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What does under offer mean? A glossary of buying and selling terms

June 29, 2020

The property market is full of jargon that may be unfamiliar to many buyers and sellers. Here’s a useful glossary to help you understand important buying and selling terms.

  • Advance – money provided by a lender to a buyer to secure a property.
  • Annual Percentage Rate (APR) – the true total cost of a loan, including arrangement fees, interest charges and other costs. This is shown as a percentage and is useful when comparing mortgage offers.
  • Arrangement fee – a fee paid to a lender for the admin of arranging a loan.
  • Asking price – property price set by the seller as what they hope to receive an offer for.
  • Assign – transfer the right to a property from one person to another.
  • Base rate – the interest rate that is determined by the Bank of England. Variable mortgage rates are often adjusted depending on fluctuations in this rate.
  • Buildings insurance – insurance policy that covers any structural damage to a property. This is often required by lenders.
  • Chain – successive buyers and sellers reliant on one another to complete the transaction. This is a common situation and leads to many transactions falling through in the UK as it takes one party not to sell and another not to buy for the entire chain to collapse.
  • Commission – fee due to an estate agent for services related to the selling of a property. This is typically a percentage of the property price and is usually paid upon completion.
  • Completion – when the legal ownership of the property changes from the seller to the buyer. At this point, all the funds and paperwork will have been distributed, and the keys will be handed over.
  • Conditions of sale – the terms within a sale contract governing the duties of the seller and the rights of the buyer.

  • Contents insurance – insurance covering any movable contents inside a property against theft or accidental damage.
  • Contract – document that outlines the terms between the seller and buyer and binds both parties to the transaction, also called an agreement.
  • Conveyancing – legal process involving transferring ownership of a property. A solicitor or licensed conveyancer takes care of the legal aspects of buying or selling.
  • Council Tax – a tax levied by local councils to cover the cost of providing local services and amenities. A property is given a council tax band, and this determines how much the owner will pay.
  • Covenants – rules in the deeds or lease governing the property.
  • Deeds – legal documents that prove ownership of a property.
  • Deposit – the amount of money the buyer puts down on exchange of contracts, which is typically 10% of the purchase price and is also called down payment.
  • Easement – a right granted to someone besides the property owner. This can be the right of a neighbour to pass over access.
  • Energy Performance Certificate (EPC)– this certificate provides an energy performance rating for a property and also recommendations on how to improve its energy efficiency. Ratings vary from A for most efficient to G for least efficient. The seller must provide this to the buyer.
  • Equity – the difference between the balance owed on the mortgage and the property value.
  • Exchange of contracts – this is the point in the homebuying and selling process when both parties are legally bound to complete the deal.
  • Fixed rate mortgage – a mortgage interest rate that is initially fixed for a set period of time.
  • Fixtures and fittings – fixtures include items that have become part of a building or land and are included in a sale, while fittings are not attached and are not included in a sale unless agreed otherwise. A seller should complete a fixture and fittings form to confirm what is included in the sale.
  • Freehold – ownership of a property and the land it sits on. Most houses are freehold; however, this is still important to check as some new-build homes have been sold as leasehold.
  • Gazumping – when a seller has accepted an offer on a property, but later the seller accepts a higher offer from a different party.
  • Gazundering – when a buyer has reduced the agreed offer directly before the official exchange of contracts.
  • Ground rent– a fee paid annually to a freeholder in order to occupy the land a property stands on.
  • Instruction – engagement by a seller for an estate agent to market their property.
  • Land Registry – the government body responsible for records of land and property ownership in England and Wales. There are set fees that need to be paid to Land Registry to register property ownership.
  • Leasehold – ownership of property and the land it sits on for a specific length of time and is typically subject to an annual ground rent payment to the freeholder.
  • Mortgage valuation – a report that assesses the value of a property and helps determine the maximum amount that should be loaned. This is carried out by a surveyor on behalf of the lender, and the buyer typically has to pay a fee for this.
  • Offer – a bid made by a prospective buyer on how much they would be willing to pay for a property. In England and Wales, an offer is not legally binding and can be changed or withdrawn at any point prior to exchanging contracts.

  • Open market value – the expected price of a property with a willing seller and buyer.
  • Repayment mortgage – a mortgage with monthly repayments covering the amount borrowed and the accrued interest.
  • Sale agreed – when the seller has agreed to an offer made verbally.
  • Sale contract– a legal agreement between an estate agent and seller.
  • Searches – these are checks done by the buyer’s conveyancer or solicitor on anything that could impact the current or future property value.
  • Service charge – a charge for the upkeep of a leasehold property, also called maintenance charge.
  • Stamp Duty Land Tax – tax paid to the government when buying land or property. Rates vary depending on the purchase price, and first-time buyers purchasing a property at or below £500,000 are eligible for relief.
  • Subject to contract– when an offer has been accepted and there is a provisional, non-legally binding agreement in place before exchanging contracts.
  • Survey – a report on the condition of a property undertaken by a qualified surveyor. There are three main types, including a mortgage valuation, homebuyers report and full structural survey.
  • Tenure – the type of land ownership, whether freehold or leasehold.
  • Under offer – when an offer has been accepted by the seller, but the contracts have not been exchanged yet. The legal processes of the transaction then begin.Variable rate mortgage – a mortgage with interest rates that change at the lender’s discretion based on market conditions and general interest rates.
  • Vendor – the seller or person selling a property.

Get in touch for buying or selling

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