Appraised value – The value of a property, as estimated by a surveyor.
Appreciation – The increase in value of property as a result of changes in market conditions.
APR (Annual Percentage Rate) – A compound interest rate figure used to compare different mortgages. Defined by law, it includes repayments on the loan plus any mortgage-related fees such as booking or arrangement
ARLA – The Association of Residential Letting Agents, ARLA, is the only professional body solely concerned with the self-regulation of letting agents. For over 25 years ARLA has been actively promoting the highest standards across every aspect of residential lettings and management in the private rented sector.
Arrangement fee – Fees charged by some mortgage lenders for providing or ‘arranging’ a loan.
Assured Shorthold Tenancy (AST) - An Assured Shorthold Tenancy is a specific type of lease/tenancy agreement, which offers the landlord a guaranteed right to repossess his/her property at the end of the term. AST’s must be for an initial minimum term of 6 months but can be longer by negotiation.
Bankers’ draft - Similar to a cheque, but the money is debited from your bank account, so unlike a cheque it is guaranteed to clear in the recipient’s bank account. You will normally need to give a bank in the UK 24 hours’ notice and they will usually charge an administration fee.
Break clause - Also referred to as a release clause. A clause sometimes inserted in a fixed term tenancy, typically if the initial fixed term is for a year or more. A break clause
Bridging loan – A loan that is usually taken out to solve a temporary cash shortfall that may arise when buying a property. It is not a mortgage, and is usually only a short-term lending solution. A typical example of when you might need one would be if you want to buy a second property before you’ve sold your first.
Buildings insurance – An insurance policy that pays the cost of repair or rebuilding if your property is damaged or destroyed. Most mortgage lenders will require buildings insurance to be taken out as a condition of their loan.
CCJ – This stands for County Court Judgement – a judgement against you for defaulting on a debt.
Chain – A sequence of buyers and sellers. Most people who sell their homes are also buying at the same time. There can be a ‘chain’ of several buyers and sellers, each dependent on one another for the sale and purchase of their new homes. If one buyer or seller drops out the whole chain may collapse, leading to a domino effect where
Commission – The fee you pay your estate agent for selling your property.
Common areas – Areas of land or buildings such as gardens, hallways, recreational facilities and parking areas where more than one resident shares access.
Company let - Let to a bona fide company.
Completion date – The day when final funds are transferred between solicitors and you get the keys to your new property and/or hand the keys over for the property you have sold. The date will have been agreed between you and the other buyers/sellers in the chain before exchanging contracts and will be a fixed date on which both you and the property seller are contractually bound to complete.
Conditions of sale – The details that determine the rights and duties of the seller and buyer. These may have been agreed between the buyer and seller, e.g. to leave certain fixtures and fittings at the property on completion, or they may be national or statutory conditions, e.g. it is a condition imposed upon your solicitor to verify your identification before completing conveyancing for the sale of your property.
Contract (Rental) When used in a renting capacity it often means the tenancy agreement or lease agreement, and is a legal agreement between the landlord and tenant of a property.
Contract (Sales) – A legal agreement between the seller and buyer of a property, which binds both parties to complete the transaction.
Conveyancer – A person who is qualified to process conveyancing transactions but is not a qualified solicitor, and does not have certain legal authorities that a solicitor would have.
Conveyancing – The legal process that transfers property ownership from the seller to the buyer, carried out by a solicitor or conveyancer.
Covenants (Renting) - The terms of the tenancy agreement; obligations and ‘promises’ made by either the landlord or the tenant.
Covenants (Sales) – Rules and regulations governing the property, contained in its Title Deeds or Lease.
payments, outstanding debt, arrears and county court judgements (CCJs).
Deeds – Legal documents proving ownership, generally held by the mortgage lender, or saved electronically with land registery.
Deposit (Rental) – An amount of money held by the landlord or agent for security against damage and unpaid rent. This is usually an amount equivalent to five weeks rent and is payable before moving in. At the end of the tenancy the tenant has to be notified of any deductions within a given time.
Deposit (Sales) - Paid by the buyer to his solicitor before contracts can be exchanged. A deposit is usually around 10% of the value of the property.
Deposit scheme – All deposits paid by a tenant for an Assured Shorthold Tenancy must be registered with a government-recognised deposit protection scheme within 14 days. These schemes offer protection to the tenant and a way of dispute resolution for all parties.
Depreciation – The decline or reduction in the value of a property caused by changes in market conditions.
Dilapidations – Any disrepair or damage to a rented property. The cost of the dilapidations is usually recovered from the deposit, where a tenant is found to have caused the delapidations
Disbursements – Fees the buyer will incur when buying a property, such as stamp duty, Land Registry fees and search fees.
Down valuation – When the lender restricts the amount you can borrow after the surveyor’s valuation report indicates the property is not worth the sum sought.
Draft contract – A preliminary version of the contract.
Early repayment charge - A charge or ‘fee’ payable if you pay part or all of a mortgage earlier than agreed. This is used to compensate the lender for interest you would have paid if the mortgage had run for the full time period agreed.
Energy Performance Certificate (EPC) – An EPC measures the property’s energy efficiency and carbon output, using a scale of A to G. It is a legal requirement and the seller’s / landlord’s responsibility to provide a valid EPC when marketing a property for sale / to let.
Equity – Either the amount of money spent on buying a property or the deposit placed on it. Also known as capital. It describes the proportion of your property’s value that does not have a charge against it.
Exchange of contracts – The point at which contracts are physically exchanged, legally binding the seller and buyer to the sale and purchase of a property at the agreed price and on the agreed terms.
Fixtures and fittings – Items in a house that are included in the sale, such as lighting fixtures, carpets and so on.
Gazumping – When a seller accepts an offer from a third party on their property, after they have already officially accepted an offer and agreed to sell to someone else, but before they’ve exchanged contracts.
Gazundering – When the buyer threatens to pull out just before the exchange of contracts if the price is not reduced or terms of sale aren’t changed in their favour.
Ground rent – A sum of money paid (usually annually) to a freeholder or leaseholder.
Guarantor – A person who is prepared to guarantee rental payments and other obligations of a tenancy. The guarantor will be liable for rental payments if a tenant is unable to pay them, so the guarantor will need to have a regular income. Guarantors should be referenced just as a potential tenant would be.
Holding fee – An amount paid by the tenant to temporarily secure the property, giving them time to return all the information required for their tenancy application.
Home Information Pack (HIP) – A HIP is a selection of legally documents relating to the property. Since 20 May 2010 it is no longer a legal requirement for sellers to provide a HIP, although they do still have to provide an Energy Performance Certificate (EPC) when marketing a property.
House in Multiple Occupation (HMO) – A property occupied by a number of individuals who share facilities, or do not have exclusive occupation of the whole property.
Inventory – In its most basic form, an inventory is a list of the contents of a property. Most will also include a schedule of condition and photographs. It is essential that an inventory covers all areas of the property that the tenants use, such as garages, outhouses, sheds, gardens etc.
Joint and several liability (Rental) - Where there is to be more than one (adult) person living in the property, the tenancy will say they are ‘jointly and severally’ responsible. This means that any one person within the tenancy is responsible for fulfilling ALL the terms i.e. each individual tenant is responsible for the whole rental payment, not just their share of it, and if one person breaches a term in the tenancy ALL tenants have breached and are equally liable.
Joint and several liability (Sales) – Where the mortgage is in more than one person’s name those people become ‘jointly and severally’ liable. This means that any one person who has signed the mortgage agreement is responsible for fulfilling ALL the terms i.e. each individual is responsible for whole mortgage payment, not just their share of it, and if one person breaches a term in the mortgage ALL individuals are deemed to have breached and are equally liable.
Land registration – The process of registering the legal title of an area of land with the Land Registry, typically handled by a solicitor.
Landlord – A person, persons, company or body with a formal interest in the premises and the right to let the property.
Landlord reference – A reference given by a previous landlord, which confirms the applicant’s history of payment of rent and their previous conduct as a tenant.
Lease – A legal document by which the freehold or leasehold owner of a property lets the premises/land or a part of it to another party for a specified length of time. Once the lease expires, ownership may revert to the freeholder or a superior leaseholder.
Lease agreement – Also referred to as the tenancy agreement or contract. A formal legal document between a landlord and tenant that reflects the negotiations between them. It constitutes the entire agreement between them and sets out their basic legal rights.
Leasehold - Land or property is ‘leasehold’ when the owner has to pay the freeholder an annual sum of money, often referred to as ground rent. Leasehold title is like a very long rental agreement paid up front.
Lender - A person or company that lends money for an agreed time period. They usually expect to have the money repaid back with interest added - your mortgage company is a lender.
Lien - The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.
Loan to value (LTV) – The proportion of the value of the property on which the lender is prepared to offer a loan.
Local authority search – When a buyer’s solicitor asks the local council for details of any outstanding enforcement or future development issues which might affect the property or the surrounding area.
Memorandum of sale – A legally recognised document that lists the people involved in a property transaction and the terms of that transaction, including the agreed sale price.
Mortgage offer – A formal offer from a mortgage lender, confirming that funds will be made available upon request within a certain time frame, and detailing the terms and conditions of the loan.
NAEA – The National Association of Estate Agents. Estate agents that are members of the NAEA must meet certain standards to gain membership and must follow strict codes of practice that influence the way they conduct their business.
Negative equity – When your home is worth less than the value of your mortgage.
Offer – A sum of money that the buyer offers to pay for a property. All offers should be placed in writing to you with the terms of the offer to ensure that it’s genuine.
Office of Fair Trading (OFT) – The Office of Fair Trading (OFT) offers advice on all consumer matters. They aim to protect consumers, explain their rights, and try to ensure that businesses compete and operate fairly. They have useful guides to consumer rights and the law. The OFT does not take up cases on behalf of individual consumers.
Ombudsman – An independent organisation that investigates professionals such as estate agents or solicitors when complaints are made by their customers.
PCM – Per calendar month.
Periodic Tenancy - This is a tenancy which runs from month to month or less commonly week to week. At the end of an initial fixed term AST unless you renew for a further fixed term or vacate the property, your tenancy will automatically role into a periodic tenancy.
Portable Appliance Test (PAT) – A test carried out by a competent person to ensure all electrical installations and appliances within a property are safe in accordance with the Electrical Equipment (Safety) Regulations 1994.
Preliminary enquiries – The initial questions asked about a property by the buyer’s solicitor. The seller must answer these fully before exchange of contracts.
Premium lease – Where the rent for the property is paid in full up front.
References - Checking a tenant’s ability to pay the rent and their track record in earlier rentals. This often involves contacting previous landlords and present employers (or accountants if the tenant is self-employed) and carrying out credit and imigration checks.
Remortgage – Mortgaging a property you already own, usually to replace an existing mortgage. You can remortgage to obtain lower monthly payments or, if you have enough equity in your property, to raise money for a number of purposes.
Renewal of contracts – When a tenancy agreement has expired or will shortly expire, you and the tenant sign new contracts and create a new agreement to carry on the let for a further fixed term.
Retention – The ability of a lender to hold back (retain) part of a mortgage loan until certain conditions are met.
Search – When your solicitor requests information about the property held by the Land Registry or the local authority.
Service charges – Also known as maintenance charges, these are paid by the owner of a property and cover the cost of providing various services (i.e. maintenance and repair of the building, lighting, security etc). Often associated with leasehold property.
Sitting tenant – A person occupying a property who is legally protected against being moved.
Solicitor – A legal expert handling all the paperwork for buying or selling a property.
Stamp duty – A government tax paid by the buyer on completion of a property transaction.
Subject to contract (STC) – An agreement that is not yet legally binding, as it is subject to the terms of the contract being agreed and all parties signing to commit themselves to its terms.
Superior landlord - People or person to whom the ownership of a property might revert at a later stage.
Superior lease or head lease – Where a property is leasehold the landlord will be governed by the freeholder, otherwise known as the head lease, and the lease agreement between the landlord and the freeholder will place certain responsibilities and obligations/covenants on the landlord.
Survey - The report produced by a surveyor in order to confirm the value of the property and whether it is structurally sound (depending on the kind of survey).
Surveyor – A professional person qualified to determine the value and condition of land and property.
Tenancy agreement – Also referred to as the contract or lease agreement. A legal agreement designed to protect the rights of the landlord and tenant, setting out all the terms and conditions of the rental agreement.
Tenant – A person(s), company or organisation who is entitled to occupy a property under the terms and conditions of a tenancy agreement.
Tenure – The type of ownership of a property, such as Freehold or Leasehold.
Term of lease – The length of time the lease runs, e.g. 999 years. The remaining term of the lease will be the time left from today’s date until the expiry date of the lease.
the sales for several properties are delayed or cancelled altogether.
The term of tenancy – The length or period of time the tenancy covers. Most initial tenancy agreements are for a minimum of six months.
Title deeds – Documents showing legal ownership of a property.
Title search – an investigation carried out by a conveyancer or solicitor into the history of a property’s ownership. The search will check for liens, unpaid claims or restrictions, or any other issues that may affect ownership.
Transfer deeds – The Land Registry document that transfers legal ownership from seller to buyer.
Under offer – The status of a property when an offer has been accepted but contracts have not been exchanged. Also referred to as Sold Subject to Contract (SSTC).
Utilities – Also referred to as services. These are normally electricity, gas, water and sewerage.
Valuation report – A survey carried out by a surveyor on behalf of a mortgage lender to confirm a property’s value. Lenders will carry out this survey to protect their interests, and it may be a condition of the loan that the buyer pays for this valuation report. It is not a condition report.
Vendor – The seller of a property.
Void period – Period of time when a property is empty or unoccupied by a tenant.