Property transaction glossary

Accessibility - Refers to the ease with which people can reach or enter a property, including the availability of features such as ramps, lifts, and other facilities designed to accommodate individuals with health conditions or impairments.

Advance - A term used to describe the paying out of mortgage funds from the lender to the borrower. This typically occurs on the closing date of the property purchase, enabling the transaction to be finalised.

Affordable housing - Housing options priced to be within reach for individuals and families with lower or moderate incomes, typically defined by being at or below a certain percentage of the area's median income.

Agreement in principle - An initial confirmation from a lender estimating the amount they might be willing to lend based on preliminary financial information provided by the borrower. This is not a final mortgage offer but serves as an indication to help prospective buyers gauge their potential budget before making a formal mortgage application.

Annual service charge - A fee paid by the owner of a property, typically in a flat or managed housing development, to cover the cost of maintaining and repairing shared spaces and services such as lifts, gardens, and building security.

Appreciation - The increase in the value of a property over time, often influenced by factors such as market demand, improvements to the property, and changes in the surrounding area. Appreciation can significantly affect the return on investment for property owners.

APRC (Annual Percentage Rate of Charge) - Represents the total cost of borrowing on a mortgage or loan, expressed as an annual percentage rate. It includes not only the interest rate but also any other charges involved in securing the financing, such as arrangement fees or mortgage broker fees, providing a more complete picture of the loan costs over its duration.

Auction - A method of selling property through a public bidding process, where the property is sold to the highest bidder. Auctions are often used for properties that need to be sold quickly or for those that may attract interest from multiple buyers, such as unique or distressed properties.

Balance outstanding - The amount of money still owed on a mortgage or loan, not including future interest or fees. This figure decreases as regular payments are made and is essential for understanding how much is left to pay on a property’s financing.

Bridging loan - A short-term loan used to cover immediate cash needs during the gap between purchasing a new property and selling an existing one. Bridging loans help buyers fund the purchase of a new property before their current one is sold, often with high interest rates and terms typically ranging from a few months to a year.

Building survey - A comprehensive examination of a property's condition, often conducted by a chartered surveyor. This detailed report covers the structure, defects, and repair recommendations, and is particularly advisable for older or uniquely constructed homes where potential issues might not be visible.

Buildings insurance - Insurance coverage that protects the physical structure of a property, including walls, roofs, and permanent fixtures, against damage from events like fire, flood, and theft. This insurance is typically required by mortgage lenders as a condition of the loan.

Buy-to-let - A type of property investment where a purchaser buys a property specifically to rent it out to tenants. This can provide the owner with rental income and potential for capital appreciation.

Capital Gains Tax - A tax on the profit made from selling a property that has increased in value. It is the difference between what you originally paid for the property and the price at which you sell it, minus any allowable expenses. This tax does not apply to your primary residence in many jurisdictions, but typically affects second homes and investment properties.

Caveat emptor - A Latin phrase meaning "let the buyer beware." This principle of law puts the onus on the buyer to perform due diligence and thoroughly inspect a property before purchasing, as the seller is not obligated to disclose all potential issues unless specifically asked.

Chain - Refers to a sequence of linked property transactions, each dependent on the completion of the others. This typically occurs when a buyer needs to sell their current home to complete the purchase of a new one, and so on, potentially involving multiple buyers and sellers. Chains can complicate and delay the transaction process.

Chain-free - Describes a property that is being sold without involving a sequence of linked transactions. This means the seller does not need to purchase another property before completing the sale, potentially allowing for a quicker and simpler transaction process.

Closing/completion date - The specified day on which the final legal transfer of property ownership occurs. All financial transactions, including payment of the purchase price and associated fees, are completed, and the keys are handed over to the buyer.

Common areas - Refers to areas within a building or development that are shared among all occupants or owners. These can include lobbies, hallways, fitness centres, gardens, and rooftops. Maintenance and management of these areas are typically covered by factor charges paid by the property owners.

Completion - The final stage in the property buying process when all legal and financial transactions are concluded. The ownership of the property transfers from the seller to the buyer, and the keys are handed over, allowing the buyer to take possession of the property.

Completion guarantee - A legal assurance or warranty typically provided by a builder or developer, ensuring that a construction project, like a new home or commercial building, will be completed by a specified date. If the project is not completed on time, penalties may apply, offering protection to the buyer.

Completion statement - A detailed financial summary provided by a solicitor or conveyancing specialist that outlines all the payments involved in a property transaction. It includes the purchase price, fees, taxes, and adjustments, clarifying the final amount to be paid or received at completion.

Conclusion - In property, this term refers to the concluded contract finalisation and the deal is legally binding.

Contents insurance - A type of insurance policy that covers the cost of replacing belongings in your home if they are damaged, destroyed, or stolen. This includes furniture, electrical goods, and personal items, but does not cover the physical structure of the building.

Contract - A legally binding agreement between the buyer and seller in a property transaction. In the UK, this document outlines the terms of the sale, including price, property boundaries, and the responsibilities of each party.

Conveyancing solicitor - A legal professional specialising in the transfer of property ownership. They handle the legal aspects and paperwork involved in buying and selling property, ensuring that their client's rights are protected throughout the transaction. Conveyancers can be solicitors who specialise in property law

Conveyancing - The legal process of transferring property ownership from the seller to the buyer. This includes preparing, verifying, and lodging all necessary legal documents, conducting property searches, and ensuring the settlement of financial matters. The process is typically managed by a solicitor or paralegal.

Co-ownership - A form of property ownership where two or more individuals jointly own a property. Each co-owner has a share in the property, which can be equal or unequal, and all co-owners have rights and responsibilities towards the property. This arrangement can be formalised through a legal agreement detailing each party's share and obligations.

Council tax - A local taxation system in the UK charged on residential properties to fund local services such as schools, roads, and waste management. The amount of council tax payable depends on the property's valuation band and the local council's rate. Discounts and exemptions may apply for certain individuals and properties.

Council tax band - A classification assigned to residential properties that determines the amount of council tax payable. Bands range from A to H, with A being the lowest and H the highest, based on the property's assessed value at a specific point in time. Each band has a corresponding tax rate set by the local council.

Deeds - Legal documents that provide evidence of property ownership. They contain details about the property, the rights and obligations of the owner, and any covenants or restrictions. Deeds are crucial in the conveyancing process as they confirm the legal transfer of property from one party to another.

Deposit - A sum of money paid by the buyer to the seller (or their agent) as a part of the property purchase agreement. Typically, this is a percentage of the purchase price and serves as a commitment to buy.

Disbursements - Costs incurred and paid by a solicitor or conveyancer on behalf of the client during the property transaction process. These can include fees for property searches, Land Registry charges, Land and Buildings Transaction Tax, and other necessary expenses.

Early repayment charge - A fee charged by a lender if a borrower pays off their mortgage or loan before the end of the agreed term. This charge compensates the lender for the interest they lose due to the early repayment and is typically outlined in the mortgage agreement.

Encroachment - When a property owner unlawfully extends or builds onto their neighbour's land. This can include structures like fences, buildings, or driveways that cross property boundaries, potentially leading to disputes and legal action to resolve the issue.

Encumbrance - A claim, lien, charge, or liability attached to a property that may affect its value or transfer. Common examples include mortgages, easements, or restrictive covenants. Encumbrances must typically be resolved or disclosed during the sale process.

Endorsements - Additional clauses or conditions added to a standard insurance policy to cover specific needs or circumstances. In property insurance, endorsements might include coverage for valuable items, specific risks like flooding, or personal liability protection beyond the standard policy.

Energy Performance Certificate (EPC) - A document that provides an assessment of a property's energy efficiency, including its energy use and typical energy costs. The certificate rates the property on a scale from A (most efficient) to G (least efficient) and includes recommendations for improving energy efficiency. EPCs are required for properties when they are built, sold, or rented.

Enfranchisement - The legal process by which leaseholders can collectively purchase the freehold of their building, gaining ownership and control over the property. This is often done to avoid paying ground rent and to have greater control over the management and maintenance of the building.

Equity - The difference between the market value of a property and the outstanding amount of any mortgages or loans secured against it. Equity represents the owner's financial interest in the property and can increase through mortgage repayments or property value appreciation.

Equity loan - A type of loan where the borrower receives funds based on the equity they have in their property. These loans are often used for home improvements, paying off higher-interest debts, or other large expenses.

Escrow - A financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a transaction. In property transactions, escrow ensures that both the buyer and seller meet their obligations before the transaction is completed, providing security for both parties.

Exchange deadline - The specified date by which the exchange of contracts must take place in a property transaction. Meeting this deadline is crucial as it formally commits both parties to the sale or purchase, with legal consequences if either party fails to comply.

Exchange of contracts - The stage in the property transaction process where the buyer and seller sign and legally swap contracts. This act makes the sale legally binding, and a deposit is usually paid by the buyer at this point.

FCA – The Financial Conduct Authority is a financial regulatory body, operating independently from government and responsible for the regulation of financial services firms including intermediaries and mortgage brokers.

First charge - A legal right or interest in a property granted to a lender as security for a loan, typically a mortgage. The lender with the first charge has priority over other creditors for repayment from the property's sale proceeds if the borrower defaults.

First-time buyer - An individual who is purchasing a property for the first time and has not previously owned a home. First-time buyers often benefit from government incentives, lower deposit requirements, and special mortgage products designed to assist them in entering the property market.

Fixed price - A property listing price where the seller sets a specific amount that they are willing to accept.

Fixtures and fittings - Fixtures are items attached to the property, such as built-in wardrobes, kitchen units, and bathroom suites, that are included in the sale. Fittings are items that are not fixed in place, such as carpets, curtains, and appliances, which may or may not be included in the sale, depending on the agreement between the buyer and seller.

Feudal - A type of property ownership where the owner has outright ownership of the property and the land it stands on, without any time limit. This contrasts with leasehold ownership, where the property is owned for a set period of time under a lease agreement.

Full structural survey - A detailed inspection of a property's condition, assessing the structure, materials, and any defects. Conducted by a qualified surveyor, it provides comprehensive information on necessary repairs and potential issues, recommended for older or unusually constructed properties.

Grade I listed - A classification for buildings of exceptional interest in the UK, warranting the highest level of protection. Alterations and repairs to Grade I listed buildings are strictly controlled to preserve their historic and architectural significance.

Grade II listed - A classification for buildings of special interest in the UK, warranting efforts to preserve them. While they have a lower level of protection compared to Grade I, any alterations or repairs require approval to maintain their historical and architectural importance.

Guide price - An indicative price that provides prospective buyers with an idea of the expected price range for a property. It serves as a starting point for negotiations and may not be the final selling price.

Home Buyers Report - A type of property survey designed to identify any significant issues in a property, such as structural problems or defects, and assess its overall condition. This report is less detailed than a full structural survey but provides an easy-to-understand overview, making it suitable for conventional properties in reasonable condition. A property cannot be marketed for sale without a Home report

Housing Association - A non-profit organisation that provides affordable housing options, often to those on low or moderate incomes or with specific needs. Housing associations may own and manage rental properties or offer shared ownership schemes, where residents part-buy and part-rent their homes. They play a crucial role in addressing housing needs and promoting social inclusion.

IFA - Independent Financial Adviser, a professional who offers independent advice on financial matters, including mortgages, investments, and pensions, tailored to individual needs.

IMRO - Investment Management Regulatory Organisation, a former regulatory body in the UK overseeing investment firms to ensure compliance with financial regulations.

Indemnity insurance - A type of insurance policy that protects against financial loss due to legal defects or issues with a property's title, such as missing planning permission or building regulation certificates.

Instruction - Refers to the formal agreement between a seller and an estate agent, authorising the agent to market and sell the property on behalf of the seller.

Interest-only mortgage - A mortgage where the borrower pays only the interest on the loan amount for a set period, typically between five to 10 years. At the end of the term, the borrower must repay the full loan amount, often through a separate investment vehicle or by selling the property.

Joint agency - An arrangement where a property is listed for sale with two or more estate agents simultaneously. Each agent shares the responsibility for marketing the property and may split the commission if a sale is achieved.

Joint mortgage - A mortgage taken out by two or more individuals, typically partners or spouses, to purchase a property together. All parties are jointly liable for repaying the loan, and their incomes and credit histories are considered when determining the mortgage terms and affordability.

Key worker - Refers to individuals employed in essential public service roles, such as healthcare, education, emergency services, and social care. Key workers may be eligible for housing assistance schemes or priority access to certain types of accommodation.

Land and Buildings Transaction Tax - LBTT is a tax applied to residential and commercial land and buildings transactions in Scotland (including commercial properties and commercial leases) where a chargeable interest is acquired. Land and Buildings Transaction Tax (LBTT) replaced UK Stamp Duty Land Tax (SDLT) in Scotland from 1 April 2015.

Land certificate - A document issued by the Land Registry in the UK confirming the ownership of a registered property and providing details such as boundaries, rights of way, and any restrictions or charges affecting the property.

Registers of Scotland - A government agency in the UK responsible for maintaining a register of land and property ownership. It records details of land and property transactions, issues title deeds, and provides information to the public and professionals involved in property transactions.

LAUTRO - Life Assurance and Unit Trust Regulatory Organisation, a former regulatory body in the UK overseeing life insurance and unit trust companies to ensure compliance with financial regulations.

Lease - A legal agreement between a landlord and a tenant granting the tenant the right to occupy a property for a specified period in exchange for rent. Leases typically outline rights, responsibilities, and conditions for both parties during the tenancy.

Leasehold - A type of property ownership where a person holds the right to use and occupy a property for a specified period, as outlined in a lease agreement with the freeholder. Ownership of the property returns to the freeholder at the end of the lease term.

Leaseholder - A person or entity that holds a leasehold interest in a property, granting them the right to occupy and use the property for a specified period as outlined in the lease agreement with the freeholder.

Lien - A legal right or claim that a creditor has over a property as security for a debt owed by the property owner. Liens can restrict the property owner's ability to sell or transfer ownership until the debt is repaid.

Lifetime ISA - A type of individual savings account in the UK that allows individuals under the age of 40 to save for their first home or for retirement. Contributions receive a government bonus of 25% up to a certain limit per year, providing an incentive for long-term savings.

Listed building - A property in the UK that is recognised and protected by law for its historical or architectural significance. Listed buildings are categorised into grades (I, II*, II), and any alterations or repairs must be approved by the local planning authority to preserve their heritage value.

Loan agreement - A legally binding contract between a lender and a borrower outlining the terms and conditions of a loan, including the loan amount, interest rate, repayment schedule, and any other relevant terms.

Loan to value (LTV) - A financial ratio used by lenders to assess the risk of a mortgage loan, calculated by dividing the loan amount by the appraised value or purchase price of the property. LTV indicates the percentage of the property's value that is financed by the loan, with lower ratios generally indicating lower risk for the lender.

Local authority search - An investigation conducted by a solicitor or conveyancer on behalf of a property buyer to gather information from the local authority regarding any planning, building regulations, or environmental issues that may affect the property. This search helps the buyer make an informed decision before purchasing the property.

Maintenance charge - A fee paid by the owner of a property to cover the costs of maintaining and managing the communal areas and services of the building or development. These charges are typically collected by the landlord or management company responsible for the property.

Market value - The estimated price at which a property would sell in the open market, assuming both buyer and seller are acting knowledgeably, prudently, and without compulsion. It's determined by factors such as location, condition, and demand for similar properties in the area.

Missives concluded - In Scottish property law, this term refers to the point in a property transaction where all the terms and conditions of the sale have been agreed upon and accepted by both the buyer and the seller. At this stage, the contract becomes legally binding, and both parties are committed to completing the transaction.

Mortgage - A type of loan used to finance the purchase of property, where the property itself serves as collateral for the loan. The borrower makes regular payments to the lender, consisting of both principal and interest, until the loan is fully repaid. Failure to repay the mortgage can result in repossession by the lender.

Mortgage advance - The initial paying out of funds from the lender to the borrower, typically on the completion date of the property purchase. This advance constitutes the mortgage loan amount and enables the buyer to finalise the transaction.

Mortgage deed - A legal document that serves as evidence of a mortgage loan secured by a property. It outlines the terms and conditions of the loan, including the interest rate, repayment schedule, and rights and responsibilities of both the borrower and lender.

Mortgage offer - A formal written offer from a lender to provide a mortgage loan to a borrower, specifying the terms and conditions of the loan, including the loan amount, interest rate, repayment schedule, and any applicable fees.

Mortgage term - The period over which a mortgage loan is repaid, typically expressed in years. This term can vary but commonly ranges from 15 to 30 years. The borrower makes regular payments during this period until the loan is fully repaid.

Negative equity - Occurs when the market value of a property is lower than the outstanding balance on the mortgage secured against it. In this situation, the homeowner owes more on the mortgage than the property is worth, which can pose financial challenges if they need to sell the property.

NHBC scheme (National House-Building Council) - A warranty and insurance provider in the UK construction industry, offering protection and assistance to homeowners and homebuilders. NHBC provides warranties for new homes, ensuring they meet certain standards of construction quality, and offers insurance against structural defects for a specified period after completion.

Ombudsman - An independent organisation appointed to investigate complaints and disputes between consumers and businesses or professionals, including those within the property industry. Ombudsmen provide impartial resolution services and may have the authority to make legally binding decisions or recommendations.

Open house - A property viewing event where a seller opens their home to multiple potential buyers at the same time, typically held over a few hours on a specified date. This approach allows for efficient scheduling and can create a sense of competition among buyers, potentially leading to quicker sales and better offers for the seller.

Power of Attorney (PoA) - A legal document that grants one person the authority to act on behalf of another person, typically in managing their financial affairs or making decisions about their welfare if they become incapacitated. The person granting the power is known as the 'donor,' while the person receiving the authority is the 'attorney.'

Pre-approval - A preliminary assessment by a lender of a borrower's financial situation to determine the amount of mortgage loan they are likely to qualify for. Pre-approval involves a review of the borrower's income, credit history, and other financial details, providing confidence to the borrower and real estate agents when making offers on properties.

Pre-qualification - An initial assessment by a lender of a borrower's financial situation to estimate the amount of mortgage loan they may be eligible for. Pre-qualification typically involves a basic review of the borrower's income, assets, and debts, providing a general idea of their borrowing capacity.

Principal - The initial amount of money borrowed in a loan, excluding interest and other charges. In the context of a mortgage, the principal is the total amount of the loan that the borrower agrees to repay over time.

Private rights of way - Legal permissions granted to specific individuals or properties allowing them to pass through or access another person's land, typically for a specified purpose such as walking, driving, or utilities access. These rights are usually documented in property deeds or agreements.

Confirmation (probate) - The legal process of administering the estate of a deceased person, including resolving any outstanding debts, distributing assets to beneficiaries, and settling taxes. The confirmation process ensures that the deceased's wishes, as outlined in their will, are carried out and that their estate is managed appropriately.

Public rights of way - Legally established routes or paths that the public has the right to use for walking, cycling, or riding horses. These routes are typically designated and maintained by local authorities or landowners and can include footpaths, bridleways, and byways.

Refinancing - The process of replacing an existing loan or mortgage with a new one, typically to obtain better terms, such as a lower interest rate or longer repayment period. Refinancing may also involve borrowing additional funds against the equity in the property.

Registered Provider (RP) - An organisation registered with the Regulator of Social Housing in the UK that provides affordable housing, including social and affordable rented homes, shared ownership properties, and supported housing. RPs are typically housing associations, local authorities, or private sector organisations.

Registers of Scotland – the organisation responsible for keeping public registers of land, property and other legal documents in Scotland.

Reinstatement period - The duration specified in an insurance policy during which the insurer will cover the cost of reinstating or repairing a property following damage or loss due to insured events such as fire, flood, or vandalism.

Repayment mortgage - A type of mortgage where the borrower makes regular payments consisting of both principal and interest over the term of the loan. Each payment reduces the outstanding balance of the loan, gradually paying off the mortgage by the end of the term.

Repossession - The legal process by which a lender takes possession of a property from a borrower who has failed to meet the terms of their mortgage agreement, typically due to defaulting on mortgage payments. Repossession allows the lender to sell the property to recover the outstanding debt.

Reserve price - The minimum price set by the seller, typically in an auction, below which they are not obligated to sell the property. The reserve price is not disclosed to bidders and serves to protect the seller's interests by ensuring that the property does not sell for less than a predetermined amount.

Restrictions and restrictive covenants - Legal obligations or limitations imposed on the use of a property, typically outlined in the property's deeds or lease. These restrictions may include rules governing alterations to the property, use of the land, or behaviours of occupants, aimed at preserving the character or value of the property and surrounding area.

Retention - A portion of the contract price withheld by the client from the contractor until the completion of the project to ensure that the contractor fulfils all obligations, including rectifying any defects or deficiencies. Retention funds are released upon satisfactory completion of the work and resolution of any outstanding issues.

RICS - The Royal Institution of Chartered Surveyors, an international professional body for qualifications and standards in land, property, infrastructure, and construction. RICS sets and regulates professional standards, provides training and accreditation, and offers guidance to professionals in the property and construction sectors.

Rights of way - Legal rights permitting individuals to pass through or use a specific route or pathway across another person's land, typically for travel or access purposes. These rights may be established by law, custom, or legal agreement and can include footpaths, bridleways, and highways.

Seller's market - A market condition in which there are more potential buyers than properties available for sale, giving sellers the advantage in negotiations. In a seller's market, properties often sell quickly, and prices may rise due to high demand and limited supply.

Settlement - The finalisation of a property transaction where all legal and financial obligations are met, and ownership of the property is transferred from the seller to the buyer. Settlement typically involves the , payment of the purchase price.

Shared ownership - A housing scheme in which a buyer purchases a share of a property, typically between 25% to 75%, and pays rent on the remaining share owned by a housing association or developer. This arrangement enables buyers to purchase a portion of a property while paying a reduced mortgage and rent on the remaining share, with the option to increase their ownership over time through a process called "staircasing."

Staircasing - The process by which a shared ownership homeowner gradually increases their ownership share in the property by purchasing additional increments from the housing association or developer.

Standard Variable Rate (SVR) - The default interest rate set by a mortgage lender, which borrowers revert to after the initial fixed or discounted rate period ends. SVRs can fluctuate and are typically higher than fixed or tracker rates, affecting borrowers' mortgage repayments.

Subject to conclusion of missives - A condition in a property sale sale where the the sale is dependent on the finalisation and agreement of all contractual terms between the buyer and seller, known as missives, before the transaction is legally binding.

Survey - An assessment of a property's condition, conducted by a qualified surveyor, to identify any structural issues, defects, or potential problems.

Title - Legal ownership of a property or land, typically evidenced by a title deed or document. Title establishes the rights of the owner to possess, use, and transfer the property, as well as any restrictions or encumbrances affecting it.

Transfer deeds - Legal documents used to transfer ownership of a property from one party to another. These deeds are typically executed as part of the conveyancing process and are registered with the relevant land registry or authority to formalise the transfer of ownership.

Under offer - Indicates that a property has received an offer from a prospective buyer, which has been accepted by the seller, but the sale has not yet been completed.

Underwriting - The process by which a lender assesses the risk associated with providing a mortgage loan to a borrower. This involves reviewing the borrower's financial information, credit history, and the property being purchased to determine whether to approve the loan and on what terms.

Utilities - Essential services such as electricity, gas, water, and sewage facilities provided to a property for domestic use. Homeowners or tenants typically pay for these services either directly to utility providers or as part of their rent or maintenance fees.

Vacant possession - Refers to the condition in which a property is empty and available for immediate occupation by the buyer upon completion of the sale. This means that the property is free of any occupants or tenants, allowing the new owner to take possession without any legal or practical hindrances.

Valuation survey - A type of property survey conducted by a qualified surveyor to assess the estimated market value of a property. Valuation surveys are often required by mortgage lenders to ensure that the property's value is sufficient to secure the loan amount requested by the borrower.

Variable Interest Rate - A type of interest rate on a loan or mortgage that can fluctuate over time in response to changes in market conditions, such as changes in the base rate set by the central bank. Variable interest rates may offer flexibility but can result in changes to the borrower's monthly payments.

Vendor - The party selling a property. In a property transaction, the vendor is the owner of the property being sold.

Vendor’s agent - An estate agent or representative acting on behalf of the seller in the sale of a property. The vendor’s agent is responsible for marketing the property, negotiating offers, and facilitating the sale process on behalf of the seller.

Verbal offer - An informal offer made by a potential buyer to purchase a property, communicated verbally to the seller or their agent. Verbal offers are not legally binding and must be followed up with a formal written offer or contract to be considered valid.