Harrisons’ Dictionary of Real Estate

Not everybody speaks “real estate”, this is why we’ve created this handy Dictionary of Real Estate.



A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

APR

Stands for ’Annual Percentage Rate’ which helps you compare the cost of different mortgage deals. It takes into account the amount of interest you will pay, the length of the term of the mortgage, and certain other charges such as any arrangement fee.

 

Bankers Draft

A guaranteed payment of funds.

Bankruptcy Search

An investigation carried out by the Land Charges Registry to check if a purchaser is or has ever been bankrupt. Most mortgage lenders will insist on this search being carried out.

Base Rate

The interest rate which is set by the Bank of England for lending to other banks. It is generally used as a benchmark for the interest rates banks charge when lending money to customers.

Bridging loan

a temporary short-term loan which enables a buyer to purchase a property before selling their existing property.

Buildings Insurance

What you must have to protect your property against hazards such as fire, flood and subsidence.

Buildings Survey

A report into the physical state of the property, this is also sometimes referred to as a full structural survey.

Buyer

That’s you!

 

Chain

The parties involved in a transaction i.e. Mr A buying from Mr B buying from Mr C (here there are 3 in the chain).

Completion date

when the transaction is complete and ownership of the property passes from the seller to the buyer. Normally, the vendor’s solicitor will ask the estate agent to release the keys to the buyer at this time.

Completion statement

A financial statement from the Conveyancer, Property Lawyer or solicitor detailing all financial transactions. The statement includes all

Conditions of sale

The terms by which the buyer and seller agree to buy/sell the property. The Law Society sets standard conditions. The lawyer sets special conditions.

Contract

The legally binding agreement specifying all of the detail of the house sale or house purchase. The contract legally commits both the buyer and the seller to the transaction. The house seller’s Conveyancing Property Lawyer draws up two copies of the same contract, and each party signs their own copy. When both parties are ready to legally commit, the two contracts are exchanged.

Conveyance or transfer

The legally binding document that transfers the rights and burdens and the benefit of the land.

Covenants

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 covenant, positive and restrictive. A positive covenant is an obligation which requires some form of action (such as maintain a fence or wall), whereas a restrictive covenant limits or prevents the use of land in a specified way.

 

Deeds

Legal title document which provides historical information about the property. Since October 2003 the Land registry have “dematerialised” deeds, This means that instead of the old style Land Registry Certificates or Deeds that the record of your ownership merely consists of a copy of the Land Registry computer record which condenses all the relevant information.

Deed of Variation

This is a document which is sometimes required in leasehold transactions correcting the legal defects in the lease and is signed by both the occupier of the property and the freeholder.

Disbursements

Out of pocket expenses paid by the Licensed Conveyancer or solicitor on the buyers behalf such as stamp duty, land registry charges and search fees.

Draft Contract

A contract drawn up for both parties to consider amendments of.

Early Redemption Charge

A charge on borrowers from lenders for paying off a mortgage before the agreed time.

Easement

An easement is the right of one landowner to make use of another nearby piece of land for the benefit of his own land, for example, a private right of way.

Encroachment

An object, such as a fence, which belongs to one property and which extends onto another illegally.

Engrossment

The actual deed or document that is executed (signed), as opposed to a mere draft of it.

EPC

An Energy Performance Certificate (EPC) shows the efficiency of a property and gives an indication of how much the energy bills will cost. It is displayed as two graphs – the energy efficiency, and the environmental impact of the property. Each is graded from A (the best) to G (the worst).

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.

Equity Release

Enables the owner of a property to generate either a lump sum or a regular income in return for allowing a lender to take ownership of a portion of the property.

Exchange of Contracts

The point where both parties are committed to the transaction; both the buyer and seller can walk away at any point before the contracts have been exchanged.

Fixed rate mortgage

with a fixed rate mortgage, you pay a set rate of interest on your mortgage for a fixed period, so you know exactly what you’ll be paying each month.

Fixtures & Fittings

A list of the items at the property, which are either included or excluded from the agreed price.

Freehold

A type of occupancy which means you own the building and the land it sits on.

FSA

The Financial Services Authority is an independent government body concerned with consumer protection in the financial market.

Gazumping

When a seller accepts a higher offer on a property having previously accepted a lower offer from another potential buyer. Common in a market with rising property prices.

Gazundering

When a buyer withdraws an offer and replaces it with a lower offer after the first offer had been accepted and acted upon by the seller. Common in a market with falling property prices.

Greenbelt

Land protected by the government, on which new developments cannot be built.

Ground Rent

Commonly charged on properties such as flats – particularly leasehold ones. It is charged by either the landlord or leaseholder.

Land Registry

A government department that registers all the details of any land transactions and issues of ownership in both England and Wales.

Land Registry Fees

Registering the title of a property under the name of an individual incurs a charge. This is usually dealt with by the solicitor/conveyancer.

Land Transaction Tax

Land tax replaced Stamp Duty in Wales from April 2018. Buyers looking to purchase in Wales will be charged land transaction tax on any residential purchase above £180,000 and above £150,000 for non-residential purchases, however the price you pay varies depending on the overall cost of the property. Take a look at our guide to land tax for more information.

Land & Building Transaction Tax

The tax you pay when purchasing land or property in Scotland. The current threshold is £145,000 for residential properties and £150,000 for non-residential land and properties, however the rate payable is subject to the total purchase cost. Read our land tax guide for more information.

Lease

A legal document containing the rights and covenants on behalf of both the Landlord and the Tenant that regulate the use of the property.

Leasehold

This is where you own the property but not the land it is built on – for example, you may own a flat, but not the building it sits in. Our guide to buying a leasehold property tells you everything you need to know before you sign on the dotted line.

Legal Charge

A document securing the debt on the property, for example, the monies the buyer borrows from the Bank of Building Society to purchase a property.

Local Searches

An investigation of the records held by the Local Authority to find out any important information that may affect the property. These are usually carried out by the solicitor/conveyancer and are valid for approximately 3 months.

Mortgage

A loan issued by lenders to purchase a property.

Mortgage Advance

The money loaned to the buyer, by the lender.

Mortgage Deed

This document explains the conditions of the mortgage and is signed by all parties to the loan.

Mortgage Indemnity Guarantee

An insurance policy designed to protect the lender against any loss in the event of the borrower defaulting or ceasing to repay the mortgage. Common on first time buyer mortgages where the loan required is a high percentage of the total value of the property.

Mortgagee

The lender

Mortgagor

The borrower.

Negative Equity

When the value of a property falls to less than the mortgage taken out to buy it.

NHBC

A governing body for developers who issue a 10 year structural guarantee on all new properties. Their inspectors will ensure that a new home is built properly and is safe.

Office Copy Entries

Certified copies of the Land or Charge Certificate from the Land Registry.

Off-Plan

When an individual buys a new home before it has been built based on the plans and artist’s impressions.

Redemption Fee

Even when a mortgage is paid-off early in accordance with its rules and outside the redemption period, a charge can be levied by the mortgage provider, even if the new mortgage is taken out with that same lender.

Redemption Penalty

An additional charge made by the lender if the mortgage is repaid within a pre-agreed period of time.

Redemption Statement

The amount to be repaid on the existing mortgage.

Registered Land

The database of land/property on the register held at HM Land Registry.

Remortgage

When an existing mortgage on a property is paid off in full and another mortgage is taken on the same property.

Retention

Monies withheld by lenders until certain mortgage conditions are met, i.e. the completion of repairs or improvements to the property that the lender has insisted on.

Seller’s Leasehold Information Form

A form used by some solicitors/conveyancers which is filled in by the property’s current owners to outline the terms and conditions of the leasehold agreement.

Seller’s Pack

A new government proposal aimed at speeding up the home buying process and thereby reducing the length of time in which gazumping is possible. This information dossier will become a mandatory requirement of anyone putting their home on the market. It will include a basic surveyor’s report and the results of local authority searches – both of which are currently the buyer’s responsibility. It is not proposed that Seller’s Packs will be compulsory until June 2007.

Seller’s Property Information Form

A form which is used by some solicitors/conveyancers which is filled in by the property’s current owners outlining issues such as boundaries and guarantees of works carried out (e.g. dry rot).

Service Charge

A charge levied on a property’s owner for the maintenance and insurance of communal areas. Usually only applicable to flats and maisonettes.

Snagging

Snagging is where the developer of new build properties touches up paintwork, adjusts appliances and fixes any other faults within the property. A snagging survey is usually completed prior to the buyer moving in, in order to spot minor cosmetic issues and check the quality of workmanship.

Stamp Duty

A lump-sum tax that anyone buying a property or land over a certain price in England, Northern Ireland and Wales 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. Read our Stamp Duty guide for more information.

Subject to Contract

An agreement upon which contracts have not exchanged yet, and therefore not legally binding.

Telegraphic Transfer

The electronic transfer of money between two parties on the sale / purchase of a property. Will often incur a fee from your solicitor and monies sent from a lender are usually in this form.

Tracket Mortgage

This is a mortgage with an interest rate linked to the Bank of England rate, or another base rate. The interest rate will go up and down depending on this rate, irrespective of the mortgage lender.

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.

Unregistered Land

Land / property not yet held on the database at HM Land Registry.

Vacant Possession

The previous occupants must vacate the property before the new occupants move in. This includes any tenants.

Variable Rate Mortgage

with a variable rate mortgage, the interest rate can change at any time. They are partly influenced by the Bank of England base rate but other factors come into play as well. The interest rate you pay on a variable rate mortgage can change even without base rate moving and similarly base rate might come down but your mortgage rate stays the same.

Vendor

This is another term for the seller.