THE TERMS YOU NEED TO KNOW WHEN BUYING A HOUSE

Buying and selling a property can be a confusing and stressful process. Property is, for most of us, the highest value asset we will ever own, so when it comes to buying or selling, the pressure is on us to make the right decisions.

Negotiating and communicating with estate agents and solicitors, who use confusing property transaction language and jargon, can make the already stressful process more daunting and overwhelming – especially for firsttime buyers or sellers.

As a property expert and CEO of UK home buying service, We Buy Any Home (www.webuyanyhome.com), I like to keep things simple, and help my clients sell a property quickly, efficiently and stress-free. Therefore, to help others going through the stressful time, I have created a guide that decodes some of the most confusing lingo used in the industry.

• AMORTISATION: the process of paying off debt with a fixed repayment schedule in regular instalments over an agreed period of time, with a mortgage for example.

• ANNUAL PERCENTAGE RATE (APR): a compound interest rate figure used to compare different mortgages. APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations.

• APPRAISAL VALUE: value of the property, as estimated by a surveyor.

• BREAK CLAUSE: a clause in a contract that allows a person to end the contract early. This can be included in a lease allowing either the landlord or tenant to end the lease early.

• BRIDGING LOAN: a short-term loan taken out to cover the interval between two transactions, typically the buying of one house and selling of another.

• COLLECTIVE ENFRANCHISEMENT: the right of owners of flats in parts, or the whole, of the building to join together and buy the freehold of that building – this requires the coordination of at least 50 per cent of the buildings tenants.

• COMPLETION: the final step in the legal process of transferring ownership of property. Completion is usually the point at which the purchase price for the property is paid and the transfer documents are dated.

• COVENANT: an agreement or written promise between two individuals that constitutes a pledge to do or refrain from doing something.

• CONVEYANCING: in law, conveyancing is the transfer of legal title of real property from one person to another, or the granting of an encumbrance such as a mortgage or a lien.

• DILAPIDATION: this refers to any breaches of lease agreements which relate to the condition of property, damage and upkeep in particular, during the term of tenancy or when the lease ends.

• DISBURSEMENTS: fees paid by the solicitor on buyer’s behalf, such as stamp duty, land registry and search fees, AKA legal fees.

• DISCHARGE FEE: paid to some lenders for releasing their hold over a property once you’ve paid off your loan. Often applies if you’ve paid it off early.

• EASEMENT: is a non-possessory right to use and/or enter the property of another without possessing it, used to describe the right of way between landowners.

• ENCUMBRANCE: is a claim against, limitation on or liability against real estate. This includes liens, deed restriction, easements, encroachments and licences. An encumbrance may restrict the owner’s ability to transfer title to the property, or lessen its value.

• EXCHANGE: the exchange of contracts, when the agreed terms become binding on the buyer and seller.

• FLYING FREEHOLD: a flying freehold exists when one part of a property extends over or under a neighbouring property.

• FREEHOLD: when the owner of the property also owns the land.

• GAZUMPING: when a seller accepts a higher offer from a third party on a property that they have already agreed to sell to someone else prior to exchanging contracts.

• GAZUNDERING: when a buyer reduces their offer at the eleventh hour.

• GROUND RENT: the annual charge levied by freeholder to leaseholder.

• HOLDING DEPOSIT: money paid to a landlord or letting agent to reserve a rental property before the signing of a tenancy agreement. This is normally non-refundable in the case of withdrawing an application for tenancy.

• INITIAL MONIES: the monies paid by a tenant before the tenancy starts. This will cover the deposit, rent for the first month or quarter, tenancy agreement fee and check in charge.

• LAND REGISTRY: the government department responsible for registering ownership of land.

• LEASEHOLD: this means to own a property for a number of years, but not the land under it

• NEGATIVE EQUITY: is when the value of an asset falls below the outstanding balance on the loan used to purchase that asset.

• PROBATE: the legal process wherein the estate of a decedent is administered and a will is proved valid or invalid.

• PEPPERCORN GROUND RENT: nominal periodic rent usually paid annually.

• REDEMPTION: when a mortgage is fully repaid.

• RING FENCED: refers to money held in such a way that it can only be used for a specified purpose. For example, in the case of a tenancy deposit, it can be used only for the purposes set out in the tenancy agreement.

• SHARE OF FREEHOLD: freehold on which property stands is owned by a limited company and the shareholders of that limited company are the owners of the property.

• TENDER: a tender is a way of marketing and selling a property whereby offers (tenders) for the property are made to a set date and time (set by the vendor), the vendor then privately considers each offer. Tenders can be conditional offers.

• TITLE DEEDS: paper documents showing the chain of ownership for land and property. They can include: conveyances, contracts for sale, wills, mortgages and leases.

• TITLE SEARCH: investigation carried out by a conveyancer or solicitor into the history of ownership of a property. Will check for liens, unpaid claims, restrictions or any other problems that may affect ownership.

• UNENCUMBERED: a property that is free and clear of any encumbrances, such as creditor claims or liens.

• VOID PERIOD: the period of time when the property is empty/ unoccupied by the tenant.