Property glossary
Here are some of the more commonly used industry terms that you should be familiar with to help better understand the property market.
A B C D E F G H I J L M N O P R S T U V Y
A
Acceptance
Document confirming to a lender that a borrower wishes to accept a mortgage offer.
Additional Security Fee
Fee charged by some lenders to protect them against the borrower defaulting. Also known as Mortgage Indemnity Guarantee and Mortgage Indemnity Premium.
Advance
Monies provided by a lender to a borrower and secured on the property as part of the mortgage debt.
Agreement
Document outlining the terms agreed between the buyer and the seller and binding both parties to complete the sale/purchase transaction. Also known as Contract.
Annual Percentage Rate (APR)
Total cost of a loan expressed as an annual interest rate. Provides a useful comparison when reviewing mortgage offers.
Arrangement Fee
Fee charged by some lenders to cover the administration of arranging a loan.
Arrears
Amount that is overdue in relation to a mortgage, which may result in action by a lender to repossess the property.
Asking Price
Price set by the seller of a property as what they hope to achieve.
Assignment
Transfer of a right or claim to a property from one party to another.
Auction
Method of sale whereby a property is sold to the highest bidder.
B
Base Rate
Interest rate set by the Bank of England. Variable mortgage rates will often be adjusted depending on movements in the Base Rate.
Borrower
Person who is obligated to repay a loan in accordance with its terms.
Break Clause
Defines the point at which a contract may be terminated.
Bridging Loan
Temporary loan designed to enable a property to be purchased prior to the sale of another property.
Buildings Insurance
Insurance policy required by lenders and designed to cover any structural damage to a property.
Building Survey
Detailed report on the construction and any defects of a property, following a thorough inspection carried out by a Chartered Surveyor. Also known as a Structural Survey.
Buyer
Person who is buying a property. Also known as the Purchaser.
Buy to Let Mortgage
Mortgage designed for buying property that is intended to be rented to tenants for investment purposes.
C
Capital
Amount borrowed on which interest is calculated.
Chain
Occurs where successive buyers and sellers are linked together and reliant upon one another to complete the transaction.
Charge
Security in the property relied upon by lenders when granting a mortgage.
Chartered Surveyor
Suitably qualified person employed to carry out a Building Survey and report on the condition of a property.
Collateral
Property pledged as a guarantee for the repayment of a mortgage.
Commission
Fee payable to an estate agent, usually a percentage of the property price, for providing certain services in relation to the transaction.
Completion
Point at which legal transfer of property ownership passes from one party to another.
Conditions of Sale
Terms defined in the contract and which determine the rights and duties of the buyer and seller.
Contents Insurance
Optional insurance policy designed to cover any loss or damage to possessions within the property.
Contract
Document outlining the terms agreed between the buyer and the seller and binding both parties to complete the sale/purchase transaction. Also known as Agreement.
Contract Race
Occurs when two or more parties attempt to purchase the same property and the Vendor will sell to the first party to exchange contracts.
Conveyancer
Suitably qualified person, such as a solicitor or licensed conveyancer, who handles the legal and administrative process of transferring ownership of a property from one person to another.
Conveyancing
Legal work involved in transferring the ownership of a property from one person to another.
Covenant
Legal requirement incorporated in the Title requiring the owner to do, or not to do, something in relation to the property.
D
Declaration of Trust
Document that binds joint owners of a property with regards to the division of proceeds upon completion.
Deed
Legal documents proving ownership of a property. Also known as Title Deeds.
Deposit
Amount of money paid by the buyer to the seller on exchange of contracts in order to secure a property. Also known as Down Payment.
Detached
Property that stands alone and has no shared walls with an adjoining property.
Development
Property that is either newly built or has been recently refurbished.
Disbursements
Third party costs relating to transaction paid out by solicitor to cover items such as Stamp Duty, Land Registry, Local Authorities, etc.
Discharge
Termination of a mortgage obligation when no further payments are required.
Down Payment
Amount of money paid by the buyer to the seller on exchange of contracts in order to secure a property. Also known as Deposit.
Draft Contract
Early version of the contract, which is then edited by the acting solicitors.
E
Early Redemption Charge
Financial penalty charged by some lenders if the borrower terminates a mortgage early.
Easement
Right granted to someone other than the owner of a property such as a right of way over land or a right to maintain services under land.
Endowment Mortgage
Mortgage designed for monthly repayments to be paid into an endowment (life assurance) policy, which is used to pay off the loan at the end of the term.
Engrossment
Final copy of a document prepared by a solicitor for signing by the parties.
Equity
Owner's financial interest in a property, calculated as the difference between the market value of a property and the balance outstanding on the mortgage.
Estate Agent
Property professional who markets property on behalf of sellers and who charges a fee, usually a percentage of the selling price.
Excess
Fixed initial sum that the insured party must pay on any insurance claim.
Exchange of Contracts
Point at which signed contracts confirming the intention to transfer ownership between buyer and seller are physically exchanged and the parties become legally bound by the terms.
F
Failed Valuation Survey
When a lender turns down a mortgage application as a result of the surveyor's report.
First Time Buyer
Buyers who have not previously purchased a property.
Fixed Rate Mortgage
Mortgage with interest rates initially 'fixed' for a defined period.
Fixtures & Fittings
Those non-structural items in a property that should be listed to be included in a sale.
Flying Freehold
Where part of a freehold property overhangs a different freehold property or land.
Freehold
Absolute ownership of both a property and the land on which it stands indefinitely.
Full Structural Survey
Detailed report on construction and any defects of a property, following a thorough inspection carried out by a Chartered Surveyor.
G
Gazumping
Where the seller has agreed an offer in principle on a property but then subsequently accepts a higher offer from another party.
Gazundering
Where the buyer has made an offer that has been accepted but then subsequently reduces the offer immediately prior to exchange of contracts.
Ground Rent
Fee paid annually by the leaseholder to the freeholder in order to occupy the land on which a property stands.
Guarantor
Person responsible for repaying a debt if the borrower defaults as required by some lenders.
H
Homebuyer's Report
Standard report conducted by a surveyor on behalf of a buyer to assess value and condition of a property, highlighting major defects.
Home Condition Report
An optional part of a Home Information Pack (HIP) providing an objective report on the condition of a property.
Home Information Pack
Compulsory information pack compiled by the seller prior to marketing a property for sale, containing specified information relating to a property.
House Price Index
Statistical method of representing changes in house prices over time.
I
Improvement Grant
Grant made by a local authority towards the cost of repairing or improving a property.
Independent Financial Advisor (IFA)
Qualified person using specialised knowledge of the marketplace to select financial products to best suit the needs of their client.
Individual Savings Account (ISA) Mortgage
Mortgage designed for monthly repayments to be paid into an Individual Savings Account, which is used to pay off the loan at the end of the term.
Instruction
Engagement by a property owner of an estate agent to market the property.
Insurance
Protection against a specific loss over a period of time secured by payment of a regular premium.
Interest Charge
Fee charged by a lender on the borrower, calculated as a percentage of the amount borrowed.
Interest Only Mortgage
Mortgage where only the interest charges are repaid initially. Monthly instalments are invested by the buyer and repaid in full at the end of the term.
J
Joint Agents
Two estate agents jointly instructed by a seller to market a property.
Joint Tenants
Equal holding of a property between two or more persons. If one party dies, their share passes to the survivor(s).
L
Land Registry
Government department responsible for recording ownership of land in England and Wales. Searches will be requested from the Land Registry by conveyancers as part of any property transaction.
Land Registry Fees
Set fee paid to Land Registry to register ownership of a property.
Lease
Possession of a property owned by another party for a specified time period. Also known as Tenancy.
Lease Agreement
Legal document detailing terms whereby the owner of a property grants rights to another party to occupy it for a specified period of time. Also known as Tenancy Agreement.
Leasehold
Ownership and right to occupy a property by way of a lease agreement for a given period of time subject to an annual payment of rent to the owner of the freehold.
Lender
Institution that lends funds in order to assist the borrower with a property purchase.
Lender's Legal Fees
Fees incurred by the lender in arranging a mortgage and that are passed on to the borrower.
Lessee
Someone who holds the lease on a property. Also known as Tenant.
Lessor
Someone who grants a Lease on a property. Also known as Landlord.
Lien
Legal right or claim against a property as security for a debt.
Listed Building
Building that has been registered as being of special interest and has preservation orders on it.
Loan to Value (LTV)
Percentage indicating the ratio of a mortgage loan on a property to its market value.
Local Authority Search
Enquiries made to the local council regarding any future development issues that might affect a property and/or the surrounding area.
M
Maintenance Charge
Charge to a tenant or leaseholder made by a landlord to cover costs of maintaining a property. Also known as Service Charge.
Maisonette
Property that comprises a portion of a larger building, usually arranged over more than one floor with its own private entrance.
Mortgage
Long-term loan used to fund the purchase of a property where the property is held as security.
Mortgage Agreement in Principle (MAP)
Lender's expression of intent to provide funding subject to certain conditions being met.
Mortgage Deed
Document containing the terms and conditions of a loan secured on a property.
Mortgagee
The lender of a mortgage.
Mortgage Indemnity Guarantee (MIG)
Fee charged by some lenders to protect them against the borrower defaulting. Also known as Mortgage Indemnity Premium (MIP) and Additional Security Fee.
Mortgage Indemnity Premium (MIP)
Fee charged by some lenders to protect them against the borrower defaulting. Also known as Mortgage Indemnity Guarantee (MIG) and Additional Security Fee.
Mortgage Rate
Standard variable interest rate quoted by all mortgage lenders. This varies in accordance with the Bank of England base rate.
Mortgage Term
Period of time over which a mortgage will be repaid.
Mortgage Valuation
Report commissioned by the lender to assess property value and detemrine maximum amount to be loaned on the security of a property.
Mortgagor
The borrower of a mortgage.
Multiple Agency
Where two or more estate agents are instructed by a seller to market a property. Only the agent who introduces a successful purchaser is paid.
N
Negative Equity
Occurs when the market value of a property falls to a value less than the mortgage loan balance.
NHBC (National House Building Council) Scheme
A guarantee offered on some newly built homes for structural defects occurring within a specified time after construction.
O
Offer
Indication from a potential buyer of a willingness to purchase a property at an indicated price. An offer is not legally binding in England and Wales and can be withdrawn or changed at any time prior to exchange of contracts.
Ombudsman
Independent body responsible for the investigation of complaints on behalf of consumers.
Open Market Value
Price that a property would likely achieve if it were available for sale.
P
Peppercorn Rent
Nominal ground rent usually paid annually and of trivial amount.
Pied-a-Terre
Property kept for temporary or occasional occupation.
Preliminary Enquiries
Initial set of questions regarding a property that the seller must answer prior to exchange of contracts.
Premium
Amount payable on an insurance policy, usually paid monthly.
Principal
Amount borrowed from a lender on which interest is calculated.
Public Liability Insurance
Insurance to cover the injury or death or damage to property of anyone on or around your property.
Purchaser
Person who is buying a property. Also known as the Buyer.
R
Redemption
Completion of the full and final repayment of a mortgage.
Redemption Figure
Amount required to fully repay a mortgage including interest and any penalties.
Repayment Mortgage
Mortgage with monthly repayments consisting of capital combined with interest.
Repossession
Occurs when mortgage payments are in arrears and a lender chooses to take possession of the property that secures the loan.
Residential Property
Property occupied for private or domestic purposes.
Retention
Amount held back by a lender until certain specified works have been completed.
S
Sale Contract
Legal agreement between a seller and an estate agent.
Searches
Enquiries made to the local authority and Land Registry for determining whether any matters adversely affect the property or the surrounding area.
Security
Property used to secure the mortgage loan.
Seller
Person who is selling a property. Also known as the Vendor.
Semi-Detached
Property where one side wall is shared with an adjoining property.
Service Charge
Charge to a tenant or leaseholder made by a landlord to cover costs of maintaining a property. Also known as Maintenance Charge.
Sole Agency
Where only one estate agent is instructed exclusively by a seller to market a property.
Sole Selling Rights
Where one estate agent has exclusive rights to market a property and is entitled to a fee irrespective of how the property is sold.
Solicitor
Professionally qualified legal expert who prepares documents for the sale or purchase of a property.
Stamp Duty Land Tax (SDLT)
Tax paid to the government by a buyer on the purchase of a property. Rates vary between 1% and 4% depending on the purchase price.
Standard Variable Rate (SVR) Mortgage
Mortgage with interest rates that fluctuate at the discretion of the lender based on market conditions.
Structural Survey
Detailed report on construction and any defects of a property, following a thorough inspection carried out by a Chartered Surveyor. Also known as a Building Survey.
Studio Flat
Flat consisting of one principle living area comprising both cooking and sleeping facilities with a separate bathroom/shower room.
Subject to Contract
Term used to indicate a provisional agreement prior to exchange of contracts that is not yet legally binding.
Survey
Report on the condition of a property.
Surveyor
Qualified expert who carries out the survey of a property.
T
Tenancy
Possession of a property owned by another party for a specified time period.
Tenancy Agreement
Legal document detailing terms whereby the owner of a property grants rights to another party to occupy it for a specified period of time. Also known as Lease Agreement.
Tenant
Person (or entity) who is entitled to occupy a property under the terms of a Tenancy Agreement.
Tenants in Common
An optional method of shared home ownership (not necessarily in equal shares). If an owner dies, the owner's interest in the property is passed to the owner's heirs, rather than to the other owners of the property.
Tenure
Conditions on which a property is held, i.e. whether it is freehold or leasehold.
Terraced
Property where both side walls are shared with adjoining properties.
Title
Legal right to ownership of a property.
U
Under Offer
Status of a property from the point at which a seller has accepted an offer until exchange of contracts.
V
Vacant Possession
Provision of a property that has been vacated by any previous occupants.
Valuation
Survey conducted by a suitably qualified professional such as a Chartered Surveyor to establish an estimate of the current market value of a property.
Variable Base Rate
Basic rate of interest charged on a mortgage that may change due to market conditions.
Vendor
Person who is selling a property. Also known as the Seller.
Y
Yield
Income generated from a property expressed as a percentage of the property value.