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The secret to creating wealth through property

A

  • Advance - Mortgage Loan.
  • Auction - Method used to sell a house where property is sold to highest bidder.
  • APR - Annual Percentage Rate. Shown as a percentage rate to make it easily comparable with mortgage interest rates. Consists of all costs of the loan, including interest charges and arrangement fees.
  • A.R.L.A - Association of Residential Letting Agents.
  • Arrears - Overdue debt, liability or obligation.
  • Article 4 - Legislation used by local councils to restrict certain types of usage for properties within the area it covers. i.e. Article 4 was introduced to certain areas of Reading due to a large number of properties as HMOs, or student houses, by bad landlords, as this had led to the quality of the area diminishing and there was an excess of HMOs in this area.

B

  • Balance Outstanding - The amount left to pay on a mortgage, or loan.
  • Bedroom a room that has space for a small single bed and in most cases it will have a window, although there is no legal requirement.
  • Bridging Loan - A short term, temporary loan given in advance to cover the interval between a purchase of a property and the sale of another.
  • Buildings Insurance - Insurance against the cost of repair or rebuilding a property following structural damage.
  • Building Regulations - Building Regulations are the legal rules by which building works must be carried out.
  • Buy to Let - Buying a property to rent it out.
  • Buy To Let Mortgage - Loan for property purchased to rent out.

C

  • Chain - The name given to a number of linked property sales, where exchange of contracts must take place simultaneously for any of the sales to progress.
  • Subcategories:
  • Open Chain- Where either the buyer or seller has not exchanged contracts on their next purchase.
  • Closed Chain - Where the buyer or seller has exchanged contracts on their next purchase.
  • Broken Chain - Where the buyer or seller’s next purchase, or the whole deal, falls through.
  • No Onward Chain - Means there is no chain involved with sale of the property, usually because it is an investment property, a probate sale, or a new build.
  • Closing Date - The cut-off date given for offers to be taken on a property that multiple parties are interested in.
  • Completion Date - When the legal transaction has gone through, including all monetary transactions and documents and culminates with the seller’s solicitor instructing the estate agents to release the keys to the property
  • Commercial Mortgage – specialist lender that will loan against a company purchase or commercial property.
  • Contents Insurance - Insurance to cover items kept within the property. Will cover against accidental damage, theft or fire.
  • Contract - The legal agreement drawn up by the solicitors detailing the full terms and conditions of the sale or purchase.
  • Conveyancer - Someone who can conduct conveyancing (the sale or purchase of a property) other than a solicitor.
  • Conversion Cost - Cost of works for converting a property, i.e converting into a HMO.
  • Council Tax - The tax paid for a property to the local council that covers the costs of local services and amenities
  • Contingency for Void - This is money saved from rental income to cover periods when rooms are not tenanted.
  • Covenant - A condition that applies to all future owners of a property and that the buyer must comply with. It is found within the Title Deeds or lease. I.e. Restrictive covenants will stop the owner from doing something.
  • Conservation areas - protect the special architectural and historic interest of a place.

D

  • Deeds - The legal document that states the details of ownership of a property or piece of land.
  • Deposit - This is the initial amount of capital that the buyer must put forward for the purchase of a property.
  • Disbursements - Fees associated with the sale/purchase of property, such as Stamp Duty, Search Fees & Land Registry etc.
  • Draft Contract - Unconfirmed version of the Contract.

E

  • Early Repayment Charge - A charge that is required if you terminate the mortgage before the agreed completion of the mortgage product. Most often occurs when special offers or reduced payments were part of the product.
  • Equity - This is the difference between the amount owed on the mortgage and the value of the property.
  • Exchange of Contracts - This is the point at which the sale of the property becomes legally binding and neither party can back out without penalty fees being given.
  • EPC - An Energy Performance Certificate (EPC) provides a record of the energy efficiency rating of a building.

F

  • Fittings and Fixtures - These are items that are not part of the structure of the property and typically include carpets, curtains etc.
  • FIMBRA - Financial Intermediaries Managers & Brokers Regulatory Authority.
  • Flip - Buy a property, renovate it/develop it, then immediately sell it on.
  • Fixtures and Fittings - Fixtures and chattels. Chattels are frequently referred to as fittings, but the term fitting has no meaning in the legal context. A fixture is deemed to form part of the land or building. A chattel retains its independence and can be removed. A chattel does not pass onto the purchaser when the land or building is sold
  • Flying freehold - refers to freehold property built over land which does not form part of the property. It is used to describe the situation where a freehold property overhangs or projects.
  • Freehold - Ownership of the land and property on a plot.
  • Full Structural Survey - A survey of the property which looks at all main and structural elements to a property. i.e. Floor, Walls, Roof, Electrical Wiring, Plumbing, Drains, Joinery, Foundations and Garden etc.

G

  • Gazumping - This is when the seller accepts a higher offer from another buyer when an offer has previously been agreed.
  • Gazundering - This is when a buyer lowers his offer just before the exchange of contracts.
  • Gross - Total amount
  • Ground Rent - The Annual fee paid by the Leaseholder to the Freeholder.
  • Gross Yield - Total Yield.

H

  • Home Buyers Report - A report that looks at the general condition of the property and validates the value of the property. Not as extensive as a full structural survey.
  • Housing Association – Non Profit organisation that allows you to buy a percentage of the property and pay rent on the rest.
  • HMO - House of Multiple Occupancy.
  • HMO Licence - This is a licence given to a property when it has 5 or more individuals living in it, over 3 floors. There will be a charge for the licence, but they are usually then valid for a 5 year period.

I

  • IFA - Independent Financial Advisor.
  • IMRO - Investment Managers Regulatory Organisation. Body that regulates investment managers.
  • ICBA - Institution of Commercial and Business Agents.
  • Instruction - When the Estate Agency is instructed to start marketing a property.
  • Interest Rate - The proportion of a loan that is charged as interest to the borrower.

J

  • Joint Agency - Where two Estate Agencies market the same property.
  • Joint Mortgage - A type of mortgage where there is more than one person responsible for the mortgage. i.e. husband and wife.

L

  • Land Certificate - A Land Registry certificate proving ownership of property.
  • Land Registry - An organisation run by the government that holds records of all registered properties in England and Wales.
  • LAUTRO - Life Assurance Unit Trust Regulatory Organisation.
  • Lease with Option - Lease a property with a contract with a fixed sale price to buy at an agreed point in the future (usually between 2-5 years), giving a possible large discount on the price of property at the end of the lease, if prices have risen. Also the seller is not allowed to sell to anyone else during the contract period.
  • Leasehold - To be the owner of a property, but not the land it is situated on. Ground Rent is paid annually to the Freeholder and the Leasehold will remain for an agreed number of years. If you wish to extend the length of a lease when it is nearing the end of an agreement, you must pay additional money for the new lease.
  • Let to Buy - This is when you let your existing property to pay for a new property.
  • Local Authority Search - An application made to the local authority requesting details of planning or other matters which may affect the sale of a property.
  • Loan to Value (LTV) - A lending risk assessment ratio that financial institutions and other lenders examine before approving a mortgage.
  • Loft conversion - which involves converting your roof space into extra living space, is an excellent way to add value and room to a home.

M

  • Maintenance Charge - The charge paid by the leaseholder to the freeholder towards the upkeep of the property.
  • M.A.R.L.A- Member of the Association or Residential Letting Agents.
  • M.A.B. - Mortgage Advice Bureau.
  • Mortgage Deed - The legal document that details the mortgage lenders interest in the property.
  • Mortgage Interest Rate - The interest rate paid to the lender for the mortgage.
  • Mortgage Offer - A formal written offer made by the lender, be it a bank or building society, to lend an approved amount to purchase a property.
  • Multi-Agency - When two or more estate agents are selling the same property.
  • Multi-Let - When rooms in a single property are let out to multiple, unrelated tenants.

N

  • NAEA - National Association of Estate Agents.
  • NAVA - National Association of Valuers and Auctioneers.
  • Negative Equity - When the value of the property is less than the amount left to pay on the mortgage.
  • Net - Amount when additional costs have been taken off.
  • NHBC - New Homes Building Certificate.
  • Net Yield - Yield after costs have been deducted.

O

  • Offer- A formal offer of a certain amount to purchase the property put forward to the seller, from the buyer, but is not legally binding.
  • Offers Over or Offers In Excess Of - Offers are invited, but must be above the price shown.
  • Ombudsman - Independent professional body who investigate complaints on behalf of customers against estate agents, solicitors and insurance companies

P

  • Part-possession - Used when a property is being sold where a tenant has a legal right of occupation.
  • Party wall divides the buildings of two owners. This 'boundary' is usually, but not always, positioned at the centre of the wall.
  • PCM - Per Calendar Month.
  • PIN - Property Investors Network.
  • Planning Permission - Permission given by the local council to undertake works on a property.
  • Plot- this is an area of land which may or may not have a property on it, that can be sold for development purposes.
  • Permitted development rights allow owners of a building to make certain building changes and changes of use without having to make a planning application.
  • Private Treaty - The way in which most house sales are completed in England and Wales.
  • Private (or un-adopted) streets are those that are not maintained at public expense. At the last survey (in 1972) it was found that there were approximately 40,000 un-adopted streets in England and Wales. The current number is thought to be around the same.
  • Project Management is the management of people, time and costs by an individual or a team to ensure the efficient commencement, progress and conclusion of a project. All these elements apply to construction projects
  • Property Cycle is a logical sequence of recurrent events reflected in factors such as fluctuating prices, vacancies, rentals and demand in the property market. Business and economic cycles typically last over a decade and they influence property cycles in different sectors.
  • Public liability insurance - This type of insurance covers you should anyone suffer injury or death in or around your property. It can be part of Building or Contents insurance, but is not always included.
  • Purchase Option - A Purchase Option is a contractual agreement made between the existing owner of a property and an investor/buyer, whereby the property will be purchased for an agreed price that will not change, but will be paid at a fixed time in the future, during which time the owner is not allowed to sell to anyone else, but the buyer does not legally have to buy the property. The option is written up in a legally binding document and this document can be sold by the investor/buyer to another investor/buyer at any point.

Q

  • Quantity surveyor is an expert in the art of costing a building at all its stages.

R

  • Rent2Rent - When an investor takes on the position of landlord from the owner of the property, by agreeing to rent the property on a single-let basis for a fee slightly below the current market price of the property and then uses it on a multi-let basis, letting out each individual room, gaining a far higher income. Then after paying the landlord the rent for the property, the profit is kept by the investor. The agreement usually lasts for a set period (2-5years) during which the Investor takes over all financial and maintenance responsibilities, except structural issues and guarantee’s rent to the landlord providing financial security for the entire length of the contract.
  • Repayment mortgage - With a repayment mortgage monthly instalments are made to your mortgage provider/lender for an agreed period of time until you have paid back both the loan and the interest on it.
  • Repossession - This is when mortgage repayments have not been kept up and the bank repossesses the property and sells it to repay the debt.
  • Retention - Holding back part of a mortgage loan until repairs to the property are satisfactorily completed.
  • ROI - Return on Investment.

S

  • Sale Agreed - A verbal agreement of purchase between the seller and buyer.
  • Searches - Searches of records kept by the local council of planning applications restrictions etc.
  • Secured - This means the mortgage has been ‘secured’ against the property. If you are unable to pay the loan back, then the house will be repossessed and the sale of the house will pay the outstanding balance of the loan.
  • Single Let - Property rented on a single tenancy.
  • Sitting tenant - This is a tenant with a legal right to continue to occupy a property, even if the property changes ownership. This will usually affect the price of the property in a negative way.
  • Sole Agency - When a property is marketed by only one estate agent.
  • Sole Selling Rights – When the contracted state agency is paid when the vendor sells to someone they know.
  • Stamp duty - This is the tax to be paid on the purchase of a property and depends on the price of the property. The % paid changed on the 4th of December 2014, making it fairer on the lower priced houses, as they had previously been paying a high proportion of tax in comparison to higher priced properties.
  • Standard variable rate mortgage - The rate at which you are repaying the loan can be altered by the lender, meaning that the interest can go up or down. The mortgage will have no discounts or deals.
  • Subject to contract (STC) - This means that a contract has been agreed in principle but is not yet legally binding.
  • Survey - An inspection made by a qualified surveyor.

T

  • Tenants - The people paying rent and living in a property that is not owned by them.
  • Tenancy agreement - This is a legal document which states the conditions of the rental agreement and will include the rights of both the landlord and the tenant/s
  • Tender - The process whereby the seller asks for written offers on a property usually with a set closing date.
  • Title - The ultimate record of ownership of a property, the evidence of which is found in the title deeds.
  • Title Split - This is when a property can be split into multiple smaller properties and is done legally by splitting the title deeds.
  • Tracker mortgage - This is when the interest rate on the loan is linked with the Bank of England’s base rate and therefore will go up or down depending on this rate, which is not be decided by the lender.
  • Transfer Deeds - The Land Registry document that transfers legal ownership from seller to buyer.

U

  • Under Offer- When the seller has accepted an offer on the property, but contracts have not yet been exchanged.
  • Utility Costs - Running costs of a property, which include Gas, Electric, Water & Telephone.

V

  • Valuer - Estate Agent who values the property.
  • Valuation - The value given to a property to advertise on the market by an Estate Agent.
  • Verbal Offer - When an offer has been put forward verbally from a prospective buyer, but is not legally binding on either party.

W

  • Writ - Mode of commencing legal proceedings.

Y

  • Yield - The income return on an investment, rent x12 divided by purchase


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