MyPIPS Property
Jargon Buster
Navigating a property purchase can be daunting, especially when your faced with plenty of industry-specific terms and phrases.
The MyPIPS Property Buyer Jargon Buster is here to help! It’s designed to demystify the complex language of the property world, whether you’re a first-time buyer or an experienced investor.
This easy-to-use guide breaks down some of the key terminology of the property industry, providing clear and concise definitions to help you unpick the process.
Still not sure? Contact MyPIPS today and let us help!
| Jargon Buster | Description |
|---|---|
| Agreement in Principle or Mortgage in Principle (AIP or MIP) | Both terms mean the same thing. When a buyer visits a mortgage broker or lender to ascertain the amount they can borrow the broker or lender will ask a number of questions regarding income and outgoings in order to calculate the affordability of a loan. Once this is complete an AIP (MIP) will be granted, which is to say the buyer can borrow up to a certain amount of money, based on their financial situation having been assessed. An estate agent may well ask how the buyer intends to pay for a property at which point a well-prepared buyer would volunteer they have an AIP (MIP) to borrow a certain amount. |
| Anti Money Laundering (AML) | Consists of the laws, regulations and procedures that are designed to prevent criminals from exchanging money obtained through illegal activities - or "dirty money" - into legitimate income or "clean money."" |
| Assign a lease extension | If a lease extension is not assigned to a new leaseholder, they must generally wait two years from the date of purchase before they can apply for a lease extension under the formal statutory process. However, this waiting period can be avoided if the seller assigns the benefit of their notice to the new leaseholder before completion. |
| Best and Final Offer | When a property is receiving a lot of interest from buyers a seller may ask to receive offers from all interested parties at the same time. A deadline is given, and each buyer is asked to give their ‘best’ offer in writing. The seller then reviews all offers and decides who to proceed with. |
| Building Survey | A building survey report is a detailed document produced by a qualified surveyor that thoroughly assesses the condition of a property, identifying any defects, potential issues, and necessary repairs, providing a comprehensive overview of the building's structure and allowing buyers to make informed decisions about purchasing it. This typically includes information on the property's construction, condition of walls, roof, floors, electrical systems, and potential maintenance needs, often with estimated repair costs. |
| Buy to Let (BTL) | A Buy to Let property is bought for the sole purpose of renting it to another party. BTL properties can be purchased in the buyer’s name or a company name. There are different mortgages for properties bought for BTL purposes and SDLT will vary also. |
| Chain | A property chain is a series of buyers and sellers who are connected by the need to buy or sell a property simultaneously. A chain can be complex, lengthy and can cause delays in moving house as numerous parties’ requirements need to be met. Should one party in the chain pull out or their sale fall through the rest of the chain is affected, as the chain is broken or incomplete. |
| Clean Title | Possessing a clean title shows that an asset, such as a property, is owned outright and without any liens or disputes. |
| Completion | The point at which the balance of the money is paid for a property. The property now belongs to the buyer, and they can collect their keys and move in. |
| Covenants | A covenant is a legal agreement that restricts or obligates what can be done on a property. Covenants are usually included in the property deeds of a property and are binding on all owners. |
| Deeds | A property deed is a legal document that transfers ownership of a property from one person to another. It's a collection of written and signed documents that create a paper trail of ownership. However, whilst they used to come as a bundle of papers, kept by the bank until the loan was paid off, these records are now kept digitally. |
| Draft Contracts | A draft contract is a legal document that outlines the terms and conditions for selling a property. It's the first version of the contract that will be amended and added to throughout the conveyancing process until both conveyancing solicitors are satisfied. It will then legally bind the sale. |
| Easements | An easement is a legal right that allows someone to use another person's land for a specific purpose, for example, accessing another property through a neighbour's land, using a drainage system on a neighbouring property, or ensuring access to light from a specific direction; essentially, it grants a limited right to use part of someone else's property without owning it outright. |
| Energy Performance Certificate (EPC) | An EPC is a document that assesses the energy efficiency of a property. A survey is carried out prior to marketing the property and it provides a rating from A (most efficient) to G (least efficient). It also estimates energy costs, carbon emissions, suggests ways to improve energy efficiency as well as providing the square area of the property. EPCs are required when selling or renting most residential and commercial property and must be made available prior to marketing the property. However, some properties are exempt e.g. Listed buildings. EPCs are stored on a government register, are public information and can be viewed on a government website here. |
| Exchange of contracts | Exchange of contracts is the point at which the property purchase becomes legally binding and the buyer puts down their non-refundable deposit. At this point the completion date is agreed. |
| FENSA Certificate (Fenestration Self-Assessment Scheme) | This is an assurance that the installer who fitted the windows have complied with Building Regulations. It also means that the installation will have been registered with the Local Council. These are legal requirements and proof of them is essential when selling your home. |
| First Time Buyer (FTB) | Sounds obvious but a first-time buyer is a person who has never bought a property before, either in the UK or in another country. |
| Freehold / Freeholder | The freeholder is the owner of the land on which a property is built. In the case of a single dwelling i.e. a house, it’s usually the owner of the property. A freehold property includes the property and the land on which the property is built. If the property contains multiple leasehold dwellings, for example a block of flats, the freeholder is often either the developer who built the block, the management company who look after the block or sometimes an investor who makes revenue from lease extensions, ground rent and service charge payments for the management and maintenance of the block. |
| Gazumping | When a higher offer is made by another party and accepted, even after the offer with the first buyer had been accepted. The first buyer has been gazumped! |
| Gazundering | When a buyer reduces their offer (usually at the final hour) for no legitimate reason, forcing the seller to accept their lower price or reject it and risk having to put the property back on the market to find another buyer. Also known as "chipping" the price. |
| Ground Rent | This is a payment made by leaseholders to their landlord or freeholder for the right to occupy the land on which their property is built. It's essentially a fee for using the land, separate from the service charges that cover maintenance and other building-related costs. |
| Guide Price | A guide price will have a range. For example "a guide price of £450,000 to £500,000". The inference is the seller would look to accept an offer above the lower amount within this range. Estate agents use it as a way to gauge interest and encourage viewings, particularly when there might be some disagreement about the actual market value. Meaning you should probably speak to MyPIPS before you offer! |
| Home Buyer Survey | A Home Buyer survey is a visual inspection of a property that helps identify any issues that might affect your decision to purchase it. It's also known as a RICS Level 2 Survey. |
| Indemnity Insurance | Indemnity insurance is a type of insurance policy that protects buyers and sellers of property from legal issues and financial losses that may arise from defects in the property. It's often used during the conveyancing process when a defect or unknown situation can't be quickly or easily fixed. |
| Leasehold | Leasehold is a type of property ownership where the buyer purchases the right to live in a property for a set period of time. The property's owner is called the freeholder or landlord. When the lease expires the property is given back to the leaseholder. Leases tend to be long, starting above 100 years, and diminish in real time. Don’t worry though, for a fee a lease can be extended. How much depends on how long is left on the lease. |
| Lien | A lien is a legal claim or right against a property or asset, typically used as collateral to secure a debt or fulfil an obligation. It allows a creditor to retain possession of the property until the debt is paid off. In essence, a lien is a form of possessory security. |
| LTV Loan to Value | The amount of money being borrowed in comparison to the value of the property. Usually given as a percentage. The higher the percentage, the less deposit being put down by the buyer. i.e. 90% LTV means the buyer has a 10% deposit and will borrow 90% of the purchase price. |
| Memorandum of sale | A memorandum of sale is the document that records the agreed terms of a property sale. It is created by the estate agent selling the property and sent to the buyer and seller for review. Once agreed it is sent to both parties’ conveyancing solicitors for their information and to allow them to make contact with each other. It contains information such as the sale price, the property address, the names and contact details of both buyer and seller and their conveyancing solicitors, target exchange and completion dates, any terms that are to be included in the sale and information regarding the property, i.e. leasehold or freehold. |
| Mortgage Valuation | When you borrow money to purchase a property the lender will want to know they are lending against an asset of suitable value. To establish the property’s value the buyer will pay for a mortgage valuation to satisfy the lender. Depending upon the loan-to-value the surveyor may or may not actually attend the property. |
| National House Building Council (NHBC) | NHBC is a UK organisation that provides insurance and warranties for new build homes. The NHBC's mission is to improve the quality of house building in the UK. Developers are required to buy into an insurance policy provided by the NHBC (other providers exist e.g. Zurich) to guarantee the structure and fabric of the building for a ten-year period. |
| Offers in Excess Of (OIEO) | This applies to the asking price of a property being marketed. The figure shown is a baseline as the seller is looking for a figure in excess of this. A technique used by estate agents to appeal to a larger audience as the property will show up on online platforms at the lowest figure the seller will accept. |
| Peppercorn | The term "peppercorn ground rent" originates from historical leases where the rent was a single peppercorn, a valuable spice in those days. This nominal rent served as "consideration," ensuring the lease was legally binding, even though the peppercorn itself had little practical value. Today, "peppercorn ground rent" signifies a minimal or token payment, often used in long-term leases. |
| Property To Sell (PTS) | The status of a buyer who has a property to sell. |
| Retention | A mortgage retention involves a lender holding back some or all of a mortgage payment until certain conditions are met. This usually happens when a surveyor finds issues with the property that need to be fixed. Once the issues are remedied to a satisfactory standard the mortgage company releases the funds. This is to protect the mortgage company’s investment and to assure the LTV is met. |
| 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. |
| Royal Institute of Chartered Surveyors (RICS) | The governing body for qualified surveyors who will be called out to survey the property you are looking to purchase. |
| Share of Freehold | Share-of-freehold is a property ownership structure allowing leaseholders of dwellings within a building to share ownership of the building and the land on which it is built. This arrangement is most common with flats and is considered more appealing than leasehold ownership as control of the building’s maintenance schedule and fee structure as well as larger decisions to do with the building are decided by the SoF owners. Even if a property is SoF there will usually still be a lease which lays out the perimeters and rules of living in the property. |
| Snagging | Where the developer of a new build property 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 to the property in order to highlight and rectify minor cosmetic issues and check the quality of finish. |
| Stamp Duty (SDLT) | The buyer pays Stamp Duty Land Tax (SDLT) when they purchase a house, flat or other land or buildings over a certain price in the UK. The term 'stamp duty' dates back to the historic process of stamping property deeds by government officials for a fee. |
| Subsidence | Subsidence occurs when the ground beneath a building shrinks, causing the foundation to shift and the building to become unstable. This can be caused by tree roots, as well as many other factors. It can lead to significant structural damage and make a building unsafe to live in. |
| Tenants in common and Joint Tenants | "Tenants in common" and "joint tenants" refer to two ways people can co-own a property, with the key difference being that "joint tenants" have equal ownership of the entire property, while "tenants in common" each own a specific percentage share of the property, meaning they can have unequal ownership. |
| Tree Preservation Order (TPO) | A Tree Preservation Order, or TPO, is usually made by a local planning authority (often the local council) to protect a specific tree or woodland from deliberate damage or destruction. This could include felling, lopping, topping, uprooting or otherwise wilful damage. If you do need to do any of these things to a tree under a TPO you will need to apply to the council and gain their permission to do so. |
| Under Offer Subject to Contract (STC) | "Under offer subject to contract" means that a buyer has made an offer on a property which the seller has accepted, but the sale is not yet legally binding as the contracts have not been signed and exchanged; essentially, the deal is still pending and either party can back out until the formal contract stage is reached."Subject to contract" means the terms of the deal, whilst agreed in principle, are subject to change. Once the buyer has completed their due diligence, which includes legal and survey processes etc. both the buyer and seller will sign the contract and the deal is ready to exchange. |
| Underpinning | Underpinning is a construction technique used to strengthen and stabilise the foundation of a building by excavating beneath the existing foundation and adding additional support. The key benefit is that it can significantly improve the structural integrity of a building, but drawbacks include the cost, disruption during excavation, and potential for further cracking if not done properly. |
| Vendor | The person or party selling the property. |
HANDHOLD
Confused by technical jargon?
Trouble making and taking calls during working hours?
Don’t know which surveys and reports to book and when?
Need help understanding your survey report?
Need help with filling out numerous forms for your solicitor?
Confused by AML requirements?
Dealing with an uncooperative estate agent?
Having issues with others in the chain?
Feel like you don’t have any control over the process?
When am I completing and when can I pick up my keys?
Or, are you just feeling overwhelmed?
NEGOTIATE
How do I go about making an offer?
Has the property been on the market for a long time?
How do I stand out from the crowd in a busy market?
Is the property on for a fair market value?
How do I get my offer to the top of the pile?
Is there a short lease on your property?
Maintenance fees are too expensive?
What are sealed bids and best & final offers?
Has the agent asked for a deposit up front?
RE NEGOTIATE
Mortgage valuation less than the agreed price?
Survey raised defects with the property?
Missing building control documentation?
Am I buying the property at the right price?
Are there any restrictive covenants on the property?
Search information affecting the property value?
Are there last-minute changes whilst trying to agree a move date?