Buy-to-let
Whether you are buying your first property or are several rungs up the ladder, moving to a new home is an exciting time.
Buying and selling houses is underpinned by a vital legal process – conveyancing – that protects your interests in this high-value transaction. You will quickly discover it comes with a whole language of its own.
As with many different areas of business and life, the terminology used can seem bamboozling and worrying. However, our handy jargon buster below should help you navigate the terms you are likely to come across.
The initial stages
Conveyancing: The legal and administrative process of buying or selling land or property.
Subject to contract: Negotiations are ongoing, but the transaction has not yet been legally agreed.
Caveat emptor: Latin for ‘Let the buyer beware’ – this means that while the seller cannot lie about the property, it’s up to the buyer to know what they are buying e.g. through a survey, searches or physical inspection.
Property information form: A form the seller must complete with information about the property, such as boundaries, neighbours, work done, services and guarantees.
What are you buying?
Freehold: Complete ownership of the land with no time limitation on that ownership.
Leasehold: The land is owned by the freeholder and the buyer buys the right to occupy it for a certain period of time – often decades or even hundreds of years – in a lease.
Registered/Unregistered land: Most land in England and Wales is registered electronically with the HM Land Registry, a government body. Its electronic register is definitive evidence of who owns a piece of land, its extent (through the title plan) and anyone else with an interest in it, such as a mortgage lender. Around 15% of land is not yet registered (because it has not been sold for a long time), but there is still usually evidence available via the title deeds as to who owns it. Unregistered land will have paper title deeds and is usually more complicated to buy, so the process can take a little longer as the property will need to be registered for the first time.
Ground rent: A regular payment, usually annual, that the leaseholder must make to the freeholder. The amount of the payment and when it must be paid (and to whom) will be set out in the lease. Be sure that you understand how any ground rent might increase over time so that you know you will be able to afford it in future.
Searches: It is the responsibility of the buyer’s conveyancer to organise a series of searches with organisations that have information about the property you are buying, such as the local council, local water authority or coal mining authority.
Chattels: Individual, moveable items – such as beds and tables – that are not part of the sale price unless otherwise agreed.
Fixtures and fittings: Items that have been fixed or fitted to the property – such as lights and bathroom suites – which are included in the sale.
Clauses and documents
Covenant: A legally-binding obligation attached to the title to do or not do an action. A positive covenant may require you to contribute to the maintenance of a shared driveway, for example. Meanwhile a negative covenant prevents you from doing something such as running a business from it or building another structure.
Title deeds: The formal documents which show who owns the land.
Conveyance: A name often given to the document by which the property is formally transferred (also known as a transfer or deed of transfer).
Redemption: This is the official term for repaying an existing mortgage. A redemption penalty is charged by the mortgage provider when it is repaid within a fixed or discounted rate period.
The final stage
Exchange of contracts: This is the moment the buyer and seller legally agree the sale of the property and a deposit is paid. After this date neither party can back out of the agreement without consequences. A completion date is agreed as part of this process.
Disbursement: A cost that your conveyancer incurs as part of the process, such as Land Registry and search fees, which are passed on to the buyer.
Completion: The moment when the transfer of ownership and remaining payment for the property are formally completed. This is the day that keys are exchanged and the purchaser is able to move into the property.
Do remember though that this is your purchase, and you must ensure you understand what you are signing, and be assured that you will be able to use the property in the way that you wish. It is your conveyancer’s job is to guide you through the process, so if you don’t understand, be sure to ask your conveyancer to explain it to you.
To find a CLC registered conveyancer in your area you can search here.
Stephen Ward is director of strategy and external relations at the Council for Licensed Conveyancers
