Buying or selling a home for the first time can be overwhelming, especially with all the property jargon that gets used. We’ve put together a guide explaining some of the most used terms in the property industry.
Sold subject to contract. This means a deal at a certain price has been agreed by the buyer and seller, however nothing is legally binding until the exchange of contracts. This means that until contracts are signed later down the line, either party can pull out of the transaction.
‘Offers in excess of’. You’ll sometimes see this abbreviation before property prices, and is often used by agents to give price guidance to potential buyers. It means that you should be looking at making an offer above the number that follows it. It’s often worth speaking to the estate agent to establish more specifically where the sellers want to be in terms of price, so you know where to begin your negotiations.
Most people need to sell their current home to be able to afford to buy the next one, and the people they sell it to need to sell their home as well. This is what is meant by a ‘chain’ and if one link pulls out, the whole chain can collapse. An ‘upward’ chain is everyone who is above you, and a ‘downward’ chain is everyone below you.
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.
Agreement in Principle (AIP)
A document from a mortgage lender that confirms it will lend you a certain amount based on your earnings and usually a credit search and credit score. An AIP will help prove to a seller you’re a serious buyer.
Energy Performance Certificate (EPC)
A certificate that details how efficiently a property uses energy with a ranking between A-G (with A being the most efficient). It will also provide an estimation of energy costs and offer suggestions on how to improve your efficiency. An EPC is legally required for properties being marketed for rent as well as for sale.
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.
When a seller has agreed an offer in principle on a property but later accepts a higher offer from another party.
When the buyer has made an offer that has been accepted but then subsequently reduces the offer just before exchanging contracts.
A report carried out by a surveyor on behalf of a buyer to assess the value and condition of a property and highlight any major defects. It is a more comprehensive survey than a Condition report, but not as extensive as a Building survey. The HomeBuyer report is suitable for most modern and older homes in a reasonable condition.
Ownership and right to occupy a property by way of a lease agreement for a given period, usually subject to an annual payment of rent to the owner of the freehold. Leases are normally long term, ranging from between 90 years and 999 years. Short leases are unattractive to mortgage lenders, with anything lower than 60 years likely to be difficult to mortgage.
Someone who owns the freehold of a property, owns the property and the land it stands on. The majority of houses are freehold.
Unlike a freeholder, as a leaseholder you do not own the land the property is built on. A leaseholder essentially rents the property from the freeholder for a number of years, decades or centuries. Most flats/apartments tend to be leasehold.
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.
Buy to let mortgage
Buy-to-let (BTL) mortgages are for landlords who want to buy property in order to rent it out. The rules around buy-to-let mortgages are similar to those around regular mortgages, but there are some key differences such as:
- Interest rates on buy-to-let mortgages are usually higher.
- The minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value (although it can vary between 20-40%).
- Most BTL mortgages are interest-only. This means you pay the interest each month, but not the capital amount. At the end of the mortgage term, you repay the original loan in full. BTL mortgages are also available on a repayment basis.