Understanding the details of property is crucial when it comes to buying or renting a new home. However, navigating the dozens of property terms, charges, types, and tenures within the UK housing market can be overwhelming.
Property tenure refers to the legal rights and ownership arrangements of a property. It is important to understand the different types of tenure when considering buying or renting a property. Here are the most common forms of property tenure in the UK:
If you own a property freehold, you own both the property and the land it sits on outright. This means you have complete control over the property’s sale, development, and maintenance. Most houses in the UK are freehold properties.
A leasehold property gives you the right to live in a property for a fixed period, typically from 99 to 999 years.
However, the freeholder (landlord) owns the land the property stands on and the overall building structure, and therefore controls certain aspects of the property’s use and upkeep.
Commonhold is a newer form of property tenure where the freehold of a property is divided into individual units, and each unit owner owns a proportion of the freehold.
This means that each unit owner has a say in how the property is run and is financially responsible for repairs and maintenance. Commonhold properties are still relatively rare.
Shared ownership allows you to buy a percentage of the property (usually between 25% and 75%) and pay rent on the remaining share owned by a housing association or developer.
The initial share can be increased over time through a process called staircasing. Although this means you do not own the property outright, it can be a more affordable way to get onto the property ladder.
When searching for a property in the UK, it’s essential to understand the distinct types of properties available to you.
Each property type has its own unique features and characteristics, so it’s crucial to choose the right one to suit your needs and preferences.
Here are some of the most common types of properties you may come across:
These are properties that are independent and are not attached to any other houses. They often have private gardens and driveways, offering more privacy and space.
These are properties that share one common wall with another house. They are often more affordable than detached houses but still offer some privacy and space.
These are properties that share both walls with other houses in a row. They are often more affordable than detached or semi-detached houses.
These are properties that do not share a common wall with another house, but they are usually linked by a garage. They are neither detached nor semi-detached.
Leasehold properties are common, especially in urban areas, and come with specific considerations:
This is critical as it determines how long you own the property. Shorter leases (typically under 80 years) can devalue a property and make it difficult to obtain a mortgage.
A fee paid to the freeholder. It is important to know how much this is, how often it is due, and the terms under which it can increase.
This defines when and how the ground rent can be increased. Some leases have clauses that can lead to significant increases, impacting affordability.
A term for nominal rent, often just a symbolic amount. It is a quirk of some leasehold agreements, essentially meaning no actual rent is paid.
This covers the cost of maintaining and repairing shared parts of the building, like the roof, lifts, and communal areas. It can vary from year to year and is an important factor in your annual budgeting.
Renting is a common choice for many, and understanding the terms involved is key:
The amount you pay to live in the property. It’s usually due monthly and can be subject to increases, depending on the terms of your lease.
A sum held by the landlord or letting agent as security against damage or unpaid rent. It’s typically equivalent to several weeks’ rent and is refundable at the end of the tenancy, subject to the condition of the property.
The duration of your rental agreement, which can range from short-term (such as six months) to long-term (several years). Understanding the length and terms of your tenancy is crucial for planning your future housing needs.
Council Tax is a local tax system in the UK, levied on households based on the estimated value of a property and the number of people living in it. This tax is used to fund local services like rubbish collection, road maintenance, and local schools.
The amount of council tax you pay depends on the property’s valuation band, which ranges from A (the lowest) to H (the highest) in England and Scotland, and from A to I in Wales.
The Energy Performance Certificate (EPC) is a key part of the property’s energy efficiency. It provides a rating from A (most efficient) to G (least efficient), which reflects the property’s overall energy use and typical energy costs.
The EPC also includes recommendations on ways to improve the home’s energy efficiency and thus reduce energy bills.
An EPC is required whenever a property is built, sold, or rented. The higher the rating, the more energy-efficient the property is, leading to lower energy bills and a smaller carbon footprint.
Adverse credit
Describes a credit history with harmful entries or missed payments.
Affordability assessment
When a lender reviews how much you earn (your income) and how much you spend on bills and other regular payments (your committed expenditure). This is the same whether it’s a joint or sole application.
Agreement in principle
An Agreement in Principle (AIP) is the first step to getting a mortgage. It’s sometimes called a Mortgage in Principle, Mortgage Promise or a Decision in Principle, and lets you know how much you could borrow before you apply for a mortgage.
Annual Percentage Rate (APR)
The interest rate for a whole year, rather than just a monthly rate. This helps you compare the cost of different mortgage deals.
Appreciation
Home appreciation relates to a house or investment property increasing in value over a period of time. A raised value of a property can lead to the owner making a profit upon selling it or earning more income through monthly rent from their tenants.
Arrangement fees
A fee that lenders sometimes charge to cover the work involved in setting up your mortgage or for certain mortgage rates.
Balance outstanding
An outstanding balance is the amount you owe on any debt that charges interest, like a mortgage.
Base rate
Base rate is the minimum rate set by the Reserve Bank of England below which banks are not allowed to lend to its customers.
Bridging loan
A loan that ‘bridges the gap’ between the sale of your current property and the purchase of your new property if the dates for completion do not coincide.
Building insurance
Protection for your property against hazards such as fire, flood and subsidence.
Building survey
A technical report that will give you a comprehensive account of the condition of the property, describing any structural or other defects.
Buy-to-let
Relating to a property bought by a person with the intention of letting it out rather than living in it.
Capital
The sum borrowed to secure a mortgage.
Capped rate
When the mortgage interest rate will not exceed a specified value during a certain period of time, but will fluctuate up and down below that level.
Cash buyer
The definition of a cash buyer is someone who can purchase property outright with money they have at their disposal; meaning they do not need to get a mortgage or loan to buy the home in question.
Chain
The process whereby a seller needs the sale of their house to occur before they can complete the purchase of another property. The same situation may exist for others in the chain. As a result, the whole chain can collapse if one link breaks.
Completion
The finalising of the sale when all the monies are passed over and the buyer has legal right to the property.
Contract
Entered into by the seller and buyer of a property which only becomes binding on exchange of contracts, i.e. when both parties have signed the contract and the purchaser has handed over the agreed deposit to the solicitor.
Contents insurance
Pays for damage to, or loss of, an individual’s personal possessions whilst they are located within that individual’s home.
Conveyancing
The legal transfer of a property from one owner to another.
Council tax
A tax paid by all households to local authorities in Britain, based on the estimated value of a property and the number of people living in it.
Covenant (and restrictive covenant)
A restriction or condition affecting the property, which must be complied with.
Credit score
A quantitative approach used to measure and evaluate the creditworthiness of a loan applicant. A measure of profitability, solvency, management ability and liquidity are commonly included in a credit scoring model.
Deeds
All the legal documents relating to the property.
Deposit
A part payment of the agreed purchase price paid by the buyer on exchange of contracts.
Chain
The process whereby a seller needs the sale of their house to occur before they can complete the purchase of another property. The same situation may exist for others in the chain. As a result, the whole chain can collapse if one link breaks.
Completion
The finalising of the sale when all the monies are passed over and the buyer has legal right to the property.
Contract
Entered into by the seller and buyer of a property which only becomes binding on exchange of contracts, i.e. when both parties have signed the contract and the purchaser has handed over the agreed deposit to the solicitor.
Contents insurance
Pays for damage to, or loss of, an individual’s personal possessions whilst they are located within that individual’s home.
Conveyancing
The legal transfer of a property from one owner to another.
Council tax
A tax paid by all households to local authorities in Britain, based on the estimated value of a property and the number of people living in it.
Covenant (and restrictive covenant)
A restriction or condition affecting the property, which must be complied with.
Credit score
A quantitative approach used to measure and evaluate the creditworthiness of a loan applicant. A measure of profitability, solvency, management ability and liquidity are commonly included in a credit scoring model.
Depreciation
A quantitative approach used to measure and evaluate the creditworthiness of a loan applicant. A measure of profitability, solvency, management ability and liquidity are commonly included in a credit scoring model.
Deeds
All the legal documents relating to the property.
Deposit
A part payment of the agreed purchase price paid by the buyer on exchange of contracts.
Chain
The process whereby a seller needs the sale of their house to occur before they can complete the purchase of another property. The same situation may exist for others in the chain. As a result, the whole chain can collapse if one link breaks.
Completion
The finalising of the sale when all the monies are passed over and the buyer has legal right to the property.
Contract
Entered into by the seller and buyer of a property which only becomes binding on exchange of contracts, i.e. when both parties have signed the contract and the purchaser has handed over the agreed deposit to the solicitor.
Contents insurance
Pays for damage to, or loss of, an individual’s personal possessions whilst they are located within that individual’s home.
Conveyancing
The legal transfer of a property from one owner to another.
Council tax
A tax paid by all households to local authorities in Britain, based on the estimated value of a property and the number of people living in it.
Covenant (and restrictive covenant)
A restriction or condition affecting the property, which must be complied with.
Credit score
A quantitative approach used to measure and evaluate the creditworthiness of a loan applicant. A measure of profitability, solvency, management ability and liquidity are commonly included in a credit scoring model.
Depreciation
The monetary value of an asset decreases over time.
Disbursements
All the various costs itemized on your conveyancer’s invoice.
Disposition or Feu Disposition (Scotland only)
Legal document transferring ownership of the property to the buyer.
Early repayment charge (ERC)
A fee charged by a lender to a borrower for paying off their mortgage before its scheduled completion date. This is to compensate for the loss of income that would have been generated had the mortgage run its full course.
Endowment
A type of mortgage where monthly payments are made into an endowment (life assurance) policy. The loan is paid off in one lump sum at the end of the loan period.
Energy Performance Certificate (EPC)
The sellers of properties in England and Wales are required to provide a valid Energy Performance Certificate (EPC). It gives details about the energy efficiency of the property.
Engrossment fee
An engrossment fee is what the seller’s conveyancer charges for producing the legal document that will transfer ownership from the seller to the buyer. It should be included in the list of conveyancing fees required.
Equity
The difference between the amount you owe on your mortgage and the value of your property.
Exchange
The contracts are, in fact, two identical documents, one signed by the seller and the other by the purchaser. When these are exchanged, both sides are legally bound to complete the transaction.
Financial Ombudsman Service
The Financial Ombudsman Service is a free and easy-to-use service that settles complaints between consumers and businesses.
Financial Services Authority (FSA)
The Financial Services Authority (FSA) was the agency that regulated financial services in the United Kingdom.
Fixed Rate
An interest rate that applies to a loan for a set term. Both the interest rate and loan repayments are fixed for the agreed term, regardless of any interest rate variations in the home loan market. The agreed term is usually anywhere between one and seven years.
Fixtures and fittings
Fixtures are generally items that are attached or ‘fixed’ to the property, while fittings are items that aren’t attached to the property, other than by a nail or a screw.
Freehold
A form of legal title to land, which means you are the absolute owner of the property and the land it’s on.
Gazumping
When a prospective purchaser has an offer for a property accepted and then another potential buyer puts in a higher offer for the same property and the seller accepts the higher.
Gazundering
When the buyer blackmails the seller into accepting a lower offer just before contracts are about to be exchanged.
Ground rent
Applicable only to leasehold properties. It is a payment that is paid, usually annually, to the freeholder of the building and the land.
Guarantor
A person that signs a guarantee with a lender and promises to repay a borrower’s loan if the borrower can’t or won’t.
Homebuyer survey
A more detailed survey than a mortgage valuation, but not as detailed as a full structural survey, and is carried out by a qualified surveyor.
Homebuyer’s Valuation Report
An assessment of the value (and general condition) of a property for mortgage purposes by the lender’s surveyor. It is not as detailed as a structural survey report.
Income tax
The tax you pay on the income you earn each year above a certain amount. As well as your salary, income tax is also charged on interest and dividends you receive. The amount of tax you pay depends on the amount of money you earn and on your allowance.
Inflation
The amount in percentage terms by which prices rise or fall year on year. In the UK, the primary measure of this is the Retail Price Index (RPI); the underlying rate of inflation is the RPI with mortgage repayment figures stripped out.
Insurance
This is usually discussed with your mortgage adviser or lender when making mortgage arrangements.
Contents insurance
To work out how much cover you need for a household contents insurance policy, you need to add up the value of all the possessions in your home. It is recommended that any items of particular value – jewelry for example – are specified and covered by an “all risks” policy, which applies even when the items are not in the home.
Buildings insurance
Cover for the bricks and mortar of your home. It is advisable to review insurance cover regularly.
Interest
Mortgage interest is the interest charged on a loan used to purchase a piece of property. Interest is calculated as a certain percentage of the full mortgage loan. Mortgage interest may be fixed or variable and is compounding.
Interest-only mortgage
When you only pay interest to your lender throughout the mortgage term and your mortgage balance doesn’t reduce.
Land certificate
A certificate issued by the Land Registry as proof of ownership.
Land registry
A process carried out by the legal representative to register the new owner of the property.
Land registry fees
These are paid through your solicitor to register your ownership of the property with the Land Registry. The scale of fees is fixed by the Government.
Leasehold
Land held under a lease for a number of years, on which ground rent is paid.
Licensed conveyancer
A Licensed Conveyancer will ensure that all documentation, contracts, and financial arrangements associated with buying or selling a residential or commercial property or piece of land are in order. They can do everything that a solicitor can do in a conveyancing transaction – they have the same legal authority to act.
Loan to Value
The size of the mortgage loan compared to the value of the property.
Local Authority Search
Carried out by your solicitor, this establishes if your new home is likely to be affected by any planning decisions.
Loan to Value (LTV)
A figure representing the size of the loan to a property’s worth as a percentage. Hence, mortgages where no deposit exists have 100% LTV.
Mortgage
Most people will need to take out a mortgage – or loan – to buy a house. There are many different types of mortgages available to home buyers – your mortgage adviser will explain.
Mortgage broker
An intermediary who will give advice and offer a range of mortgages.
Mortgage protection policy
An insurance policy often arranged in conjunction with a repayment mortgage, which is taken out to ensure that the loan will be paid off should the borrower die before the end of the mortgage term. Insurance may also be available to protect your repayments in the event of redundancy.
Mortgage valuation survey
Prior to making a mortgage offer your lender will have the property valued for “mortgage purposes”. You will pay a fee (variable on the purchase price of the property).
National House Building Council (NHBC)
A non-profit making body whose role is to both protect the home buyer and help the industry to construct good quality new homes. NHBC inspectors carry out spot checks and regular examinations on all properties at varying stages of construction. The NHBC also provides a 10 year Buildmark warranty.
Negative equity
The amount by which the market value of a property falls below the amount of the mortgage secured upon it. The situation in which a property is worth less than its mortgage.
Off-plan
Buying off-plan enables investors and homebuyers to buy a property before the home is finished being built.
Registered land
Land (including buildings on it) the title to which is registered at the Land Registry and legal ownership of which is guaranteed.
Repayment mortgage
A term generally used in the UK to describe a mortgage in which the monthly repayments consist of repaying the capital amount borrowed as well as the accrued interest. The mortgage statement, usually received annually, shows the amount borrowed decreases throughout the term.
Repayment
Repayment is the act of paying back money previously borrowed from a lender.
Repossession
House repossession is a legal process where a mortgage lender or secured loan provider takes ownership of a property. Lenders only start court action to repossess your house as a last resort.
RICS
The Royal Institution of Chartered Surveyors promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.
Searches
A term used to denote the physical and written procedure for determining any adverse effects in/on a particular property, whether already in effect or planned to take place.
Shared ownership
A scheme where the borrower owns part of a property, and pays the mortgage on this. A Housing Association usually owns the rest of the property, and the borrower pays rent on this.
Sold subject to contract
Sold ‘Subject to Contract’ (STC) means that the seller and buyer are proceeding with the sale, but the paperwork is not yet complete.
Solicitor
A solicitor is a legal practitioner who traditionally deals with most of the legal matters in some jurisdictions.
Staircasing
Buying more shares (‘staircasing’) You can buy more shares in your home after you become the owner. This is known as ‘staircasing’. When you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the landlord’s share.
Stamp duty
Government tax on the purchase price of a property. Your solicitor will automatically handle payment on your behalf.
Stamp Duty Land Tax (SDLT)
A government tax on the purchase price of a property.
Surveys
A house survey is an expert inspection of a property’s condition, which identifies problems to a prospective buyer. It’s completed by a surveyor who visits the property, carries out an inspection and prepares a report on what they’ve found.
Tie-in period
This is the period during which you are ‘locked in’ to your mortgage deal. You’ll have to pay an early repayment charge if you leave your mortgage during this period.
Title Deeds
Legal documents describing the rights and liabilities that attach to the property and prove ownership of property.
Under offer
Under offer usually means an offer’s been accepted on a new home.
Vacant possession
The right of a purchaser to exclusive use of a property on completion of the sale, any previous occupant having moved out.
Valuation
A brief inspection, for the benefit of your lender, of the home you hope to buy. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want your own survey.
Variable base rate
The basic rate of interest charged on a mortgage, which may go up or down in relation to market conditions.
Vendor
In property sales the vendor is the name given to the seller of the property. This does not mean they are the owner or full owner.
Understanding property terms is essential in making informed decisions in the real estate market. Whether you are buying, selling, or renting, this knowledge empowers you to navigate the process with confidence.
Remember, in the property world, knowledge is not just power – it’s peace of mind.
Looking for your perfect home? Why not view the new build developments by Hopkins Homes.
Our properties are spread across sought-after locations like Suffolk, Norfolk, Essex and Cambridgeshire, offering a variety of homes to match your space needs and budget.
Interested in one of our new builds? We would love to chat with you about it – get in touch.
