I have had a massive response from my Blog reading friends since I posted last weeks article on Jargon Busting. The thought had crossed my mind to do something different this week however, my readers have convinced me otherwise. So without further ‘ado’ here is part 2 (part 1 can be found here – just in case you missed it…)!!
Negative Equity – When the value of the mortgage which is outstanding on the property, is more than the market value of the property.
NHBC – National House Building Council. A warranty scheme for new properties providing cover against major structural defects for 10 years.
Non Resident Landlords – If you live overseas and are not a UK tax payer you can apply to receive rent without tax being deducted. For more information and details on how to apply for the Non Resident Landlords (NRL) Scheme – click HERE
Office Copy Entries – If the property has a registered title, the vendor’s (seller) solicitor will need to apply for office copy entries from the Land Registry before a draft contract can be prepared.
Ombudsman – An independent professional body which is set up by law to help settle individual disputes between consumers and firms, for example, estate agents, solicitors and insurance companies. There are now three ombudsman schemes.
Outline Planning Permission – This is planning consent which is subject to certain reserved matters, such as design, appearance and siting of proposed buildings.
Overseas landlord – A landlord who is resident overseas for more than six months in any tax year. Overseas landlords must apply for consent for their letting agent to pass on rental income without deductions for tax.
Portable Appliance Test (PAT) – A test in the United Kingdom by which electrical appliances are routinely checked for safety. The correct term for the whole process is In-service Inspection & Testing of Electrical Equipment.
Peppercorn Rent – A nominal rent where the landlord does not receive an annual payment in cash. When the owner of land or property wishes to grant a lease, he must charge a rent as an acknowledgement of the existence of the lease. Where the owner does not want to charge any rent but simply wishes to establish the lease exists, he can ask for a peppercorn rent each year as a token payment.
Planning Permission- The permission granted by the local planning authority (usually the local council) for any new building or engineering operations or change of use of a building if it meets the public’s interest.
Premium – The amount you pay regularly, monthly or annually, to an insurer for an insurance policy.
Private Sale – Sale of a property without the use of an estate agent.
Product Fee – There may be a fee involved when you apply for a mortgage. This is to reserve the mortgage and to cover administration costs. Also known as an arrangement fee.
Redemption Figure – The amount required to discharge your outstanding mortgage at a fixed point in time. This will be the balance of your mortgage plus any early repayment fees or penalties which may apply.
Remortgage – The process of moving your mortgage without moving home. You take a new mortgage with a different lender to pay off your old mortgage.
Rent To Rent – Where a person rents a property and then sub-lets to others for a profit. Contractual arrangements may not protect parties involved and this should be avoided unless dealing with a professional, accredited agent.
Repayment Mortgage – Also known as a Capital and Interest mortgage. Your monthly payments pay off the interest and some of the capital borrowed. By the end of the term of your mortgage, you will have paid off all your mortgage debt.
Repayment Type – How you pay back your mortgage. See Repayment Mortgage or Interest Only (in Part 1 of the Blog) Mortgage.
Retention – Holding back part of a mortgage loan until any repairs to the property are satisfactorily completed.
Section 21 Notice The notice which must be served to end a tenancy. This can be served at any time after the deposit has been properly registered with an approved scheme but not less than 2 months before possession is required. A Section 21(1)(b) notice must be served to end a fixed term tenancy. A Section 21 (4)(a) must be used to end a periodic tenancy. In this case of a periodic tenancy, it must be served after term ends and expires following 2 months after the fixed term ends. Example: let for 6 months starting on 1 Jan. Term ends 30 June. Notice served 15 July. Notice expires after 30 September.
Share of Freehold – Share of freehold means that when you buy a flat the lease on the property comes with a share of ownership of the building. Leaseholders in a block with several properties often choose to buy the freehold between them and so share of freehold gives them more control over the management of the property. It is important to remember that when purchasing a property with a share of freehold, the property is still a leasehold property.
Sinking Fund – When you buy a leasehold property, part of the service charge may be paid into a sinking fund. The sinking fund builds up over the years to cover future projects that may be needed to repair or improve the building. The freeholder or the property management company will be responsible for the service charge management and will notify leaseholders if part of the service charge will be paid into a sinking fund.
Sold Subject to Contract (STC) – This term refers to the fact an offer has been accepted by the vendor and that a sale is proceeding. It means the same as ‘Under offer’ or ‘Sale agreed’
Sole Agency – Where you employ the services of one agent to sell your property for an agreed period of time. Should you sell your property through another agent before your agreement with the sole agent has ended, then you may have to pay the original agent their fee as well. Likewise, the agent must respect the terms of the agreement and ensure that the service promised and agreed is delivered. If other agents approach you during the term of a sole agency agreement, they must warn you of a possible liability to pay commission to more than one agent.
Sole Selling Rights – This means that the appointed selling agent will be due the agreed fee, even if you end up selling your property privately or through another agent. This usually applies to development / land, new homes, auction and properties being sold by tender.
Stamp Duty Land Tax – A tax you must pay on a property when you buy it. The duty must be paid at the point of completion.
Statutory Periodic Tenancy – If at the end of a fixed term tenancy, neither party does anything and no further agreement is made, the tenancy will automatically run from one rent period to the next on the same terms as the preceding fixed term assured shorthold tenancy. It will continue to run on this basis until replaced by a new agreement or by one party giving the other notice. Once notice is served, it will only be effective from the start of the next period of renewal and will end on the last day of that period. The tenant will have to provide not less than 1 months notice and the landlord not less than 2 months.
Subject to Contract – Words to indicate that an agreement is not yet legally binding.
Settlement – caused by the weight of a new building/structure or part of it. Buildings are heavy things and, as their weight is taken up by the ground, a little movement caused by this adjustment sometimes occurs as the ground consolidates under the new load – this is settlement. It usually occurs early in the life of a building and rarely recurs, although, there are exceptions, for example, in soft clay soils. Settlement rarely causes problems, although differential settlement (differing degrees of settlement between connected parts of the same structure) can cause damage. Not to be confused with subsidence.
Subsidence – This results from external factors which cause the disruption, displacement, contraction or distortion of the ground under or around a building. Some of the more common causes include-
- TREES – trees extract moisture from the ground which then contracts, particularly in shrinkable clay soils, causing buildings above to move (subside).
- DRAINS – leaking drains can wash away or erode the adjacent ground which then partially collapses reducing the lateral (sideways) strength of the ground. The support provided by this ground will then be reduced causing any building above to move (subside).
There could be movement in the ground beneath your home if you find: New or expanding cracks in plasterwork; New or expanding cracks in outside brickwork or rendering; Sticking doors or windows; Rippling wallpaper with no other apparent cause e.g. damp.
Survey – A thorough report on the property you are planning to buy. This can be a full structural survey, a homebuyers report or a basic mortgage valuation.
Tenants – People living in a property on a non-ownership basis.
Tender – This is an arrangement whereby prospective purchasers are invited to submit sealed bids by a previously stated date and time. The moment the offer is accepted by the seller, the arrangement becomes a legally binding contract.
Tenancy in Common – A form of ownership by two or more people in which, if one dies, their share of the property forms part of their estate and does not automatically pass to the other(s).
Tenure – A collective term which relates to the nature of the owners title to a property i.e. is it freehold or leasehold.
Title – The record of ownership of a property, the evidence of which is found in the title deeds.
Tracker Mortgages – Tracker mortgage normally follow movements in the base rate set by the Bank of England. The interest rate is then set at a constant level above or below the base rate, rising and falling in line with any changes during the tracking period. This means that if the base rate falls, the amount you pay falls. Likewise, if the base rate goes up, so will your payments. Tracker mortgages tend to be for a set period of time, say five years, after which you usually transfer to a new tracker rate, or to a different type of rate altogether.
Transfer Deeds – The Land Registry document that transfers legal ownership from seller to buyer.
Transfer of Equity – Adding or removing a party to / from a mortgage.
Under Offer – A term applied to a property for which the seller has provisionally accepted the buyer’s offer subject to contract.
Underpinning – In construction, underpinning is the process of strengthening and stabilizing the foundation of an existing building or other structure. Underpinning may be necessary for a variety of reasons:
- The original foundation is simply not strong or stable enough.
- The usage of the structure has changed.
- The properties of the soil supporting the foundation may have changed (possibly through subsidence) or were mischaracterized during design.
- The construction of nearby structures necessitates the excavation of soil supporting existing foundations.
- It is more economical, due to land price or otherwise, to work on the present structure’s foundation than to build a new one.
Unlawful eviction – Eviction of a tenant from residential property by preventing them from occupying the premises for example by changing the locks. This is a criminal offence under the Protection from Eviction Act 1977 and could lead to a prison term, a fine, or both.
Valuation – A valuation of the property for mortgage purposes to ensure that the property is worth the amount requested for a mortgage
Valuation Fee – The charge for the valuation of the property.
Variable Interest Rate – Rate of interest payment that fluctuates over time with general interest rates.
Vendor – The seller of a property or piece of land.
Void Period – The time when a rental property is unoccupied and no rent is received – a Landlord’s biggest worry.
Walk Through – The final inspection of a property being sold by the buyer to confirm that any contingencies specified in the purchase agreement such as repairs have been completed, fixture and non-fixture property.
Wash Sale – The comparison of such a sale to the act of washing, which does not affect the nature of the thing washed] : a sale and purchase of securities that produces no change of the beneficial …
Yield – The yield of the property tells you the annual return on your investment. The gross yield is calculated by looking at the rental income you receive as a percentage of how much the property cost. Agent’s fees and VAT can be a significant, which is why our Guaranteed Rent scheme is preferred by many landlords.
Taking loads of Zzzz’s and resting these fat fingers after all that typing…!!
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