property jargon buster...property jargon buster acceptance a document that you need to sign and send...

PROPERTY JARGON BUSTER

Acceptance

A document that you need to sign and send back to the Lender if you wish to accept the lender’s mortgage offer.

Additional Security Fee

An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value. Also known as MIG, Indemnity Guarantee Premium and Mortgage Indemnity Premium.

Advance

The amount of money that your lender agrees to lend you.

Adverse Credit

Just as it sounds, it is a term used to refer to people with a poor credit history. This may include but is not limited to, things such as county court judgments (CCJ’s), bankruptcy, mortgage arrears, Individual Voluntary Agreements (IVA’s) and credit card or other borrowing arrears or defaults. (Can also be referred to as Non- Conforming).

Agent

This is normally a person/company, organisation that has been appointed and who acts on behalf of a landlord, such as a letting agent, management agent or estate agent.

Agricultural Covenant

This is a very specific planning condition that allows the building of a residential dwelling on the condition that it is occupied by a person employed or associated with working the land in someway.

Applicant

This is how you are normally referred to by an estate agent/auctioneer when you are the potential buyer of a property.

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Appraisal

This is what is done, usually by an estate agent, when you are selling your property to determine what they think the correct current value of it is. They will come in and appraise your property.

APR

Annual Percentage Rate. The amount of interest you will pay on your loan.

Arrangement Fee

Sometimes you might need to pay this fee to lenders for arranging a loan for you.

Assignable Contract

This is when an exchange contract allows you to sell on a property before the completion date.

Assignment

This is when the ownership of a property is transferred from one person to another.

AST

AST stands for “Assured Shorthold Tenancy” if basically gives a landlord the right to reclaim their property back after a specified period of time. At the moment AST’s tend to be for about 6 months.

Auction

This is a means of buying a property in a quick and open way. In an auction house, exchange is seen as having happened when the auctioneers hammer comes down for the final time for the winning bid.

Bailiff

Official who repossess your possessions or house if you cannot keep up on your mortgage/loan repayments.

Bank Automated Clearing System (BACS)



A type of funds transfer that is normally electronically done it is normally free of charge.

Bankers Draft

Different to a cheque in that the money has already been debit straight from your account, therefore the person receiving the bankers draft is confident the money will come to them, whereas with a cheque there is no guarantee there will be any money until it has been cleared. There is normally an administration fee to obtain a bankers draft, as well as you having to give a notice period, normally of at least 24 hours.

Banks

A place to go for Mortgages & Loans.

Base Rate

This rate is set by the Bank of England and is used as a benchmark for lenders to set interest rates by. It represents the lowest rate of interest a bank will charge you when it lends you money. This rate is reviewed periodically thorough out the year and can go up as well as down.

Below Market Value (BMV)

This is what is referred to as buying property under what is deemed to be the current value of the property.

Beneficial Owner

This is the person owning land and who is therefore entitled to it for his/her own benefit. This is different from say a trust etc that may hold land for the benefit of someone else.

Block Management

This refers to the agents that manage/act on behalf of the freeholds and leaseholds, normally for a block of flats or apartments. The will usually arrange things like, the insurance, tending the garden, general cleaning and re- decoration.

Booking Fee

Another term meaning arrangement fee.



Break Clause/Release Clause

These are sometimes used in conjunction with fixed term tenancies. For example: in an AST after the first 6 months is over when it comes to renewal, either party (landlord or tenant), will often request that a break/release clause be entered into the agreement, if they are unsure whether they will want to continue renting the property for the duration of the next 6 months. This clause will normally allow either party to get out (normally with about 2 months’ notice) before the end of the new term.

Bridging Loan

An expensive temporary loan to tide you over when having to buy your new house before selling your old home.

Broker

This is a person that advises on mortgages etc. Known as a mortgage broker.

Building Insurance

This is a type of insurance that is required to cover against the structure of your property being damaged or destroyed. The sum that is insured covers the estimated cost of rebuilding the property. (keep in mind this can vary greatly from the market value of the property.)

Building Society

Another place to go for Mortgages & Loans

Buy to Let (BTL)

This is a specific mortgage that allows you to buy a property with the main aim being to find tenants and let it out. The income from renting the property out is taken into consideration by the lender.

Capital

The total amount – sometime referring to sum borrowed in a mortgage – sometimes the amount you have left in a property after the mortgage has been repaid.



Capital and Interest Mortgages

With a capital and interest mortgage the monthly mortgage payments pay off both the initial loan (i.e. cost of the property) and any interest that has been charged. Therefore, at the end of the loan term, the entire debt will be repaid with nothing outstanding. (also know as a repayment mortgage).

Capital Rest Period

This is to do with the regularity with which the Lender calculates the outstanding balance on any give mortgage and hence the size of the monthly repayments. This figure is normally calculated annually, monthly or daily.

Capped Rate

This is a rate of interest that you agree to with your lender that will be the maximum you will pay during a set period of time. This is period of time is often the first 1-3 years of the mortgage starting, but it can be for longer. The interest rate cannot go any higher than this capped rate during this specified period of time.

Cash Back Mortgage

See Cash Back on completion.

Cash Back on Completion

This is where you get a lump of cash from the mortgage lender on the completion of a sale.

Cash on Cash Return

This is the same as Return on investment.

Caution

These are entries that are on a land register to protect the interest of a third part.

Chain



This occurs when the seller needs the sale of their house to occur before they can complete the purchase of another property. The same situation may exist for others in the chain. As a result, the whole chain can collapse if one link breaks.

Chain Free

This is simply when a potential buyer does not need to sell a property in order to buy a new one hence they are “chain free”. First time buyers are often chain free.

Charge

The term attached to a property by the lender to give security against the asset. It means that they have a right to the property value should it come to a sale.

Charge Certificate

This is a certificate issued to the lender by the Land Registry that gives evidence of the lender’s charge over the property.

Chief Rent

This is a payment made on freehold land to the original freeholder forever. This differs from ground rent because ground rent normally has a limited period.

Collateral

The property is what is classed as collateral. It is seen as a guarantee that you will be able to pay the lender the loan. If you aren’t able to repay this loan the property could be sold by the lender in order to recoup the money they originally lent you.

Company Let

This is when you have let your property to a specific bona fide company.

Completion

This is the final stage of the buying process. The ownership is legally transferred from the seller to the buyer.

Compulsory Purchase Order



(CPO'S) are normally issued by local authorities and they enable an authority to purchase a property whether the seller wishes to sell or not.

Contents Insurance

Insurance to cover any loss or damage to your possessions.

Contract Race

This is what sometimes happens when two potential buyers want to buy the same property. The seller will normally be the one to instigate the contract race but it can also be instigated by a buyer. The winner of the race will be the first buyer to be in a position to exchange contracts.

Contracts

The legal documents needed to transfer the ownership of property they are signed by both the seller and the purchaser.

Conversion

This is a flexible term in property and can mean such things as a house that has been converted into flats or a loft converted into a bedroom, as well as other things.

Conveyancing

Legal work involved in buying and selling a house.

County Court Judgement (CCJ)

You can get a CCJ if you default on a payment of debt. If you do get a judgment against you may have difficulty in getting credit in the future.

Covenants

The covenants are the terms of any given tenancy agreement. They include any obligations or promises made by either the Landlord or the tenant. They are requirements by law on the owner of a property that they will either do or not do something with their property.



Credit Search References

These are references taken regarding a potential tenant. These references can be from sources such as the tenant’s employer. A check of the tenant’s credit history is also often carried out.

Current Account Mortgage

This type of mortgage is a flexible mortgage that can keep all your finances in one place. It combines your mortgage with a current account and the money in the current account can be automatically set against the mortgage balance and then interest only charged on the outstanding amount of the loan. In practice this should mean that interest payments should be reduced.

Deeds

These are the legal documents associated with a property.

Decision in Principle (DIP)

‘Mortgage Promise’ or an Agreement in Principle’ (AIP), a mortgage in principle is a certificate or statement from a lender to say that in principle they would lend a certain amount to a particular prospective borrower or borrowers based on some basic information.

Default

This is when you have failed to make payments as you have agreed to. In property terms this is normally used when talking about missed payments on your mortgage.

Delayed Completion

Completion is classed as delayed if they take over 28 days to complete after exchange of contracts a delayed completion needs to be agreed before exchange of contracts.

Deposit

This is normally a lump sum paid to the seller towards the overall cost of the property it is normally held by solicitors until completion of contracts.



Direct Debits

Direct debits are used to make payment directly from a bank account. Direct debits are used usually used when the amount being paid might vary otherwise Standing Orders are used.

Direct Lenders

A new form of mortgage lender who deals solely over the telephone.

Disbursements

Expenses paid by the solicitor on behalf of the purchaser.

Discounted Rate

A Discounted rate mortgage will have an interest rate lower than the lender's Standard Variable Rate.

Discounted Tracker Rate Mortgage

This is a variable rate mortgage that is discounted from the Bank of England’s base rate. It is usually discounted by a set percentage for a set period of time. In practice there are usually early repayment charges that will be charged if the loan is repaid within the discounted period.

Double Agent

An agent who is acting on behalf of both the buyer and the seller in practice this is a term sometimes used for an Estate Agent who reveals the seller's lowest asking price to the buyer in order to make a quick sale. An agent should be acting on behalf of only their client who is generally the seller.

Early Repayment Penalty (ERP) / Early Redemption Charge (ERC)

This is a fee that is sometimes charged if you pay off all or part of your mortgage before a pre-agreed time.

Endowment Mortgage



Type of mortgage where monthly payments are made into a endowment (life assurance) policy. The loan is paid off in one lump sum at the end of the loan period.

Energy Performance Certificate (EPC)

This certificate is part home information pack and gives you information as to how energy efficient your home is in a similar way to the stickers you see on fridges.

Engrossment

This is the final and formal version of a document that has been prepared by a solicitor in preparation for signing following the agreement of the final draft between parties.

Equitable Interest

This is when someone has some legal rights to a property but these rights do not include the right to sell its legal title.

Equity

This is the difference between the market value of a property and the amount of the mortgage that is still owed to the lender on that property.

Estate Agent

Property agents who link up buyers and sellers. Estate Agents advertise houses & arrange viewings.

Excess

The initial sum you have to pay on an insurance claim.

Exchange of Contracts

The point at which buyer and seller are legally bound to the sale and purchase of the property.

Exclusive Mortgage

This mortgage is called an exclusive mortgage because it is only available through a specific packager in conjunction with the Lender who is going to provide the funding.



Execution

This is when a deed is signed, sealed and delivered in front of an independent witness.

Execution Only

This is a service with no advice, just carried out the orders of a customer.

Failed Valuation Survey

When the lender turns down your mortgage application after reading the surveyor's valuation report.

Fixed Rate Mortgage

This is a mortgage which has a 'fixed' rate of interest for a set period of time normally between 1-5 years.

Fixtures and Fittings

Any items not included or included in the sale of the property. For instance, curtains, carpets, wall lights, cooker etc. These are generally agreed on a document sent by the seller’s solicitor to the seller to complete, this document is then passed over to the buyer’s solicitor for the buyer to read.

Flexible Mortgage

These are mortgages that allow you to pay them off in a flexible way, one example of this are mortgages that allow you to make overpayments so that you can pay off your mortgage early.

Flying Freehold

A flying freehold is formed when part of a freehold property overlaps onto a different freehold property or land.

Freehold

This is when you have complete ownership of a piece of land and the property that resides on it.



Full Status

This describes a borrower who has a good credit history and who is not self-certifying his income.

Gas Safety Regulations

A landlord must make sure that a gas safety check is carried out prior to letting out any property. Then it needs to be completed annually and a copy of the record must be given to the tenant. This check must be carried out by an authorised CORGI register engineer.

Gazumping

Gazumping is when a vendor accepts an offer from one person only to later reject it in favour of a higher offer they receive from someone else.

Gazundering

This is a term used when a buyer reduces his offer moment before exchange.

Gearing

This is the amount of money you have against the amount of a loan. You can be ‘highly geared’ which is owning very little of a property with a very big loan or ‘lowly geared’ which is when you have very little debt against an asset. Also see ‘negative gearing’.

Gifted Deposit

This means that someone has gifted you the deposit on a property. This would normally have been a developer on a new build property you are buying. In practice it is an incentive to encourage you to buy the property as is similar to ‘cashback’ on a mortgage. Don’t be too fooled there is after all no such thing as a free lunch.

Ground Rent

Ground rent only applies to leasehold properties and is a sum paid annually to the Freeholder of the property, by the leaseholder. There are normally service charges also attached.

Guarantor



This is a person who agrees to guarantee that they will repay a loan or debt if you default on the payment of it. A typical example of this is when a parent guarantees the mortgage will be paid on their son/daughter’s first property purchase.

High Rent Tenancy

This indicates a tenancy agreement when the annual rent on a property is over £25,000 and is known as a contractual tenancy.

Higher Lending charge

See Additional Security Fee

HMO

House in Multiple Occupation – bedsits come under this category. They are the subject to more rules and regulations than the average property

Home Information Pack (HIP)

This is also known as a seller pack and have been legally required on all properties that are sold in on the open market since Dec 14th 2007. You have to have one as you cannot sell most properties without one so whether you question their value as most do or not its best to get one in plenty of time.

Home Report (HR)

Property for sale in Scotland have to be marketed with a Home Report. This is a pack of three documents; a Single Survey, an Energy Report (EPC) and a Property Questionnaire

The Single Survey contains an assessment by a surveyor of the condition of the home, a valuation and an accessibility audit for people with particular needs.

The Energy Report contains an assessment by a surveyor of the energy efficiency of the home and its environmental impact. It also recommends ways to improve its energy efficiency.



The Property Questionnaire is completed by the seller of the home. It contains extra information about the home, such as Council Tax banding and factoring costs that will be useful to buyers.

The Home Report is made available on request to prospective buyers. There is no legal requirement to update the Home Report provided the house remains on the market.

IFA

IFA stands for “Independent Financial Adviser “and means someone that has undergone specific training and has obtained specific qualifications to give financial advice and to act independently without being tied to only recommending the products of any particular lender.

Improvement Grant

This is a grant given by the local authority towards the repair of the improvement of a property.

Income Multiples

These are the multiples that the Lender will apply to the borrower’s income when trying to decide what the maximum they will lend them for their mortgage is. It is worked out based on what you are likely to be able to afford. Traditionally you could borrow 3.5 times your salary but in headier times 5 or even 6 times a salary was available.

Indemnity

An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value. Also known as MIG, Indemnity Guarantee Premium and Mortgage Indemnity Premium.

Indemnity Guarantee Premium

An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value. Also known as MIG and Mortgage Indemnity Premium.

Individual Savings Account (ISA)



They are a way for people to save cash or shares without paying tax. They are also seen as a savings vehicle associated with interest only mortgages so you can repay the loan amount at the end of the term.

Inheritance Tax

Also known as Death Duties it is a tax on everything you own when you die. It is a good idea to properly consider inheritance tax with a financial advisor especially if you have dependents.

Instruction

This is when you given an estate agent or auctioneer the right to sell your property. The resulting agreement between you and them confirms the terms under which the “instruction” is offered by you and accepted by the estate agent or auctioneer.

Interest only Mortgages

This is when you are only paying off the Interest on the mortgage over the term of the loan. You are not actually paying any of the mortgage amount itself. For this reason, Interest only mortgages are often tied in with some other type of investment vehicle which is set up to cover the initial loan amount at the end of the mortgage term. This investment vehicle includes things like, ISA’s endowment policies and personal pensions.

Intestate

This is where your assets sit if you have not made a will before you die whilst it is decided who inherits.

Introducer Fee

This is just as it sounds and is a commission that is paid by the Lender to intermediaries for introducing business to them. At the time of writing, if this intermediary receives a payment of more than £250 they are then obliged under the Mortgage Code to disclose to the borrower the exact amount they received. (This is also sometimes referred to as a Procuration Fee).

Inventory



This is a listing of the contents of any given property. This can include things like kitchen utensils and garden equipment etc. As well as the condition a property is in and the structural fixtures, fittings and power points etc. It is generally associated with rental properties let on an AST.

Joint Tenants

This is when two or more people are co-owners of a property. When one dies, their share of the property automatically passes to the other/others.

Joint/Multiple Agency

This is when you have instructed more than one estate agent to market your property. This can sometimes mean that you are paying higher commission fees because they are not your sole agent.

Joint/Several Liability

This is when there is to be more than one adult living in a property. Tenants tend to be ‘joint and severally liable’ which means that they are liable together but also individually each tenant is responsible for payment of all rent and all liabilities.

Land Certificate

This is a certificate that is issued by the land registry that proves ownership of land.

Land Registry

This is a government department where details of the ownership of properties and any charges against these properties are held.

Landlord

A landlord can be a person, group of people, company or some sort of body that has a formal interest in a property and has the right to let that property out to tenants.

Lease

Document in which the owner of a freehold property lets out their premises to a named party at a certain price and for a specified time.



Leasehold

This when a leaseholder is granted the right to use land/property for a fixed period of time. This ownership is subject to the annual payment of ground rent to the owner of the freeholder.

Lease Option

A lease option is a type of contract used in both residential and commercial property. In a lease option, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property.

Lender

A company or person who lends you money for an agreed time period. Interest is generally charged.

Lender's Arrangement Fees

Charge passed on to the buyer by lender for arranging a loan.

Lender's Legal Fees

The fees incurred by the lender when arranging a mortgage. These costs are generally passed onto the buyer.

Lender's Valuation

A valuation of the proposed property carried out by the lender before agreeing to give out a mortgage. This is only a valuation survey. A separate survey may be required by the buyer.

Lessor

This is the person etc. that grants a lease.

Let to Buy Mortgage (LTB)

This is a mortgage that allows you to borrow money to buy a new home to move into while your current home is let out to tenants. The maximum you can borrow for your new mortgage will generally be calculated without taking your existing mortgage on your



current home into consideration, as long as the rent covers the mortgage on the current home.

Libor-Linked mortgage

This is a variable rate mortgage that is linked to the London Inter-Bank Offered Rate and will normally be set at a certain percentage above the Libor rate within a given period of time. The Libor rate is often associated with lenders that offer Loans to borrowers with some sort of adverse credit history.

Lien

This is a term used for the legal right of one person to hold someone elses property as security for a debt.

Life Assurance

An insurance policy which pays out a fixed lump sum on death of an individual.

Life Policy

This is a policy/insurance that repays the mortgage in the event of the insured person’s death. (This can also be known as Term Assurance).

Loan-to-Value (LTV)

A percentage expressing the size of mortgage against the value of house. For example, if a House Value is £100,000, with a Mortgage Size of £90,000, the loan-to-value = 90%.

Local Authority Search

A search carried out by the Solicitor to find out if there are any Local Authority Notices, with respect to the building itself (e.g. has it been condemned?), and the surrounding area (e.g. have plans gone through to build a motorway next to the house?) there are many different searches that can be carried out an average house requires 2/3 but some may require say a mining search.

Maintenance Charge



This is the charge that will have been agreed in the initial contract with the landlord that covers costs of maintaining a property. Depending on the type of property in question, this will typically include things like keeping the garden and communal areas and outside of the property in good order.

MIG

MIG – stands for “Mortgage indemnity guarantee” and is an insurance premium that lenders sometimes require you to take out in certain situations but often when there is some uncertainty as to a right on the property.

MIRAS

Mortgage Interest Relief At Source. Tax relief available on interest payments on the first £30,000 of your mortgage. Phased out in April 2000 by the Government.

Mortgage

A long term loan to fund the buying of a property.

Mortgage Deed

This is a document that details the conditions of a loan/mortgage secured on a property.

Mortgage Indemnity Premium

An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value. Also known as Indemnity Guarantee Premium or Mortgage Indemnity Premium.

Mortgage Offer

This is normally in letter form from the lender offering you a loan and setting out the conditions by which it is offered.

Mortgage Payment Protection Insurance

See Accident Sickness and Unemployment Insurance as they are essentially the same thing.



Mortgage Term

Period over which mortgage is to be repaid.

Mortgagee

The lender of a mortgage.

Mortgagor

The house buyer who takes out a mortgage.

Multiple Agency

See Joint/Multiple agency earlier in this property glossary page.

Negative Equity

This is when you owe more money to the lender than the actual market value of your property

Negative Gearing

This is when the amount of rent that a property brings in is less than the cost of the mortgage. Bear in mind tax must be deducted from the income before a loan can be repaid.

Non-Conforming

Just as it sounds, it is a term used to refer to people with a poor credit history. This may include but is not limited to, things such as county court judgments (CCJ’s), bankruptcy, mortgage arrears, Individual Voluntary Agreements (IVA’s) and credit card or other borrowing arrears or defaults.

Offer

This is when you make an offer for a property – this may be at the asking price or less or in some cases more.

Offset Mortgage



This is a flexible mortgage that allows credit in one account to be taken into consideration when calculating the interest due on different mortgage.account. For example: Money in your savings or current accounts is set against your mortgage balance and then interest is only calculated and charged on the outstanding amount. In practice this should mean that your interest payments are reduced.

OMV

OMV stands for "Open Market Value" and is the value a property can achieve in the open market when there is both a willing buyer and willing seller.

Option Agreement

You generally have to buy an option for an agreed amount of money. It gives you a set time when the vendor can't sell it to anyone else although you are not legally tied to a purchase.

Overpayment

This is when you make an unscheduled capital repayment i.e. you pay over what was agreed initially. This can be an effective way of repaying your mortgage before the end of the term and saving yourself a considerable amount of interest. With some mortgages you will be charged a fee for overpaying or for overpaying over a certain amount.

Packager

Relates to a mortgage packager; people that get all the documents relating to your application to a lender, ready for you.

PCM

PCM stands for “Per Calendar Month” and is normally used when talking about the rental figure per calendar month (PCM).

Pension Mortgage

Monthly repayments made up of a) Interest on loan and b) contribution to a personal pension scheme. The loan on the house is paid off in one lump sum at the end of the loan period. This can be a tax efficient way to save.



Peppercorn Rent

This is a term used to mean a ground rent that is of a trivial sum in reality no actual money changes hands.

Personal Equity Plan (PEP)

Personal Equity Plans (PEPS) were tax efficient investments that where available in the 1980’s and 1990’s. Many people used them as an investment vehicle to go along with an interest only mortgage.

Portable Mortgage

A portable mortgage is one which allows the borrower to move their mortgage from one property to another without penalty within an early repayment charge period. Portable mortgage can be very important, for example: if there are early repayment charges for the first 3 years on your mortgage, then if you wanted to move house after say 19 months and didn't have a portable mortgage, then you would have to pay the charges and then get a new mortgage product.

Preliminary Enquires

These are set of questions that are raised by solicitors on the sale/purchase of a property. They can be completed in advance of an agreed sale (along with a fixtures and fittings form) to avoid any delays once a property is under offer.

Premium

The monthly amount payable to an insurance policy.

Principle

The sum of the loan on which interest is calculated.

Private Residence Relief

A tax relief relating to your principal home.

Probate



Probate is the official process of proving a will is valid. If the will involves a property, things such as inheritance tax etc need to be taken into account. A probate valuation can be obtained which is normally a negotiated value with the district valuer who represents the Inland Revenue. It is vital for a potential purchaser and the seller to understand that the sale of a property in this situation cannot proceed to exchange until probate is granted.

Procuration Fee

See Introducer Fee

Public Liability Insurance

Insurance which covers injury or death to anyone on or around your property.

Redemption

When a mortgage if fully repaid.

References

This is what is done to check a potential tenant’s suitability to rent a property. Such things as contacting previous landlords, present employer and doing a general credit check can come under this category.

Registered Land

This is land (including any property on it) which is registered at the Land Registry.

Release Clause

These are sometimes used in conjunction with fixed term tenancies. For example: in an AST after the first 6 months is over when it comes to renewal, either party (landlord or tenant), will often request that a break/release clause be entered into the agreement, if they are unsure whether they will want to continue renting the property for the duration of the next 6 months. This clause will normally allow either party to get out (normally with about 2 months’ notice) before the end of the new term.

Relocation Agents

Specialists in finding houses and assisting with negotiations.



Rental Agreement

This is the document that contains all the details and terms and conditions of the tenancy. An AST is a form of tenancy agreement. It is a legally binding document.

Repayment Mortgage

Both capital and interest on the loan are paid off in monthly instalments.

Repossession

When the mortgage lender takes possession of your home because you have fallen too far behind on your mortgage repayments. You will be removed from the property.

Retention

This is an amount of money that is held back from the initial loan and will not be paid out by the lender until specific repairs or improvements have been carried out by the purchaser.

Return on Investment (ROI)

This term refers to how much you get out of an investment in comparison to how much you have put into it. For example, if you have invested £100,000 and got £125,000 out it would be a 25% return on your investment.

Return on Time Investment (ROTI)

This is the hourly return on any time expenditure as valued in pound amount per hour.

Reversion

This is a special type of property purchase. You have an agreement with the vendor that they can still continue to live there for a specified time, normally until they die or some other significant agreed event happens.

Right of Way

An individuals legal right to use any particular part of a property so as to gain access to their own property.



Right to Buy (RTB)

This is when a tenant living in a council-owned (or sometimes housing association or other social housing owned) property, can purchase the property at a discount. Generally the size of the discount depends on the length of their tenancy. In the 1980’s and 1990’s there could end up being a sizable discount, but these days the discount is often capped, no matter how long you have lived there.

Sale and Rent Back (SARB)

This is when you buy a property and then rent it back to the people you have bought it off. It is often seen as an investment.

Searches

Searches are carried out by solicitors to find out whether there are any unwanted/adverse effects in relation to a particular property. They will cover both existing issues as well as planned.

Self Build

This is when you build the property yourself. If you are a builder you could literally build it yourself otherwise you can commission builders, surveyors etc to be involved with the planning and building.

Self Build Mortgage

This is a mortgage that is taken on to build a property. The loan amount is generally paid out in stages as the building is progressing.

Self Certification Mortgage (S/C)

This is a mortgage where a buyer does not provide evidence of there income but instead they state their income and sign a confirmation of their ability to repay the mortgage. Normally the rates of a self certification mortgage will be higher than those of a standard mortgage and a larger deposit is required.

Sellers Pack



This is also known as a Home Information pack (HIP) and has been legally required on all properties that are sold in on the open market since Dec 14th 2007. You have to have one as you cannot sell most properties without one so whether you question their value as most do or not its best to get one in plenty of time.

Services/Utilities

Gas, electric, water and council tax. In most AST’s the tenant will be responsible for the cost of these.

Shared Ownership

This is a scheme that is operated by various Housing Associations where the borrower buys and owns part of a property i.e. a percentage such as 40%, 50%, 75% etc and they pay a mortgage on the percentage they own. The Housing Association owns the rest of the property and the borrower pays rent to the Housing Association on this. The borrower would normally have the right to purchase a higher percentage of the property in the future.

Sitting Tenant

This is when someone occupies a property as a tenant but has not signed an AST and so therefore cannot be asked to leave.

Sole Agent

When a seller chooses only one agent or service to sell their home.

Sole Selling Rights

This is where one agent has complete control over the sale of a particular property. This agent is generally entitled to his fee however property is sold.

Solicitor

Legal Professional who acts on behalf of the buyer or seller in the purchase of a house. The solicitor will check the legal position of the house, carry out Local Authority Searches, Land Registry Searches check monies are in place and oversee the exchange and completion of contracts between the two parties.



Split Loan

A split loan is a mortgage that can be taken partly on a capital and interest basis and partly on an interest only basis.

Stamp Duty

A Stamp Duty is the tax placed on legal documents usually in the transfer of assets or property. See https://www.gov.uk/stamp-duty-land-tax/overview for a comprehensive break down and associated fees.

Standard Variable Rate (SVR)

This is the default variable rate the Lender offers to borrowers on their standard residential mortgages. It is also normally the rate that mortgage is reverted back to at the end of any special discount period.

Standing Order

This is what you would normally get a tenant to set up to pay you rent directly. It is called a standing order mandate and is the instruction to the tenants bank to pay you a set figure on a regular basis for example £850 rent on the 1st of each month.

� Structural Survey

A report constructed by the surveyor detailing firstly, whether the house is structurally sound and secondly, listing the major/minor defects, (including the necessary work which needs to be done).

Studio flat/apartment

This is a flat or an apartment with the bedroom/living room all in one. It will normally have either a separate kitchen or a kitchen in the corner of the main room. It will still have a separate bathroom and loo.

Subject to Contract



This is a term that is associated with an agreement to purchase a property before exchange of contracts. At this stage either party is still free to pull out of the transaction.

Superior Landlord

The superior landlord is the landlord who the ownership of a property might revert to at some stage for example; a flat with a 99-year lease.

Superior Lease or Head Lease

This is often applicable to a flat that is rented out. There will be a freeholder, a leaseholder who has a superior or head lease and then they may grant a lease generally as an AST to a tenant to actually occupies the property though they must comply with the terms of both their lease and the Head Lease.

Survey

A term that covers various types of surveys from a valuation survey which is a report that is produced on a property to determining the value of the property, whether it is structurally sound and whether the lenders money will be secure to a full structural survey which gives much more detailed information. This report is done by a qualified surveyor upon inspection of the property. You generally have three tiers of report available: Valuation, Home Buyers and Structural. The structural is the most in-depth and hence normally the most expensive.

Surveyor

The person who carries out a survey of a property, examining the structure and general state of the house.

Tax Relief

Tax relief available on interest payments on the first £30,000 of your mortgage. Phased out in April 2000 by the Government.

Tenancy Agreement



This is the document that contains all the details and terms and conditions of the tenancy. It is also known as a rental agreement. An AST is a form of tenancy agreement. It is a legally binding document.

Tenancy at Will or Licence

This is when a purchaser wants to gain access to the property before legal completion. This can be for anything from measuring up to actually beginning renovations etc. This can be organised formally through the solicitors and a licence arranged between both the vendor and the buyer. In this situation the buyer sometimes agrees to pay an appropriate rate of interest on the balance of money owed for the property (i.e. the purchase price of the property less the deposit that they have already paid). They will pay this instead of paying rental.

T enant

A tenant is a person or persons (can be a company or organisation) who is entitled to occupy a property under the terms and conditions of a tenancy agreement.

Tenants in Common

This is when two or more people are co-owners of a property. When one dies, their share of the property automatically passes to the other/others.

Tender – For Sale by Tender

This is when an asking price is not stated but offers are invited in writing. There will be a set time and date for the offers to be opened and it will usually be in the presence of the vendor’s solicitor. Normally an acceptance of an offer by the vendor constitutes an immediate agreement subject to contract.

Tenure

This is relating to whether a property is freehold or leasehold, it denotes the type of ownership a property has.

Term

The period that the mortgage will last for.



Term Assurance

This is a policy/insurance that repays the mortgage in the event of the insured person’s death.

Title

The legal right to ownership of a property.

Title Absolute

This is the highest form of tenure available. (see a bit further up this property glossary page for an explanation of tenure).

Title Abstract of

This is a summary of the title documentation used in the conveyancing of unregistered properties to prove that the vendor has the right to sell that particular property.

Title Deeds

These are legal documents that describe the rights and the liabilities that are attached to a property and they also prove ownership of a property.

Title Report

A report from the land registry that confirms that the title of a property is acceptable. This is a vital certificate that a lender must have before they will issue the cheque for mortgage monies.

Tracker Mortgage

This is a mortgage that moves in line with the Bank of England base rate and for a set period of time.

Under Offer

This is when a vendor has accepted an offer for the property but contracts have not been exchanged on it yet. At this stage either part can still withdraw from the sale/purchase of the property.



Vacant Possession

This is when the property is vacant. The previous occupants of the property must vacate the property before you move in.

V aluation

The process of evaluating a property to determine its market value. In some cases, there may be a cost for this service by a professional, this cost is referred to as a Valuation Fee.

Valuation Survey

A survey carried out by the lender to ensure that the house's value is not less than the proposed loan. Often the lender will arrange the survey and bill the buyer. This cannot be used as a structural survey. It is also a service offered by estate agents or other property professionals to try to ascertain the value of your property in the current market.

Vendor

This is another word for the person who is selling a property.

Vendor Deposit

This is when you use creative financing to get the vendor to pay the deposit or part of the deposit for you – generally used by developers.

Yield

Yield is the ‘return’ on a property investment on a yearly basis. The two main ways to look at yield are gross yield and net yield.

Yield (GROSS)

This is a measure of your return on investment before tax, in the form of rental income compared to the property's price.

Yield (NET)

This is a measure of your return on investment taking into account any expenses incurred.



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