the property to be purchased, conducted by a fully qualified Chartered Surveyor (and any other professionals he may deem appropriate such as electrician, plumber, structural engineer), usually paid for by the purchaser. A detailed report is then written and sent to the purchaser. Recommended for any property, especially older properties which have been poorly maintained, extensively altered or extended and also for any property which you may wish to alter or extend.
Chain – refers to the number of property sales linked together by onward purchases, reliant on the proceeds of the sale, to complete on that purchase.
Completion Date – the date when a property is transferred to the buyer when the balance of the purchase price is handed over to the seller’s solicitor and the seller must vacate the property.
Conditions of sale – details that determine the rights and duties of the buyer and the seller.
Contract – a legally binding agreement between the parties which sets out the terms of the sale, once exchanged it binds the buyer and seller to complete on the transaction.
Contract race – occurs when two or more potential purchasers have made offers which are acceptable to a vendor. The vendor will exchange contracts with whichever purchaser is in a financial and legal position to do so first – in essence, a race.
Conveyancer – a qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying and/or selling a property.
Conveyancing – term given to the legal process of buying and/or selling property.
Covenants – obligations and restrictions relating to a property.
Deposit – a percentage of the purchase price – usually 10% - paid by the buyer on exchange of contracts and held by the seller’s solicitor until completion.
Dilapidations – any disrepair or damage to a rented property.
Disbursements – fees paid by the solicitor on a purchaser/vendor’s behalf such as Stamp Duty, Land Registry Fees, Local Authority search fees etc.
Discharge – paying off a mortgage.
Draft Contract – preliminary, unconfirmed version of the contract, usually drawn up by the seller’s solicitor and sent to the buyer’s solicitor for approval.
Equity – the difference between the sum achieved for the sale of the property and the outstanding mortgage.
Exchange of Contracts – the point at which the contract signed by the buyer is exchanged for the contract signed by the seller and the deposit is paid by the buyer to the seller’s solicitor. At this point both parties are legally bound to the transaction and a date agreed for completion.
Energy Performance Certificate - Indicates how energy efficient a home is on a scale of A-G. The most efficient homes - which should have the lowest fuel bills - are in band A. The Certificate also tells you, on a scale of A-G, about the impact the home has on the environment. Better-rated homes should have less impact through carbon dioxide (CO2) emissions. The average property in the UK is in bands D-E for both ratings. The Certificate includes recommendations on ways to improve the home's energy efficiency to save you money and help the environment.
Fixtures and Fittings – any non structural items contained within the property such as door handles, light fittings, built-in cupboards etc.
Fixtures, Fittings and Contents Forms – A form completed by the seller which sets out the items at the property which are being taken or left behind so that both parties understand what is included in the selling price.
Freehold – term referring to the ownership of the property and the ground on which it is built, without the limitation of time.
Gazumping – occurs when a vendor accepts a higher offer from a third party after having agreed a sale initially with someone else before exchange of contracts.
Gazundering – usually occurs on the day of exchange and is when a buyer re-offers at a lower purchase figure than is agreed on the contract, in order to force the purchase price down.
Ground Rent – the annual charge levied by the freeholder on the leaseholder.
Home Buyers Report – an inspection of the property to be bought by a qualified inspector, such as a Chartered Surveyor, but not in as much detail as a full structural report. Usually includes a valuation of the property’s worth backed up by comparable evidence of sales of similar properties in similar locations.
Home Information Pack (HIP) - Under the provisions of the Housing Act 2004 a Home Information Pack (HIP), sometimes called a Seller's Pack, will have to be provided before a property in England and Wales can be put on the open market for sale with vacant possession. The pack will be a set of documents about the property: an Energy Performance Certificate, local authority searches, title documents, guarantees, etc.
The introduction of HIPs has been subject to delays and reduced requirements, but they became mandatory for all properties.From 6 April 2009, the HIP must be available on the first day a property is marketed for sale. If you are buying a property, just ask whoever is advertising it for sale for a copy of the Home Information Pack. This is usually an estate agent, but could be another business or individual; usually the vendor’s solicitor.
They must give you a copy of the pack free of charge. However, they may make a reasonable charge to cover the costs of copying and posting it.
Inventory – a list which details the contents and describes the condition of furnishings, decoration and contents of a leased property at the start and end of a tenancy in order that any dilapidations may be assessed.
Land Registry Fee – fee paid to the Land Registry to register the ownership of a property.
Lease – a legal document by which the freeholder or landlord of a property lets the premises – or part of it – to another party for a specific length of time, after which point ownership may revert to the freeholder or superior leaseholder.
Leasehold – denotes that tenure of a property is by way of a lease.
Listed Building – a building registered as being as of specific architectural or historic importance, which cannot be demolished nor have its external and in some listings, interiors altered without special permission from the local Listed Buildings Officer and possibly English Heritage.
Local Authority Search – an investigation undertaken by a purchasing solicitor whereby a search of local authority and other agencies (eg transport or water companies) is carried out in order to identify any proposed plans for development or enforcement, which may affect the property or its immediate surroundings.
Maintenance Charge (or Service Charge) – payment levied by a management company with responsibility for the repair and upkeep of external and internal areas of a building or scheme commonly used by the residents, charged to the owners or leaseholders of individual properties contained within.
Mortgage – a sum of money advanced by a lender, usually a bank or building society, to assist in the purchase of a property. The loan is secured against the property and is usually taken out over a number of years.
Mortgage Deed – a legal document relating to the mortgage lender’s financial interest in the property and containing the terms by which the loan has been agreed.
Mortgage Offer – a formal document drawn up by a mortgage lender detailing the terms by which the loan is agreed.
Mortgage Term – the period of time over which mortgage repayments are made.
Negative Equity – is the term applied when the amount of the mortgage owed is higher than the market value of the property.
NHBC (National House Building Council) Guarantee – a form of warranty available on some newly built properties whereby any defects occurring during a specified period of time (usually ten years from the date of construction) are to be remedied by the builder and not at the owners cost.
Offer – a suggestion of a sum of money put forward by a potential purchaser for consideration by the owner, for the purchase of an individual property. Can also be used to refer to a mortgage offer.
Peppercorn Ground Rent – a nominal periodic rent usually paid annually.
Preliminary Enquiries – initial questions about an agreed property sale, raised by a purchasing solicitor on behalf of his client, asked of the seller’s solicitor, which the seller must answer.
Property Information Form – form that is completed by the seller giving answers to questions raised on the buyer’s behalf.
Premium Lease – lump sum paid up front as rental payment for a property, rather than staged payments throughout the term of the rental period.
Repossession – occurs when a mortgage company obtains a court order to take possession of a property due to non payment of the mortgage.
Retention – a sum of money held back by the mortgage company until such time as repairs or remedial works are satisfactorily carried out to the property they have loaned on.
Search – numerous searches concerning the property and its locality are made by the buyer’s solicitor during the purchasing process; these include a Local Authority Search, Land Registry Search, Coal Mining Search, Water Search, Commons Registration Search, Bankruptcy Search etc. The buyer’s solicitor will decide which searches are appropriate according to the location/age of the property concerned.
Stamp Duty Land Tax – is generally payable on the purchase or transfer of property or land in the UK where the amount paid is above a certain threshold. In addition most UK land and property transactions must be notified to HM Revenue & Customs (HMRC) on a Stamp Duty Land Tax return within a certain time limit - even if no tax is due.
Subject to Contract – words used to indicate that an agreement is not yet legally binding.
Surveyor (Chartered) – professionally qualified expert who carries out property inspections.
Tenancy – temporary possession of a property by a tenant.
Tenancy Agreement – legal agreement designed to protect the rights of both tenant and landlord setting out the terms under which the rental of a property has been agreed.
Tenant – the person who has temporary use and possession of a property owned by another person, the landlord. The duration and terms of a tenancy are usually fixed by a lease or tenancy agreement.
Tenure – describes the manner in which the property is held by the owner i.e. either Freehold or Leasehold.
Title Deeds – documents evidencing ownership and extent of a property, also sets out any rights or obligations that affect the property, also show whether there are any mortgages on the property. Title Deeds will be held by the mortgage lender until such time as the mortgage has been redeemed.
Transfer Deed – The document that transfers the ownership of the property from the seller to the buyer. The Land Registry will require this document before the change of ownership can be recorded.
Under Offer – term applied to the sale of a property once an offer has been made by a potential purchaser and which has been accepted by the owner, prior to exchange.
Valuation – an assessment of a property’s market value carried out by a recognised professional on behalf of a lender and/or the buyer, backed up with comparable evidence from recent sales of similar properties in similar locations.
Vendor – term used to describe the owner of a property which is being sold.
Yield – income from a property calculated as a percentage of its value.
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