Published: 17/03/2023Last year we published a blog aimed at those who found property jargon a minefield…because, let’s be honest, the expressions used can be a whole crazy level of confusing. However, as so many industry terms are thrown at us during the buying process, we only just scraped the surface. So we are back with what we have called ‘part two’ of our jargon-busting series.
Buying property for the first time is almost certainly the most significant investment you will make, and whilst it’s very exciting, it can also be extremely daunting. We are here to try and make the experience as smooth and stress-free as possible. And we are confident that with a little extra knowledge in the bank, you can purchase your new property with increased confidence. Whatever stage you are at, it’s a good idea to familiarise yourself with some of the jargon most commonly used during property transactions. It is a minefield of complicated words, many of which will go straight over your head, so let’s see if we can shed some light on a few more mind-blowing words that may pop up along the way…
In simple terms, the Land Registry register the ownership of land and property in England and Wales and show evidence of ownership (88% of the land mass of England and Wales, to be exact). Their primary responsibility is to provide a reliable record of information about ownership of land and property, a title plan that indicates general boundaries, and owners with a land title guaranteed by the government; the land registry currently lists over 26 million titles. If you are buying or selling land or property - or taking out a mortgage - you must apply to the Land Registry to register the following (as explained by the www.gov.uk website):
- unregistered land or property
- any new owner of registered land or property
- an interest affecting registered land or property, such as a mortgage, a lease or a right of way
- When considering each application, we use the law to decide whether and how it should be registered.
A lease is a legal, binding contract highlighting the terms under which one party agrees to rent property owned by another. The contract guarantees the tenant (otherwise known as the lessee) use of the property; it also guarantees the property owner or landlord regular payments for a specified period in exchange. Residential leases tend to be the same for all tenants, but there are several types of commercial leases. Consequences for breaking leases range from mild to damaging, depending on the circumstances under which they are broken. Certain protected groups can vacate their leases without any consequences, for which some proof is usually required.
Local Authority Search
A Local Authority Search may be required for various reasons, but the most common is when purchasing property or land. They are carried out to ensure potential purchasers know of any restrictions or obligations on them by purchasing the property. They also provide the property's history for planning applications, building regulations, and road information that may influence your buying decision.This information is usually requested by solicitors acting for their clients.
Loan to Value
Loan to value is the percentage of borrowing you take out against your home. For most of us here in the UK, a loan or mortgage is necessary to buy a house, given the cost of property in relation to the average salary. The loan-to-value is the ratio between the value of the loan you take out and the property's value as a whole. It’s that simple. The remaining value outstanding on the purchase price must be paid as a deposit. LTV matters for two main reasons. First, the higher the LTV, the more you need to borrow to buy the property you’re after. This is a more considerable risk which usually isn’t desirable to the lender. The larger your deposit, the safer you are considered as a borrower. The other big reason LTV matters is that the amount you borrowed has an interest rate attached to it. And this rate means you’ll pay back more than you originally borrowed. So, the more you borrow, the higher your LTV, and the more you pay overall. Is your head spinning yet?
Stamp Duty Land Tax
Stamp duty is a tax charged when you buy a property in the UK, but it’s not payable by everyone. You will only need to pay it if the price of that property reaches a certain threshold. Stamp Duty Land Tax (SDLT) is a tax due when purchasing property in England and Northern Ireland and is charged at different rates depending on the purchase price of a property. There are several stamp duty tax bands, with rates rising from lower to higher bands. On 23rd September 2022, the stamp duty threshold was increased from £125,000 to £250,000.
Subject to Contract
Sold STC (Subject To Contract) means the owner of the property has accepted an offer made by a buyer. However, it also means that the paperwork required to make a sale legally binding has not yet been completed. There is still a way to go from here…
Moving a property to ‘sold STC’ status means it will be removed from the market. It doesn’t mean the listing has been removed altogether; therefore, it’s better to think of it as a change in status rather than anything more permanent. What it does mean is that the conveyancing process can begin.
Is it All a Little Clearer now?
So that’s a bit more jargon busted. Right now, your head might still be swimming with all the new information you have learnt, but hopefully, this will act as a helpful reference guide during what should be an exciting and stress-free (well, as much as possible) time in your life. If you have any questions about the house-buying process or require reassurance that you will come out the other end, give us a call…we would love to help.