Property Glossary ( UK )

AcceptanceWhen you are offered and accept a mortgage offer from a lender this is what you need to sign and return.APRStands for ‘Annual Percentage Rate’ relating to interest on a loanApplicantThe term used by an estate agent to refer to you when you are a potential buyer of a property.AppraisalWhen selling your house an estate agent will ‘appraise’ your property to determine a current value for it.Arrangement FeeSome lenders may ask for this fee for providing or ‘arranging’ a loanAssignmentThe transfer of ownership from one person to another. For example if you buy a leasehold property ownership is ‘assigned’ to you via the contract.Base RateThis is the lowest rate of interest a bank will charge when it lends you money and is used as a benchmark to set interest rates for borrowers. This rate set by the Bank of England and is reviewed several times a year. Lenders will charge borrowers a margin above the base rate.Bridging Finance/LoanYou may need ‘Bridging Finance’ if you are buying a new property before selling your current house. This is to ‘bridge’ the gap before you have sold your property so as to complete the buying process of your new property before selling your existing home.BrokerThis is a person who advises on mortgages and loans, known as a ‘mortgage broker’Capped RateThe maximum set interest rate you will pay on a mortgage for a set period of time. This means that the interest rate cannot go higher than the capped rate during the specified time period, usually the first few years of the loan.ChainThis refers to a sequence of buyers and sellers. Most people who sell their homes are also buying at the same time. There can be a ‘chain’ of several buyers and sellers, each dependent on each other for the sale and purchase of their new homes. If one buyer or seller drops out the whole chain may collapse, leading to a domino effect where the paperwork for several properties is delayed or cancelled altogether.Chain FreeThis is when the owner of property doesn’t need to sell the property in order to buy another, thus it is offered chain free.CollateralYour house is ‘Collateral’ when used as a guarantee you will repay a loan to your lender. If you do not keep up with repayment your house could be sold by the lender to get back the money they have loaned you.CompletionThis is the final stage of the property buying process – when the agreed sale price has been paid by the buyer to the seller. Legal ownership has been transferred from the seller to the buyer of the property.Contents InsuranceThis insurance is taken out to cover/protect personal belongings that are in your home.ContractThis is the agreement that once signed by the buyer and seller binds both parties to the sale and purchase of the property.ConversionThis can refer to a property that has had the loft converted into a room, or a house that has been converted into flats.ConveyancingThe name of the legal process that transfers property ownership from the seller to the buyer.CovenantA requirement by law on the owner of a property to either do or not do something with their property.CAMStands for Current Account MortgageCCJThis stands for County Court Judgement. If you have a judgement against you for defaulting on a debt it may mean you are turned down for future loans or pay a higher interest rate.DeedsThe legal documents regarding a property.DefaultThis is a term used when you do not do as you agreed, eg. failing to make a mortgage payment. If you fail to make mortgage payments (or default), your home could be repossessed.Delayed CompletionTypically completion takes less than 28 days after the exchange of contracts. If it takes place after 28 days then it is called ‘delayed completion’DepositIn terms of mortgages a deposit is the initial lump sum payment the buyer contributes towards the total purchase price of the property.DisbursementsThis is another word for the legal costs involved with purchasing a property.Discounted RateThis type of mortgage has an interest rate lower than the lender’s Standard Variable Rate (SVR).Early Repayment ChargeThis is a charge or ‘fee’ payable if you pay part or all of your mortgage off earlier than agreed. This is used to compensate the lender for interest that would have been paid if the mortgage had run for the full time period agreed.Equitable InterestWhen a person has some legal rights to a property but not including sale of the property.EquityThis is what you actually own – it is the difference between the market value of your property and the amount of the loan you still owe to the lender.Exchange of ContractsThis is the point at which the buyer and seller are legally bound to complete the sale.Execution OnlyA service with no advice, just carry out the orders of a customer.Fixed Rate MortgageA mortgage which has a ‘fixed’ rate of interest for a set period of time.Fixtures and FittingsThese are items in a house that are included in the sale. For example lighting fixtures, carpets and so on – these should be agreed / confirmed before a sale.Flexible MortgageAs the name suggests this mortgage is flexible in terms of how you pay the loan back. An example could be that it allows you to make overpayments or pay off your mortgage early.FreeholdComplete ownership of a piece of land and the property that is on it.GazumpingThis is when a vendor (seller) accepts an offer but later rejects it to accept a higher offer by another buyer.GazunderingThis is the opposite of gazumping – when the buyer threatens to pull out just before the exchange of contracts if the price is not reduced.GearingUsing loaned funds to progress investments. For example, buying a house with a small deposit and the rest with a mortgage and then selling the property on at a higher price, making a profit.Ground RentThis is rent paid annually by the leaseholder of a property to the owner of the freehold. Usually it is paid to the owners of the land on which the property/properties are built.GuarantorA person who agrees to guarantee that they will pay a debt or loan if you default on payment.Home Information Pack ( HIP )Also known as a ‘Sellers Pack’ this will be a mandatory Survey from the 1st of June 2007 to be produced by a home owner or selling agents via a home inspector before a property can be put on the open market. The aim is to help improve the process of buying and selling a home, it is part of the conveyancing process and will include detailed information about a property.IFAIndependent Financial AdviserInstructionThis is when you give an estate agent ‘Instructions’ or the right to sell or let your property.Joint / Multiple AgencyThis is when you instruct more than one estate agent to market your property.Land CertificateThe certificate that proves ownership of land issued by the land registry.Land RegistryA government office that stores records of land ownership and any charges like a mortgage.LeaseA legal document detailing an agreement made between a freeholder and those occupying their property for a specified period of time. It lists all the conditions which the leaseholder must abide by and what the landlord’s responsibilities are.LeaseholdLand or property is ‘leasehold’ when the owner has to pay the freeholder an annual sum of money.LenderA person or company that lends money for an agreed time period. They expect to have the money repaid back with interest added – your mortgage company is a lender.LTVLoan To ValueMaintenance ChargeA landlord charges for the annual maintenance of a property which should be agreed in your contract. This includes keeping the outside of the property in good order and gardening services in communal areas.MIGMortgage Indemnity Guarantee – an insurance premium some lenders may need you to take out on certain mortgages.B>MortgageMoney borrowed from a lender to buy a property. The borrower agrees to use his or her property as security against it until the loan is paid back.Mortgage DeedA document which has the details of a mortgage arrangement.Mortgage OfferAn offer from a lender which details the terms and conditions of a loan.MortgagorThe individual who is borrowing money for the purpose of buying a property.Negative EquityWhen you owe more than the market value of your property, or have paid or are paying back more than a property is worth.OfferAn offer, usually below the asking price, you make on a property.OMVOpen Market Value – the value a property can achieve when there is a willing buyer and seller.RedemptionThis is the moment when you pay off your mortgageRegistered LandLand including any property on it that is registered with the land registry.Right Of WayThe legal access to a piece of property so as to access your own property.ROIReturn On Investment – how much you get out of what you put in.SearchesThe process of finding out if there are any unwanted effects now or planned for the future on a property.Sole AgencyWhen a single (sole) estate agent has been given the right to sell or let a property.Stamp DutyTax paid to the government on the purchase price of property.Subject To ContractThe point at which both parties are free to pull out of an agreement before exchange of contracts.SurveyA survey is the report produced by a building surveyor for the purpose of determining the value of the property and if it is structurally sound.TenantA person or persons (can be a company or organisation) who is entitled to occupy a property under the terms and conditions of a tenancy agreement.TenureThe type of ownership of a property such as Freehold or LeaseholdTitleThe legal right to ownership of a property.Title DeedsA Document that shows ownership of a property.Under OfferWhen a property has had an offer accepted but contracts have not been exchanged.ValuationA service by an estate agent or independent expert to determine the value of a property in the current market.VendorThe person who is selling a property.This is meant as a general guide and should not be seen as legal advice.

Portuguese Property Sales Down – Demand For Lettings On The Rise

In this tough financial climate we continue to find ourselves, many are left with their assets floundering in the wind, so to speak! In a recent survey by The Royal Institution of Chartered Surveyors and Confidencial Imobiliário (Ci) of the Portuguese housing market, covering the sales and lettings sectors, shows a continued decline in property sales and a sharp rise in property lettings.Interestingly, until September, existing home prices had been falling faster than new home prices. However, the last two months have shown developers becoming less resilient to the fall in house prices. December’s survey actually shows new house prices falling at a faster rate than existing homes.In the lettings market, demand continued to rise, as did new landlord instructions. Lettings anticipations recorded a sharp rise and remains firmly in a positive stance. Rents remained negative, with a reading consistent with falling rental levels. Rental expectations, whilst still falling, did so at a much slower rate in December. Indeed, outside Lisbon rental expectations are broadly stable (in Porto and Algarve), indicating that it is a regional rather than a national trend. Lettings are also the highest in Porto and the Algarve. The fall of rent in some areas could be reflecting an excess of rental stock on the market but there is also evidence of a mismatch between the type of property offered, and that in demand.The regional data tends to be more volatile than the national data, respondents in the Algarve saw the sharpest house price falls while those in Lisbon saw the sharpest falls in rents. Confidencial Imobiliário Spokesman, Ricardo Guimaraes commented: “According to the Memo signed with the Troika, December is the deadline for the Portuguese Government to change the lease law, which should improve the market confidence, especially regarding the default risk from tenants. This is moving agents’ expectations. At the same time, the most commented topic remains the financial wrangling between potential buyers and banks, as well as the amount of houses directly sold by financial institutions, which is having a negative effect on prices.”RICS Senior Economist, Josh Miller added: “Although sales volumes in the housing market continue to fall, volumes in the lettings market are rising as households who cannot access mortgage finance are opting for rented accommodation instead. Given the deteriorating macro economic backdrop – unemployment now stands at 12.9% while economic sentiment has collapsed – and the tightening in credit conditions already underway, the lettings market is likely to continue experiencing high volumes of activity for the time being.”This sort of trend could be typical for many European countries, so if you are having trouble selling your property, perhaps you could look at the rental market for the next few years to keep your investment level. On the other hand, if you are looking for an investment, it seems it is a buyers’ market out there that could be part of your long term investment plan.The good news is that once you’ve found the perfect property the buying process in Portugal is relatively simple and straightforward.If you want to put your property on the rental market, make sure you use a reputable property management company that is local, speaks your language and that listens to your needs.There are many ways you can use a management company, from just showing the property to a complete background check on potential tenants, rental collection, maintenance for house, pool, garden and so on.For those considering purchasing property in Portugal, here are the main things to consider: We always recommend you buy through an AMI Licensed Agent and that the agent has a valid license. This license is granted by the governing body INCI (Instituto da Construção e do Imobiliário) formerly known as IMOPPI. This serves as a guarantee that the individual estate agent has complied with numerous regulations to exercise the profession of estate agent in Portugal.Licensed estate agents also have insurance cover that may be claimed against if they don’t conform to the highest standards. Make sure that your agent not only has a license but that it’s actually valid. We recommend that you also seek expert legal advice and use an English speaking local lawyer.Once you’ve found a suitable property the procedure is usually as follows:A Contrato de Promessa de Compra e Venda (Promissory Contract similar to Exchange), will be drafted up by your lawyer whereby you promise to buy the property for a given sum and the vendor agrees to sell it. Your lawyer should at this stage ask the vendor to supply the following documentation:1. Caderneta Predial (Tax Registration Document) from the Finanças (Tax Office) which shows the tax situation of the property including the property’s inscription for fiscal purposes, the current owner, the property’s fiscal number etc.2. Certidão de Teor (Land Registry Document). This document shows who owns the property, who has rights to the property and if there are any charges, mortgages or incumbrances registered against the property. It basically provides you with the history and the general standing of the property.3. Licença de Habitabilidade (Habitation License) for properties built after 1951 a habitation license is required. This document shows that the property has, at some time in the past, obtained a certificate deeming it fit for human habitation. The licence is obtained at the Council.4. Ficha Técnica de Habitação (The Property’s Technical Report) This document is required for properties built or altered after 1st January 2004. It contains the builder’s details, materials used by the builder, who supplied them and other relevant technical information on the property and construction process. The builder should supply the report where necessary.5. The Property’s Plans – these should also be supplied and ask your lawyer to check that everything is as it should be and that no significant modifications have been made which may affect your enjoyment of the property.6. Identificação Fiscal (Fiscal Number) As a future home owner you will also be required to get one of these from the Local Tax Office. Usually your lawyer will take care of this for you.7. Survey- A structural survey is not a legal requirement under Portuguese law and banks don’t usually ask for it either on most properties, but you know the saying “If in doubt, check it out” particularly if you’re looking at older properties. Amongst other things your lawyer should also look into whether the property you’re buying is currently rented to a third party. If it is, the tenant can in certain circumstances exercise the right to purchase. If you’re buying an agricultural plot (rústico), the neighbours can have the right to purchase. So check these little details out and avoid unnecessary headaches. Once you and your lawyer are satisfied that everything is in order, you can then proceed to the signing of the Promissory Contract.8. Energy Rating Certificate: As of 1 January 2009 before buying property in Portugal you must be shown a valid energy rating certificate which grades properties from A-G, A being the most environmentally friendly.A 10% per cent deposit is usually required at this stage, although this can vary. The contract is legally binding and the law states that should you change your mind and decide not to proceed with the purchase, you forfeit your deposit. On the other hand should the vendor withdraw from the sale they will have to repay double the original deposit handed by the buyer. Escritura (Deed of Completion)After the Promissory Contract and if everything is in order you can in the following weeks proceed to the Escritura (Completion). This is done in a Notary’s Office, Land Registry Office. The Escritura is the legal document which shows ownership of the property and you get a copy a few days after the completion.The Notary is a neutral government legal representative who is there to ensure that all the documentation is in order, all taxes have been paid and serve as a witness to the property during Escritura and ensures that every legal aspect is adhered to. Once the Notary is satisfied that every legal aspect of the transaction has been adhered to they will read out the clauses in the Escritura; if a translator is needed your lawyer should be able to help with this.The buyer, seller and the Notary will then sign the Escritura (Deed of Completion) and it is registered at the Land Registry and Finanças (Tax Office) this has to be done within 60 days. If you’re a tax resident in Portugal you may be eligible for IMI (Council Tax) exemption if your property’s rateable value is less than € 236.250.Prior to Escritura de Compra e Venda (Completion) you are required to pay IMT (a type of Stamp Duty for the local authority). This Stamp Duty goes up in platforms in accordance with the value of the property and also if it’s a main or second residence.PRACTICAL EXAMPLE:You’re purchasing a three bedroom villa in mainland Portugal for €450,000 as a second home, your IMT calculation would be as follows:€450,000 x 8% =€36,000 – €11,035.25= €24,964.50 ACTUAL amount of IMT payable because the Tax Office gives a deductible allowance on most of the platforms.The IMT payment must be made PRIOR to the Escritura de Compra e Venda (Completion) which can take place at any Notary Office in the country. If you do not make this payment, the Notary will not allow Completion to take place.There is also a 0.8% Imposto de Selo (Stamp Duty) cost of the value of the property at the Notary’s Office on Completion. So for your villa you would pay €3.600 to the Notary on Completion.If you’re borrowing from a Portuguese bank there is a further 0.6% Stamp Duty on the amount borrowed. So for instance if you borrowed €350.000 from PPP Bank there is a €2.100 stamp duty to pay.Where borrowing is involved the procedure is slightly different in the sense that the bank does a provisional registration of their and your interest in the Land Registry prior to Completion to protect both your and its interest in the property. This should between €500 to €1000. After completion the provisional registrations are converted at the Land Registry by the bank or your lawyer.Purchasing costs vary depending on the value of the property you buy but also of course which lawyer you use. Lawyers’ fees vary between 1% and 1.5% of the purchase price.Allow 6 -10% for all your purchasing costs (this varies because of the deductible allowances of the IMT platforms).So if you are purchasing your dream four bedroom villa in sunny Algarve for €450.000, add approximately 8% to the purchase price to cover all costs including taxes, stamp duties, registrations and legal fees.Well, here we are in the first Quarter of 2012! The future has arrived and we see signs of it everywhere in our daily lives.If you were among the lucky people who received gifts at Christmas and found amongst the socks and scarves, chocolates and perfumes, the latest gadget for internet surfing like a new mobile phone, you will be thrilled to know you can access and the whole family of Holprop driven websites on our new mobile version. So, now you can take us where ever you go!

There is an excessive amount of traffic coming from your Region.