Estate agency jargon busting – Samuel Wood explains
We’ve been thinking here at Samuel Wood about ways we can make buying and selling easier for our clients.
Because let’s face it, whether it’s your first move onto the property ladder or you have bought and sold many times, every sale and chain and transaction is different.
Some sales seem to sail through glitch-free, whereas others can seem to have more hurdles than the grand national.
But whether you are a first-time buyer, or a stepper upper (see we have started already), there is so much jargon attached to moving house.
We thought it would be helpful to cut through some of those, to help you know what you are doing and hearing.
So just what is jargon? Let’s start there – jargon is special words or expressions used by a profession or group that are difficult for others to understand.
And there are lots in estate agency. We want you to feel fully in control during the process and understand what is happening every step of the way. So, with the help of NAEA Propertymark (which Samuel Wood is a member of and our co-director Russell Griffin is Midlands Regional Executive of) – we have put together a little guide.
1) NAEA Propertymark
So first up, this stands for the National Association of Estate Agents.
Propertymark is the leading membership body for property agents. Any reputable agent should be a member, avoid if they are not. Propertymark is like the regulatory/advisory board for the sector. And having a director on the midlands board means we help shape the legislation for the sector for the good of all agents and everyone buying and selling in the UK.
2) Agreement in principle
An estimate of how much money you can borrow from a mortgage lender. What you can borrow is based on your income and credit history; it can be used as evidence that you have the funds in place for when you have an offer for a property accepted. Also known as a decision in principle, mortgage in principle, approval in principle or mortgage promise.
3) Annual percentage rate of charge (APRC)
The total rate of interest you’ll pay for a mortgage’s entire duration. APRC considers all the different rates your mortgage will be subject to and serves as an easy way to compare mortgage deals—lower rates usually mean a better deal.
4) Bank rate
Also known as 'base rate', it is the interest rate set by the Bank of England which influences other banks. It is generally used as a benchmark for the interest rates banks charge when lending money.
5) Bridging loan
A temporary short-term loan which enables a buyer to purchase a property before selling their existing property.
6) Building survey
A report into the physical state of a property sometimes referred to as a full structural survey.
7) Cash buyer
You are only referred to as a cash buyer if you have the sum total of the property price as cash ‘in the bank’.
8) Cash upon completion
Not to be confused with a cash buyer, sometimes people think they are a cash buyer but they’re not! This means that their cash will be released from the sale of their property so if it falls through and they can no longer proceed.
9) Chain
The number of property sales involved in a transaction. If you’re a first-time buyer without a property or if a property owner has already moved from the property, it is described as chain free. If someone has to sell their home before they can proceed to buy – it starts a chain which can involve one or more properties. A chain can become complicated, but a good estate agent will be able to help keep it moving.
10) Conveyancing
This is the legal process of buying or selling a property that the solicitors deal with.
11) Completion date
When the transaction is complete, and ownership of the property passes from seller to buyer. Normally, the seller's solicitor will ask the estate agent to release the keys to the buyer at this time.
12) Conveyancer
A lawyer who specialises in the transferring of homeownership. They are required if you are using a mortgage and will cover every legal aspect of the home purchasing process.
13) Covenant
A covenant is a provision or promise that has been written into a deed which may affect or limit the use of the property or land. There are two different types of covenants: positive and restrictive. A positive covenant is an obligation which requires some form of action (such as maintaining a fence or wall), whereas a restrictive covenant limits or prevents the use of land in a specified way.
14) Deeds
Documents that show who owns the title of a property or land, along with any responsibilities on the property, e.g., what you can/cannot alter, rights of way, etc. Deeds are usually held by the mortgage lender until you pay off your mortgage, then they can be held by you or your solicitor.
15) Deposit
An amount of money used to secure a property purchase, usually ten per cent (or lower) of the full price. Paying a deposit displays your initial commitment to purchase with the remaining amount to be paid later or provided in the form of a mortgage.
16) Early repayment charge (ERC)
A charge incurred when you overpay on a mortgage or transfer to a different mortgage product during a specified amount of time (known as the early repayment charge period). The charge covers potential lost interest to your lender. Most mortgages will allow you to overpay up to a certain amount annually without incurring a charge.
17) Easement
The right of one landowner to make use of another nearby piece of land for the benefit of their land, e.g., a private right of way.
18) Energy performance certificate (EPC)
Shows the efficiency of a property and gives an indication of how much the energy bills will be. It is displayed as two graphs: the energy efficiency and the environmental impact of the property. Both are graded from A (the best) to G (the worst).
19) Equity
Equity, or capital, represents the amount of money a homeowner has put into a property. This value is built up over time as the owner pays off the mortgage and the market value of the property appreciates.
20) Exchange of contracts
The point at which both parties are committed to the property transaction; both the buyer and seller can walk away at any point before the contracts have been 'exchanged'.
21) Execution-only
When a buyer chooses a mortgage rather than taking advice from a mortgage broker/advisor.
22) FA – Financial Adviser
Financial advisers provide clients with specialist advice on how to manage their money. The role involves researching the marketplace and recommending the most appropriate products and services available, ensuring that clients are aware of products that best meet their needs, and then securing a sale. In terms of buying houses, they assist in the search and application for a mortgage.
23) Fixed-rate
A term used to describe a mortgage that has an interest rate which stays the same for a predetermined ‘fixed’ period—the interest rate will not change during this time.
24) Freehold
A system of ownership which means you own the building and the land it sits on.
25) Gazumping
When a higher offer is made by another party and accepted, even after the offer with the first buyer had been accepted.
26) Gazundering
When a buyer lowers their offer (usually at the final hour), so the seller is forced to accept their lower price or reject it and risk having to find another buyer.
27) Interest rates
A percentage charge added to the amount you pay back on a loan. For example, a mortgage with a four per cent interest rate would mean you have to pay back the full amount of the loan—plus four per cent of its value.
28) Land registry
A Government database containing the registrations of who owns what property and land in England and Wales.
29) Leasehold
A system of ownership where you own the property but not the land it sits on. For example, you may own a flat but not the building it sits within. There will be a time period placed on your lease which will need to be renewed with the landowner, always check how many years remain on the lease. Whilst common with flats, some houses are sold as leasehold too which has been subject to much scrutiny. See our guide Leasehold: A Life Sentence? to find out more.
30) Loan-to-value (LTV)
The ratio of how much your loan (usually a mortgage) will cover the price of your property, written as a percentage. For example, a mortgage that offers 60 per cent LTV will cover 60 per cent of the property’s price.
31) Right of way
Right of way is a legal right for another to pass along a specific route on a piece of land or property belonging to another.
32) Stamp duty
A lump-sum tax that anyone buying a property or land over a certain price in England and Northern Ireland must pay. The current threshold for residential properties is £125,000 and £150,000 for non-residential land and properties. However, the rate you pay will vary depending on the overall purchase price. See the Propertymark guide to find out more.
33) Standard variable rate (SVR)
The rate your lender charges after your introductory mortgage deal finishes (usually after two to five years). This rate is set by your lender, not by the Bank of England.
34) Surveyor
In the context of property, they are a qualified expert who specialises in examining and highlighting any potential issues or benefits within a property. Such issues may affect its price or need fixing in future.
35) Under offer
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.