Property Jargon Explained
If you are looking for your first home, the frequent use of property terminology may feel bewildering. When I began my property journey, I felt that every key person I came across bombarded me with complex property terms that I didn’t quite understand. Paperwork was a minefield and contracts were simply mindboggling. Often, I found myself secretly googling answers or calling upon my network.
Once you begin your first property search, you are quickly propelled into a new realm of property lingo and terminology. Here at First Property Steps, we aim to take your hand and guide you through the process step by step.
Understanding the terms and phrases that you will come across is vital when you buy your first home. That’s why I have created an A-Z list of definitions of property words that you may come across.
- Agreement In Principle (AIP)
This is a document provided by your mortgage lender to indicate an amount they will lend dependent on your earnings and credit ratings.
- Auction
At an auction, properties are sold to the highest bidder subject to funds. Following the sale, there is a fixed timescale for exchange and completion.
- Building Insurance
Building insurance covers the financial cost of repairing or rebuilding your home. If there is a disaster such as a fire or a flood, this insurance will cover damage to the structure of your home and permanent fixtures, for example, a fitted kitchen or bathroom suite. It is compulsory to have this when you take out a mortgage on a freehold property.
- Chain
When there is more than one buyer in a transaction a chain is formed. It consists of buyers and sellers who are all interdependent on one another for the completion of the sale. If a property is chain free, then it means that the seller does not need to buy another home. Buying chain free is a desirable option as it often means a speedier process.
- Completion date
This is the date that a property is legally transferred to the buyer and keys are issued.
- Contents Insurance
Insurance that covers the possessions within your property.
- Conveyancer
The solicitor or licensed conveyancer who is involved with the legal process of transferring a property from one owner to the other.
- Covenants
Found in the title deeds, or lease, these are the legal requirements of governing a property. For example, you may be unable to install an aerial.
- Credit Report
A detailed report covering an individual’s credit history. This is often viewed as a sign of a buyer’s reliability to pay bills, including a mortgage.
- Deeds
A deed is a legal document that officially recognises ownership of the property and its boundaries.
- Deposit
The initial sum paid by the buyer to secure payment of a property.
- Energy Performance Certificate (EPC)
This is a certificate that shows how energy efficient a building is. This will be ranked between A-G with A being the most efficient. This is legally required to sell a property.
- Exchange of contracts
The point where solicitors from either side exchange contracts. Both parties are now legally bound to the sale of the property.
- Freehold
The owner owns the property and land. Houses are more likely to be freehold.
- Gazumping
Gazumping is incredibly frustrating and something to be prepared for. A new buyer outbids the original buyer whilst the property is under offer. The original buyer usually loses the purchase of the property and the gazumper buys it instead.
- Guide Price
The approximate amount that the owner is willing to sell the property for. This will give agents the flexibility to entice more viewers to the property and open negotiation discussions for a sale.
- IFA – Independent Financial Advisor
An advisor will give unbiased financial advice.
- Leasehold
This is where the owner of the lease lets out the property for a fixed amount of time. Flats are more likely to have a lease.
- Repossession
If a subject defaults on their mortgage repayments, they may have their home possessed by their mortgage or financial lender to cover the outstanding debt.
- Sold Subject to Contract (STC or SSTC)
An offer has been accepted by the owner, and the paperwork is in the process of being completed. Some agents may use the term ‘sale agreed’.
- Stamp Duty Land Tax
The tax paid to the government by the buyer upon sale of a property. This can be anywhere between 0% and 12% of the property amount, depending on its value. This is paid on completion.
- Survey
An in-depth report on the structural condition of the property. This will be carried out by a chartered surveyor.
- Vendor
The seller of the property.