Estate agency terms explained
Agreement in principle
An estimate of how much money you can borrow from a mortgage lender. What you can borrow is based on your income and credit history; it can be used as evidence that you have the funds in place for when you have an offer for a property accepted. Also known as a decision in principle, mortgage in principle, approval in principle or mortgage promise.
Annual Percentage Rate of Charge (APRC)
The total rate of interest you’ll pay for a mortgage’s entire duration. APRC considers all the different rates your mortgage will be subject to and serves as an easy way to compare mortgage deals—lower rates usually mean a better deal.
Bank rate
Also known as 'base rate', it is the interest rate set by the Bank of England which influences other banks. It is generally used as a benchmark for the interest rates banks charge when lending money.
Bridging loan
A temporary short-term loan which enables a buyer to purchase a property before selling their existing property.
Building survey
A report into the physical state of a property sometimes referred to as a full structural survey.
Chain
Formed when several property sales and purchases are inter-dependent. A chain can become complicated but a good estate agent will be able to help keep it moving.
Commonhold
A system of ownership usually in place in buildings or estates of multiple occupancies (such as a block of flats). Unlike with leasehold, you own the freehold to your particular property (as do the other owners) and all property owners collectively help manage the upkeep of the building/estate.
Completion date
When the transaction is complete and ownership of the property passes from seller to buyer. Normally, the seller's solicitor will ask the estate agent to release the keys to the buyer at this time.
Conveyancer
A lawyer who specialises in the transferring of homeownership. They are required if you are using a mortgage and will cover every legal aspect of the home purchasing process.
Covenant
A covenant is a provision or promise that has been written into a deed which may affect or limit the use of the property or land. There are two different types of covenant: positive and restrictive. A positive covenant is an obligation which requires some form of action (such as maintaining a fence or wall), whereas a restrictive covenant limits or prevents the use of land in a specified way.
Deeds
Documents that show who owns the title of a property or land, along with any responsibilities on the property, e.g. what you can/cannot alter, rights of way, etc. Deeds are usually held by the mortgage lender until you pay off your mortgage, then they can be held by you or your solicitor.
Deposit
An amount of money used to secure a property purchase, usually ten per cent (or lower) of the full price. Paying a deposit displays your initial commitment to purchase with the remaining amount to be paid later or provided in the form of a mortgage.
Early Repayment Charge (ERC)
A charge incurred when you overpay on a mortgage or transfer to a different mortgage product during a specified amount of time (known as the early repayment charge period). The charge covers potential lost interest to your lender. Most mortgages will allow you to overpay up to a certain amount annually without incurring a charge.
Easement
The right of one landowner to make use of another nearby piece of land for the benefit of their land, e.g. a private right of way.
Energy Performance Certificate (EPC)
Shows the efficiency of a property and gives an indication of how much the energy bills will be. It is displayed as two graphs: the energy efficiency and the environmental impact of the property. Both are graded from A (the best) to G (the worst).
Equity
Equity, or capital, represents the amount of money a homeowner has put into a property. This value is built up over time as the owner pays off the mortgage and the market value of the property appreciates.
Exchange of contracts
The point at which both parties are committed to the property transaction; both the buyer and seller can walk away at any point before the contracts have been 'exchanged'.
Execution-only
When a buyer chooses a mortgage rather than taking advice from a mortgage broker/advisor.
First Time Buyer
An individual who has never bought or owned a property before. Renting a property does not count as buying or owning.
Fixed-rate
A term used to describe a mortgage that has an interest rate which stays the same for a predetermined ‘fixed’ period—the interest rate will not change during this time.
Freehold
A system of ownership which means you own the building and the land it sits on.
Gazumping
When a higher offer is made by another party and accepted, even after the offer with the first buyer had been accepted.
Gazundering
When a buyer lowers their offer (usually at the final hour) so the seller is forced to accept their lower price or reject it and risk having to find another buyer.
Interest rates
A percentage charge added to the amount you pay back on a loan. For example, a mortgage with a four per cent interest rate would mean you have to pay back the full amount of the loan—plus four per cent of its value.
Land and Building Transaction Tax (LBTT) (SCOTLAND)
The tax you pay when purchasing land or property in Scotland. The current threshold is £145,000 for residential properties and £150,000 for non-residential land and properties. However, the rate payable is subject to the total purchase cost. See our guide to find out more.
Land Registry
A Government database containing the registrations of who owns what property and land in England and Wales.
Land Transaction Tax (LTT) (WALES)
LTT replaced Stamp Duty in Wales from April 2018. Buyers looking to purchase in Wales will be charged LTT on any residential purchase above £180,000 and above £150,000 for non-residential purchases. However, the price you pay varies depending on the overall cost of the property. See our guide to find out more.
Leasehold
A system of ownership where you own the property but not the land it sits on. For example, you may own a flat but not the building it sits within. There will be a time period placed on your lease which will need to be renewed with the landowner, always check how many years remain on the lease. Whilst common with flats, some houses are sold as leasehold too which has been subject to much scrutiny. See our guide Leasehold: A Life Sentence? to find out more.
Loan-to-Value (LVT)
The ratio of how much your loan (usually a mortgage) will cover the price of your property, written as a percentage. For example, a mortgage that offers 60 per cent LTV will cover 60 per cent of the property’s price.
Mortgage
A specialist loan used to pay for a property which you pay back over time with interest to the mortgage lender. The property itself is considered collateral, this means if you don’t keep up with your repayments, it can be repossessed and sold to reclaim the money owed. There are varying types of mortgages, see our guide to find out more.
New Build
A property that hasn’t been lived in and has been recently built. Bear in mind that different banks and mortgage lenders have their own definitions. They can vary from whether the property has been lived in but not bought, whether it has been converted or refurbished or whether it was finished within a certain amount of years.
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.
Snagging
Where the developer of new build properties 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 spot minor cosmetic issues and check the quality of workmanship.
Solicitor
A type of lawyer who deals professionally with legal matters. Like a conveyancer, they will handle the transferring of homeownership but their knowledge goes above and beyond just that of property.
Stamp Duty
A lump-sum tax that anyone buying a property or land over a certain price in England and Northern Ireland must pay. The current threshold for residential properties is £125,000 and £150,000 for non-residential land and properties. However, the rate you pay will vary depending on the overall purchase price. See our guide to find out more.
Standard Security (Scotland)
This is the form that confirms to your mortgage lender that they can repossess your home if you don’t keep up with your payments.
Standard Variable Rate (SVR)
The rate your lender charges after your introductory mortgage deal finishes (usually after two to five years). This rate is set by your lender, not by the Bank of England.
Surveyor
In the context of property, they are a qualified expert who specialises in examining and highlighting any potential issues or benefits within a property. Such issues may affect its price or need fixing in future.
Title
The legal right of owning a property or land.
Under offer
If a property is under offer, it means that the seller has accepted an offer from the buyer but the contracts have not yet been exchanged.
Vendor
Another term for the seller.
Accidental Landlord
A property owner whose initial intention was not to rent out the property. This can occur when someone struggles to sell their property or have inherited one.
Additional Licensing (England and Wales)
HMO licensing which covers a specific area or whole district of properties that do not require a mandatory HMO licence. This usually occurs when a local authority believes HMOs are not being managed correctly.
Alternative Payment Arrangement (APA)
An arrangement set up by Universal Credit to have a claimant’s money sent in a different way than the standard monthly payment.
Capital Gains Tax
Tax landlords pay when selling a property that is not their main home, applicable to any profit made on the increase in the property’s price.
Client Money Protection (CMP)
Reimbursement schemes which all letting agents in England, Wales and Scotland must belong to. They protect the agent's client money whilst it is being held by the agent. This is so that in the unlikely event that the agent goes bust or misappropriates the funds, landlords and tenants can apply for their money back through the CMP scheme. All Propertymark Protected members are covered by CMP.
Energy Performance certificate (EPC)
A document outlining a property’s energy use, typical energy costs and recommendations on how to reduce energy usage and save money. A copy of the EPC must be given to the tenant, failure to provide one will mean a landlord cannot serve a Section 21 to evict a tenant.
Eviction
When a tenant must leave a property permanently, usually for breaking a term of their tenancy agreement. Evictions commonly occur when tenants do not pay rent or if the landlord needs to regain use of the property.
Excluded Occupier
A form of tenant with certain rights, who lives and shares accommodation with their landlord or a family member of the landlord.
Fair Wear and Tear
The natural deterioration that is reasonably expected to occur to a property's furniture, fixtures and fittings over time. It takes into account the length of tenancy and number of tenants living in the property. It is not something the tenant is liable for when deductions to a tenant's deposit are considered at the end of the tenancy.
House in Multiple Occupation (HMO)
A single property with at least three people who are not from the same family ('household') and share certain facilities such as a kitchen.
HMO Licensing
A local authority (council) licence obtained by a landlord to legally allow their property to be let as an HMO. Landlords in England and Wales should ask their local authority whether they need a licence. In England, HMOs with five or more inhabitants from at least two unrelated households who are sharing common facilities must be licensed. In Wales, HMOs three or more storeys high with at least five tenants from two or more households must be licensed. Northern Ireland and Scotland require licences on every HMO property.
Housing Health and Safety Rating System (HHSRS) (ENgland and WAles)
A list of 29 property hazards considered detrimental to a person’s health as set out by the Government. If a property contains one of the hazards, a landlord will be served a notice of varying degree to improve the property or risk prosecution, a fine or being unable to evict a tenant.
Improvement Notice
A notice served by a local authority for a landlord to resolve any hazards in the property.
Income Tax
Tax paid by landlords on any profit made from rent or fees. This is in addition to income from other forms of employment.
Legionella
A bacteria commonly found in water that causes serious illness. Landlords have a legal duty to assess and reduce the risk of legionella in their properties through risk assessments and taking necessary measures.
Letting Agent Code of Practice (Scotland)
The rules by which letting agents operating in Scotland must follow. This includes how they work with landlords, property management, and communications. This also places a duty on letting agents to inform their landlords where their property legally requires a licence.
Lodger
Someone who lives in a property with a resident landlord. They may or not share living space with the landlord (and their family), which will affect whether they are considered an 'excluded occupier' and their subsequent rights as a tenant.
Minimum Energy Efficiency Standards (MEES) (England and Wales)
The standard of energy efficiency a property must meet in order to be let, the minimum standard is defined by the energy rating on the property's Energy Performance Certificate (EPC).
Mesne tenant
A tenant who is leasing to a subtenant. They are essentially the landlord of the subtenant in this scenario but will still have to answer to the landlord who owns the property (known as the head landlord).
Managed Payment To Landlord (MPTL)
A form of Alternative Payment Arrangement (APA) where a claimant on Universal Credit has their rent sent straight to the landlord. This arrangement can be requested by the claimant or the landlord.
Prescribed Information
Deposit information which a landlord must serve to their tenant within 30 days (in England and Wales) of having received their deposit. In Scotland, this must be given to the tenant within 30 working days of the tenancy start date. The information includes which scheme protects the deposit, their contact details, reasons the deposit may be held and how to resolve deposit disputes.
Permitted Payments (England and Wales)
The payments which a landlord or letting agent can legally charge to a tenant, as defined under the Tenant Fees Act 2019 and the Renting Homes (Fees etc.) (Wales) Act 2019. They include rent, tenancy deposit, holding deposit and utilities but do differ slightly between England and Wales.
Prohibited Payments (England and Wales)
Illegal charges under the Tenant Fees Act 2019 and the Renting Homes (Fees etc.) (Wales) Act 2019. They include cleaning, admin, gardening and referencing fees.
Property portal
A specialist website which lists properties available to buy or rent from a range of sources. Examples of property portals include Rightmove, OnTheMarket and Zoopla.
Rent Smart Wales
The Welsh Government’s licensing scheme for landlords and letting agents. All landlords leasing properties in Wales must be registered and licensed by this scheme.
Resident Landlord
A landlord who lives in the property with the tenant or lodger they let to.
Retaliatory eviction
When a landlord evicts a tenant having received a complaint about the property's condition, or for repairs to be carried out. Landlords who are subject to complaints cannot issue an eviction notice until six months after receiving an Improvement Notice to remedy any reported disrepair.
Right to Rent (England)
A landlord's legal obligation to check the immigration status of any tenants who wish to rent their property. Only tenants that are legally allowed to live in the UK, either permanently or temporarily, are allowed to rent a property.
Scottish Choices
Tenants can opt to have their Universal Credit paid to them twice monthly rather than monthly, and their rent paid directly to the landlord after receiving their first payment.
Scottish Landlord Register
The register all landlords leasing a property in Scotland must apply for. Landlords apply through their local authority and must comply with the requirements of the register.
Scottish Letting Agent Register
The register all letting agents operating in Scotland must apply for. They must abide by its Code of Practice and landlords must check that their agent is on the register.
Section 8 Notice (England and Wales)
The process used to evict a tenant where a ground for eviction can be proven, e.g. not paying rent, excessive damage the property or illegal activity.
Section 21 Notice (England and Wales)
The process used to evict a tenant without giving a specified reason. In Deember 2019, the Government announced the Renters’ Reform Bill which will abolish the use of ‘no fault’ evictions by removing Section 21 of the Housing Act 1988.
Section 24
A clause of the Finance Act 2015 that states that landlords will be taxed on all rental income, not just profit, and be given the basic tax rate relief (20 per cent) on their mortgage interest from April 2020.
Selective Licensing
A license landlords must obtain to legally operate in certain local authority areas. Selective Licensing usually occurs in areas of low housing demand, prevalent antisocial behaviour, poor property conditions, an influx of migration, high levels of deprivation or crime. Its aim is to ensure that properties are safe to inhabit and that the landlord is managing the property correctly.
Subletting
When a tenant lets part or all of the property they are renting to someone else (a subtenant). Tenants must get permission from their landlord before subletting a property, otherwise legal action can be taken against them.
Subtenant
A tenant who is leasing from a mesne tenant, who is subletting a property.
Tenancy deposit protection
The legal requirement for all landlords to register a tenant’s deposit with a Government-approved tenancy deposit scheme. Failure to do so can result in difficulties over eviction or having to pay back three times the deposit amount to the tenant.
Universal Credit
A monthly benefit payment that has replaced Child Tax Credits, Housing Benefit, Income Support, Job-seekers Allowance, Employment and Support Allowance and Work Tax Credit.
Utilities
Services provided to a home such as gas, electric, water, phone-line and broadband.