All industries have their own jargon, whether it’s healthcare, banking or snowboarding, knowing the lingo can mean the difference between seeming a fool and making a foolish mistake. In the property industry, the majority of terms used are self-explanatory but some could do with a little guidance to help the layman to understand its meaning.
In this guide, we’ve put together an at-a-glance view of all the main terms and phrases used by estate agents, conveyancing solicitors and property professionals so that anyone can navigate their way through the jargon.
At Property Assistant, we like to think that we speak plain English, so no-one gets confused or mislead, but we also know that sometimes things get lost in translation so consider this excerpt your English to EstateAgent-ese translation tool.
For the full property jargon guide to download as a PDF, visit our library where you can also find other useful resources.
A common term relating to all of the parties (or, links) involved in the sale of a home. A simple chain will only involve two links; a buyer and a seller. In complicated chains, there can be many more links involving several properties, each having a sale or purchase which is dependent on another party.
As a result, chains are subject to collapse; one party pulling out of a purchase can impact many other
Used to describe either a buyer who does not rely on the sale of a property in order to complete their contract. First time buyers are often ‘Chain Free’ as are properties cash (or investment) buyers.
A term used to describe the legal processes involved in the sale and purchase of a house.
Exchange of Contracts
The stage of the contract process where both the seller and buyer are legally committed to the sale and purchase of a property, but at which point the transfer of the home has not been made. Though the Completion can still become delayed, it is typical for the final transfer of ownership to be made within 28 days after the exchange of contracts.
A term used when part of a freehold property overlaps (either overhangs or underlies) another freehold property (or land). Common examples include balconies which extend over neighbouring land or a room that is situated above a common passageway.
Coming from a Yiddish word (‘gezumph’) meaning ‘to cheat or overcharge’, gazumping is a common term used in the property market when a vendor accepts an offer from a seller but later rejects it in favour of a higher offer from another party.
Derived from the term, gazumping, this term is used when a buyer reduces his offer price on a property just before the exchange of contract.
Referring to a deposit that has been give you for the purchase of a property. It is often used by developers with new builds and is a way to incentivise sales, especially with first time buyers.
Applying only to leasehold properties, Ground Rent is a sum of money paid to the owner of the property by the leaseholder. It is usually billed annually along with service charges.
In the event that a buyer has poor credit, a guarantor will be a person who has a better credit rating who offers their security that the loan or debt will be repaid by them instead. Guarantors pledge to be liable in the event of a loan being in default to meet the repayments or the full cost of the debt. Typically, guarantors are a family member and it is common for young first time buyers to have their parents stand as guarantor for their first mortgage
Someone who has been trained and qualified to offer financial advice. They should offer solutions to their clients based on the whole market and not be tied to a certain lender or type of product. All IFA must meet strict competency requirements and are regulated by the Financial Conduct Authority.
Whilst there are plenty of ways to engage the services of a reputable IFA, Property Assistant has worked with many individuals and organisations who offer a local service.
More commonly known as ‘Death Duties’, inheritance tax is a levy paid to the government on your estate once you die. If you have dependents, it is worthwhile discussing the impact of these taxes with an IFA to ensure that you have your financial affairs in good order.
As of April 2018, the rate is 40% owed on all capital owned above the value of £325,000 (unless you leave a minimum of 10% to charity in which case this reduces to 36%).
Interest Only Mortgages
As the name suggests, this is a mortgage where the repayments taken by your lender cover only the interest of the loan you have taken out. At the end of the term of your mortgage, the original value of the loan will be due in full.
This type of mortgage is usually taken out in conjunction with another investment vehicle that is set up to cover the cost of loan at the end of the mortgage term. This can be something like a personal pension, endowment policy or ISA.
A leasehold is the ownership of a property by lease and grants the right to use the land and property to which this relates for a fixed period of time. Ownership is usually subject to payments of ground rent to the owner of the freehold.
Leasehold properties can be for a short term period such as 40 years but are more often long term such as 90+ years.
Used when referring to leased properties, this is a charge levied by the landlord that covers the maintenance costs associated with the property and the communal areas. These are usually agreed in advance and can include items like cleaning, gardening and general repairs to keep the property in good condition.
A type of ground rent which is nominal in value. The exchange of money is usually so ‘token’ so as to constitute a legal lease, that no money actually changes hands
A type of mortgage that is linked to a borrower and not a property. In these situations, a buyer can move home without having to switch mortgage lender or paying any early repayment charges.
The process of establishing the validity of a will. Probate properties involve the executor of the deceased’s estate and require additional court processes before contracts can be exchanged or completed.
Stamp Duty Land Tax (SDLT)
A tax due to the government, paid by the buyer, based on the value paid for a property. As of April 2018, the stamp duty rates are 0% on all properties up to the value of £125,000, 2% on properties valued between £125,001 and £250,000, 5% on homes worth £250,001 to £925,000 and 10% up to £1.5 million.
A type of report that is conducted on a property. This can include, but is not limited to, a valuation survey, a condition survey or a structural survey. You can find out more about the definitions of each type of survey in our full Property Jargon Buster guide.
Here at Property Assistant, we think a property jargon buster is an essential way to help communicate with our customers and communication is key to a good relationship. If you would like to know more about the way we do business then you can contact us on 0118 912 2370.
Don’t forget, you can also download our free Home Buyers Guide as well as find other useful information on our blog.
Featured image via Pixabay.