The property world is full of words and expressions that may be unfamiliar to anyone who is not regularly buying, selling, letting or renting a home.
In the first part of an occasional series, this guide will help to shed light on what they all mean.
A landlord described as absent is one who cannot be contacted. If the lessees wish to create a Right To Manage Company but are unable to contact the landlord, they are free to make a legal application to acquire the right to manage.
The document you need to sign when accepting a lender’s mortgage offer.
A payment which is charged to cover the costs of processing a property rental application. This is paid by the tenant and will be taken from the initial monies once the tenancy starts.
Annual Percentage Rate (APR)
The total cost of a loan, taking into account interest charges, arrangement fees and other costs, shown as a percentage.
A payment which is charged to cover the costs of drawing up a tenancy agreement. This is usually shared between the landlord and tenant.
The Association of Residential Letting Agents, the UK’s foremost professional body for letting agents.
These are fees charged by a mortgage lender or broker to arrange a loan.
To transfer the right or interest in a property from one person to another.
Assured Shorthold Tenancy (AST)
A widely used rental agreement where the tenant is an individual and net rent does not exceed £25,000 a year. It covers a fixed period, so both parties know the date the property will be vacated.
The rate of interest which the Bank of England charges for lending to other banks. These banks then use it as a benchmark for the interest rates they charge when lending money to consumers, often stipulating an interest rate X% above the base rate.
A clause sometimes agreed between the landlord and tenant to be inserted in a fixed term agreement, typically if the initial fixed term is for a year or more. A break clause will usually allow either landlord or tenant to give written notice after a particular date or period of the tenancy in order to end the tenancy earlier than the original fixed term.
A temporary short-term loan enabling someone to purchase a property before selling his or her existing property.
Building Inspection/Structural Survey
A report on the physical condition of a property. The surveyor will look at all accessible parts of the property and give a written report on defects or issues affecting it. See also HomeBuyer Report. Not to be confused with a mortgage valuation.
Capital, also known as equity, is an asset that is less liquid than cash. It represents the amount of money you have put into a property, investment or deposit.
A chain is formed when several property sales and purchases are inter-dependent. A chain can be complicated but a good estate agent will be able to help keep it moving.
The point at which the sale of the property is concluded and the buyer receives the keys.
A document which your solicitor or conveyancer will provide as a record of all the financial transactions and costs.
Conditions of Sale
The specific items in a sale contract that govern the rights of the buyer and the duties of the seller.
The legal document detailing the agreement of terms between the seller and buyer. When a sale is agreed, a draft contract is sent to the buyer by the seller’s legal representative and at exchange of contracts both parties are bound to a date on which to complete the sale.
Where two or more purchasers are given a draft contract and the first one to exchange contracts buys the property.
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.
The legal process of transferring the ownership of a property.
Rules governing the property in its title deeds or lease.
Credit Search References
References requested for a tenant applying to take up rented accommodation. Many agents and individual landlords use external companies who will contact the applicant’s employer, landlord and check the tenant’s credit history, providing a report on their financial suitability to rent.
The legal documents that prove the ownership of the property.
When buying: The amount of money paid by the buyer on exchange of contracts, usually 10% of the purchase price.
When renting: A monetary sum held by the landlord or agent for security against damage to a property or a breach of the tenancy terms. This is usually the equivalent to six weeks’ rent but may vary. If the deposit is for an Assured Shorthold Tenancy (AST), then it must be protected by one of the approved tenancy deposit protection schemes.
Items that have been damaged during a tenancy. The tenant is usually responsible for the cost of repair or replacement.
The items in addition to legal fees in conveyancing. These may include Stamp Duty Land Tax, Land Registry fees, search fees, mortgage redemption costs and any other expenses. All conveyancers should be able to estimate the likely level of disbursements before the transaction commences.
The initial version of the contract. This may be amended during the course of the sale but becomes final at the point of exchange of contracts.