If you’re selling or buying a property for the first time, chances are you’ll stumble across some terms that may seem like a foreign language.
In this blog, we’ve listed the most common terms in the property world with a simple explanation of what they mean.
No more confusing property jargon for you!
Stamp duty (officially Stamp Duty Land Tax) is a type of tax
that you pay when you buy a new home over £125,000. Stamp duty is charged in
tiers, so you pay different rates on different portions of the property price.
Land Transaction Tax
Stamp Duty has been replaced by Land Transaction Tax (LTT) for properties bought in Wales. LTT will apply to residential properties costing over £180,000.
If you own the leasehold of a property, it means that while the property is yours, the ground it stands on and the communal areas of the building belongs to the freeholder, who owns the land.
If you own the freehold to a property, it means you own the
building and the land it sits on.
This is usually in place in buildings of multiple occupancy (like a block of flats), whereby the individual property owners own the freehold to their property. All of the individual property owners collectively help to maintain the building.
This is when you’ve had an offer accepted on a property, but
another buyer offers more and the seller takes the new offer. It can happen at
any point up until the contracts are exchanged and the sale is complete.
This is when a buyer lowers their offer price, often at the
last minute, forcing the seller to either accept the lower price or reject it and
risk finding another buyer.
Snagging is the final touches of a new build development. It’s where the developer touches up paintwork, adjusts appliances and fixes any issues within the property. Before the new buyer moves in, a snagging survey will take place.
Agreement in principle
An ‘agreement in principle’ is often provided to mortgage applicants before they have to commit to a mortgage. It states the amount of money a lender provisionally agrees to lend to you, so you can establish your budget.
This is when a consumer chooses a mortgage themselves,
rather than taking advice directly from a lender or mortgage advisor.
An Energy Performance Certificate (EPC) shows the
efficiency of a property and gives the interested buyer an idea of how much the
energy bills will cost.
These are documents that show who owns the title of a property or land. They also state any other obligations and responsibilities on the property, such as what you can/cannot change on the property. The deeds are usually held by the mortgage lender until you pay off your mortgage.
A covenant is a term included in the deeds of the property. There are two different types of covenant, positive and restrictive. A positive covenant is an obligation of action, such as maintaining the exterior of the building. A restrictive covenant means there is a limit or prevention to the use of the property in a particular way.
An easement provides the right of one landowner to make use
of nearby land, owned by someone else, to benefit their own land. For example,
using it as a private right of way.
A chain is caused when property buyers and sellers
are linked together because their purchase or sale is dependent on another
transaction. This is a common experience for home-movers as they’ll usually be
buying a new home and selling their current one simultaneously.
If a property is under offer it means that the seller has accepted an offer from the buyer but the contracts have not yet been exchanged. Other offers can still be accepted until the sale is complete.
So there you have it. Hopefully, these explanations will help next time your estate agent helps you buy or sell your property.