An estate agent who represents the vendor - or seller - through a contractual relationship. They must have all required paperwork signed and returned before they can market any property for sale under the Consumer Protection from Unfair Trading Regulations 2008 Act.
Agency Agreement – Dual fee liability
If a seller instructs two or more estate agent on either a sole agency or sole selling rights basis, they may have to pay more than one commission, known as dual fee liability.
Agency Agreement – Joint agency
Under a joint agency agreement, two or more agencies agree to share sale commission regardless of which agency sells the property.
Agency Agreement – Multi-agency
A multi-agency agreement sees the seller instruct more than one estate agent, with all acting independently. Only the agent who introduces the successful buyer would receive commission.
Agency Agreement – Sole
A sole agency agreement sees a seller instruct one agent to sell their home for a fixed period.
This gives that agent a period of exclusivity to sell the property and if another agent was instructed during the fixed period and sold the property, the first agent would still be entitled to a fee.
If the seller sold the property privately, however, and the buyer didn’t view the property through the agency, the seller would not have to pay commission.
Agency Agreement – Sole Selling Rights
Under a sole selling rights agreement, the estate agent retains exclusive selling rights of the property – even if it’s sold by someone else.
This would mean the seller still has to pay that agent their commission fee, regardless of who the property is sold by.
Anti Money Laundering Check
An anti-money laundering check is carried out by estate agents to verify identities in accordance with the Money Laundering Regulations 2017.
The information provided by both sellers and buyers is handled exclusively by the estate agency staff to comply with these regulations.
Seller identities are verified when signing the Agency Agreement, while buyer identities are checked before proceeding with an offer.
An applicant is someone interested in buying or renting a property.
An applicant is classed as someone who wishes to buy or rent a property, thus becoming a buyer or tenant.
Application and arranging tenancy
A tenancy application is submitted by someone who wishes to rent a property.
Arrangement of a tenancy is when the application has been accepted subject to referencing.
A tenant classed as ‘in arrears’ is one who has unpaid rent due in whole or in part after the date of payment specified in their tenancy agreement.
Assured Shorthold Tenancy
Assured Shorthold Tenancies (ASTs) are the most common form of tenancy issued in the UK.
Best and final offers
When there is a lot of interest from buyers, the seller may opt to request ‘best and final’ offers. This means all interested buyers will submit their best possible offer for the property by a closing date and the seller will then decide which bid they wish to accept.
A bond is another name for a tenancy deposit, where the tenant pays money to a landlord or letting agent as security on the completion of the tenancy and its terms.
Bonds, or tenancy deposits, are capped at five weeks’ rent if the annual rent is less than £50,000 and six weeks’ rent if it exceeds £50,000.
A break clause is a clause inserted into a tenancy agreement that allows a landlord tenant to leave a tenancy before the end of its fixed term.
For example, a two-year tenancy agreement with a one-year break clause could allow either the landlord or tenant to end the tenancy after 12 months, subject to them following correct procedures.
Building Regulation Approval
Applications to complete alterations to existing buildings or erection of new ones must be made to local authority buildings control officers before starting work.
Extensions and internal structural alterations where openings are created through load bearing walls are examples where Building Regulation Approval is required.
A buy-to-let property is a property specifically purchased by a landlord to rent out.
Cavity Wall Insulation
Cavity wall insulation is the prevention of heat loss through insertion of insulation into a property’s cavity wall space
A chain refers to a situation where multiple sales and purchases are interconnected and reliant on each other.
When a buyer joins the chain without having a property to sell, such as a first-time buyer, it is considered the end of the chain.
Agents will communicate with other agents in the chain to determine who is at the end of the chain and keep a record of this information.
CO2 is the chemical formula for carbon monoxide, which is poisonous and produced by the incomplete burning of gas and liquid petroleum gas (LPG).
Gas appliances that are fitted incorrectly or badly repaired can cause CO2 to be produced in properties, while solid fuels like wood, coal and oil can also produce CO2.
Common Household refers to a rental property that is self-contained and shared as one house by two or more tenants, who are usually jointly and severally liable under the tenancy.
Completion occurs when a property legally changes hands between a buyer and seller and all money is transferred.
Conflict of Interest
A conflict of interest occurs when an agent could gain from multiple transactions and may not provide impartial advice as a result.
According to the Estate Agents Act 1979, agents are required to disclose any potential conflict of interest.
Conservation Areas are areas of specific architectural or historical interest and properties within them are often subjected to tighter planning rules.
A legal document that sets out the terms of a property sale between buyer and seller.
When multiple buyers express interest in purchasing a property and the seller enters contracts with more than one of them, it is known as a contract race.
In a contract race, even though the purchase price may be the same for each buyer, the terms and conditions of their individual contracts can differ. The first buyer to complete all necessary requirements and exchange contracts effectively secures the property.
Contractual obligations bind parties to a contract and if these obligations are not met, that party could be held in breach of contract.
The contractual term refers to a fixed period stated in a contract for which the contract will last.
Covenants restrict the use of freehold properties.
Landlords are customers letting agents and sign contracts instructing them to act on their behalf.
A damp-proof course is a layer of protective membrane between bricks to prevent damp from rising through brickwork.
Deeds, which are also referred to as Title Deeds, are the official documents that prove a property’s ownership.
Under anti-money laundering rules, agents must be able to verify ownership of a property by seeing the deeds and retaining a copy for five years once the sale has completed.
When the buyer also has a property to sell, the transaction is known as a dependent sale.
Deposit - Lettings
Also known as ‘bonds’, deposits are paid by tenants to landlords or letting agents as security on completion of the tenancy and its terms.
Deposits are capped at five weeks’ rent if the annual rent is less than £50,000 and six weeks’ rent if the annual rent exceeds £50,000.
Deposits - Buyers
Deposits are given by buyers as a gesture of good faith and can be refunded upon request.
When an agent accepts a deposit, they must adhere to the regulations outlined in the Estate Agents Act 1979. It is also essential for the buyer and seller to inform their conveyancers when this happens, so they can accurately calculate the funds required for completion.
Disinstruction – Withdrawal
This refers to a seller who tells their agent they no longer wish to sell their property.
Duty of Care
Letting agents have a duty of care to both landlords and tenants and must provide them with the correct advice.
Electrical Installation Condition Report (EICR)
EICR refers to an Electrical Installation Condition Report and rental properties must have these carried out every five years.
An encumbrance refers to any claim, interest, or legal restriction on a property that is imposed by a third party and can affect subsequent owners. It could include things like mortgages, liens, easements, or restrictive covenants that limit the use or transfer of the property.
Energy Performance Certificate – EPC
Any building being constructed, or advertised for sale or rent, must have a valid Energy Performance Certificate (EPC).
EPCs are in place so properties comply with The Energy Performance of Buildings (England and Wales) Regulations 2012.
Exchange of contracts
Exchanging of contracts between a buyer and seller creates a legally binding agreement.
Execute (a tenancy)
Executing a tenancy refers to the procedure of creating a legally sound tenancy through dating both the original and counterpart documents and exchanging them between landlord and tenant.
An executor is the person named in a will who is responsible for settling the financial affairs of someone who has died.
When a tenancy reaches the end of its fixed term, an extension or renewal for either another fixed term or a periodic, month by month agreement can be negotiated between a landlord and tenant.
Fair wear and tear
Fair wear and tear refer to the damage that occurs through normal, day-to-day use of a rental property. An example of fair wear and tear would be a worn carpet from normal use.
Windows that have been replaced since 1st April 2002 must be supported by a FENSA certificate or a building regulations certificate, to show that they legally comply. A FENSA certificate should be provided by the seller’s conveyancer to the buyer’s conveyancer as a part of the home selling process.
FICO is an abbreviation of Financial Intermediaries and Claims Office – part of the Inland Revenue responsible for administering tax for overseas landlords.
Financial services refer to mortgage and insurance arrangements that are offered to agency customers.
Fixed term refers to the agreed minimum term of a tenancy between a landlord and tenant.
Fixtures and fittings
Fixtures and fittings are any fixed or removable items attached to the property being sold, which may or may not be included as part of the sale. These could include taps, white goods, or fitted wardrobes.
In a property where certain floors or storeys are owned by different freeholders, the owner of the freehold for the higher floor or storey wouldn’t own the land beneath the property and this is known as ‘flying freehold’.
Freehold is the highest estate in land and when buying a freehold property, the owner is responsible for both the property and the land it’s built on.
The freeholder (or superior landlord) is the person who owns the land on which a property is built. This person also has ultimate responsibility for the building itself.
Furniture and Furnishings (Fire Safety) Regulations 1988 as amended in 1993
Under these regulations, all soft furniture supplied with a rental property must comply with fire safety standards and have a label confirming this.
Any furnishings without the confirmation label cannot be included with the rental property and must be removed before the tenancy begins.
GAS SAFE Registered
GAS SAFE is the organisation that provides the GAS SAFE register – an official list of gas engineers that are legally qualified to work on gas appliances.
Gazumping is where a seller accepts an offer from a buyer before exchange of contracts having already accepted and proceeded with one from someone else.
If a buyer reduces their offer after initially agreeing a price with a seller, this is known as gazundering.
Gazundering typically occurs just before the exchange of contracts, when the seller is left with little choice but to accept the buyer’s reduced offer.
The Green deal is a government-backed initiative that enables homeowners to make energy saving improvements and pay for them through their energy bills over time.
Ground rent is charged by freeholders to leaseholders and refers to the passing on of a fee in respect to the land a property is built on.
Ground rents are often small amounts per year over the term of the lease issued by the freeholder.
Grounds for Possession
If a landlord wishes to regain possession of their rental property, they may refer to certain ‘grounds’ for eviction when applying to the courts.
Someone who co-signs another person’s tenancy or mortgage agreement and agrees to pay any outstanding rent or mortgage payments, if the tenant or borrower are unable to.
Guarantor – Lettings
A lettings guarantor is someone nominated by a tenant to cover their financial obligations should they be unable to do so.
Letting agents will often request a guarantor if a tenancy applicant’s affordability is stretched.
Handover refers to the point where a landlord allows a tenant occupation of their property.
The Head Landlord is a person or company that owns the freehold of a property let out to a tenant.
A holding deposit may be put down by a potential tenant to secure a rental property while referencing is carried out. Holding deposits are capped at no more than one week of rent.
Housing Act Tenancy
A Housing Act Tenancy refers to tenancies that fall under the Housing Act 1988 and Housing Act 1996.
A tenancy’s initial term is the period that its first fixed term lasts.
Inland Revenue FICO Number
Letting agents are given an Inland Revenue FICO number, which is required by overseas landlords completing an NRL1 form for overseas tax purposes.
When a seller decides on an estate agent to act for them, this is known as an ‘instruction’. The seller will then sign a terms of business agreement and agree to the agent’s terms.
A property inventory is a detailed list of the condition of a property just before a tenancy begins.
Inventories should also list all fixtures and free-standing items included at the start of the tenancy.
Joint Tenants and Tenants in Common
If two or more people own a property equally, they’re known as Joint Tenants.
When one tenant passes away, their share in the property automatically transfers to the other tenant(s).
Tenants in common, however, can own different shares of a property and their share passes to their estate on death, rather than the other tenant(s).
Jointly and Severally
For multiple tenants who are living in one property, they are jointly responsible for paying rent and meeting their obligations, but are also individually responsible, too.
Landlord’s Gas Safety
Landlords must make sure all gas appliances, fittings, and flues are safe and must do this by obtaining an annual gas safety certificate.
Certificates must be issued by a GAS SAFE engineer licensed to complete work on gas appliances.
Law of Contract
Law of Contract Tenancy/ Tenancies outside the scope of the Housing Acts of 1988 and 1996 and subject to the standard provisions of contracts.
Lease – Lettings
A lease lays out the rights and responsibilities of both a landlord and a tenant during a tenancy.
A leasehold property is one that is purchased by a buyer for a certain period as set out in the freeholder’s lease.
Most flats and apartments are leasehold and a ‘time certain’ – meaning the buyer has the right to ownership for the time remaining on the lease.
Legionnaires Disease is the illness caused by legionella bacteria, which thrives in stagnant water.
Lessee is another work for ‘tenant’.
A lessor is another term for a landlord.
Properties of architectural significance are granted ‘Listed’ status, which protects them from alterations. Owners will need listed building consent to undertake certain work rather than just planning permission.
Listing refers to a property being placed on the market for sale.
A managing agent is the person or company retained by a landlord to manage their property and its maintenance.
Market appraisals are carried out by estate agents to give sellers an estimate of what they may be able to achieve as a sales price.
Method of sale - Auction (Modern Method)
Buyers under the modern method of auction pay a non-refundable reservation fee but have longer to pay their full deposit and complete their purchase, leaving time to complete a mortgage application. The buyer also pays the auctioneer fee, rather than the seller.
Method of sale - Auction (Traditional Method)
Traditional method auctions are those usually held in person in an auction house. Sales become legally binding once the auctioneer’s hammer falls and buyers must pay their deposit and sign a contract immediately, alongside paying a fee to the auctioneer.
Once the deposit has been paid and exchange of contracts has taken place in the auction house, the buyer and seller have another 28 days to complete the sale. This means buyer funding must be completed before they attend the auction.
Method of sale – Formal tender
Formal tender is a complex sales process and is therefore very rarely used in the UK. It refers to properties that are marketed with a deadline for buyers to submit bids. Each buyer’s tender document should include a full contract and banker’s draft as a deposit. The seller will then select the best bid, accept the banker’s draft, and exchange contracts with the successful bidder immediately.
A date is appointed for completion of the sale, which the buyer must stick to or otherwise forfeit their deposit and incur further costs.
Method of sale – Informal tender
Informal tender is used when competition from buyers is strong, if a property requires intense modernisation, or if a specific closure date is required by the seller.
Properties have a guide price rather than an asking price. Buyers then submit offers by sealed bids up until a closing date, after which time the seller will open all sealed bids and select their chosen ‘best bid’.
Unlike formal tender, informal tender offers aren’t legally binding upon the seller selecting their best bid. Instead, the sale proceeds as ‘subject to contract’.
Method of sale – Private treaty
Private treaty sales see the agent prepare marketing details and advertise the property for sale alongside an asking price. Interested buyers then view the property and make an offer to buy it if they wish.
If an offer is acceptable to the seller, the sale proceeds on a ‘subject to contract’ basis until exchange of contracts. In a scenario where more than one buyer is interested in the property, the seller can request ‘best and final’ offers.
Most homes in the UK are sold via private treaty.
The binding offer made by a mortgage lender to a buyer to loan them money to buy a property. Mortgage offers usually come with conditions.
If a lender keeps a certain portion of a mortgage loan while work to a property is carried out by a buyer, this is known as ‘mortgage retention’.
The term ‘mortgagee’ refers to the lender issuing the loan.
‘Mortgagor’ is the term used to describe the person receiving a mortgage to buy a property.
Properties with more than one tenant which aren’t used as a single home are known as Houses in Multiple Occupation (HMOs).
Tenants in HMOs share facilities but rent bedrooms on an individual basis.
When a property’s value or sale price is lower than the mortgage secured on it, the owner would be in ‘negative equity’. Someone in negative equity who sells their property, therefore, would still have an ongoing debt to their lender.
Negotiations are the discussions between buyers and sellers over the purchase price, completion dates, and fixtures and fittings.
These negotiations are usually carried out through third parties like estate agents and conveyancers.
A new instruction is a property that is new on the market through an estate or letting agent or has been advertised previously by another agent.
A property is generally only classed as a new instruction for the first month it’s on the market, or its first month with a new agent.
New to market
‘New to market’ refers to a property on that has not previously been marketed by any agent.
New instructions are usually classed as such for their first month on the market.
Non-Housing Act refers to tenancies that don’t fall under the criteria of the Housing Act 1988 and Housing Act 1996.
Notice periods refer to the amount of notice a landlord or tenant must give each other to end a tenancy agreement.
Notices are formal documents issued at certain points during a tenancy.
NRL 1 is the Non-Residence Landlord Scheme for overseas landlords paying tax on their UK rental properties.
A tenancy agreement will stipulate the tenant’s right to occupancy of the rental property.
When a buyer has viewed a property and decided to buy it, they will submit an offer outlining how much they are willing to spend.
Offers are usually made to the seller’s estate agent, who must record the offer and pass it on to the seller right away. All offers made in this way should be passed on as ‘subject to contract’.
Offer accepted - Memorandum of sale
A memorandum of sale is a written summary of all the major agreements within a property sale, including the agreed purchase price, and terms and conditions agreed by the seller and buyer.
Memorandums of sale are only produced when a buyer has completed anti-money laundering assessment.
Offer accepted - Sold Subject To Contract (SSTC)
Sold Subject to Contract, or SSTC, means the seller has accepted an offer from a buyer, but this is not binding until contracts are exchanged.
Offer accepted - Under Offer
A property that’s ‘Under Offer’ means the seller has accepted an offer from a buyer and the sale is progressing subject to contract.
Offer accepted – Continuation of marketing
This refers to the scenario where an offer is accepted by a seller, but the property remains on the open market until exchange of contracts.
In this case, the agent must tell the buyer making the offer in writing and update their marketing materials to make clear the property is ‘under offer subject to contract’.
Offer Accepted – Sales progression
Once the agent’s seller has accepted an offer from a buyer, the agent will identify all the links in the sales chain and manage these through exchange of contracts and completion, liaising with all key people involved.
Outline Planning Permission
Outline planning permission is planning consent based on certain conditions, such as design, appearance, and setting.
An owner occupier is the person who owns the property and lives there as their sole or primary residence.
An owner statement is the statement of account sent to a landlord each month by their letting agent.
PCM stands for Per Calendar Month and is used when outlining a tenant’s monthly rent payment.
Parties refers to the individuals in a property rental agreement – usually the landlord and tenant, but also a tenant’s guarantor if they have one.
In a tenancy agreement, the individuals are collectively referred to as ‘The Parties’.
PAT stands for Portable Appliance Testing and is an assessment of electrical appliances and their safety.
Payment advice is issued to landlords by their letting agent when their account is credited.
A peppercorn rent is a nominal rent where a landlord doesn’t receive a cash payment.
To legally grant a lease, the owner of land or a property must charge a rent. However, if they only wish to create the lease and not charge a cash rent, they can request rent of ‘one peppercorn’ per year instead of money.
Periodic statements are reports landlords require to calculate their annual tax returns and outline all rent and expenses paid in a tax year (April 6 – April 5).
A periodic tenancy is a tenancy that runs on a month-by-month (or quarter-by-quarter) basis after a fixed term agreement has ended. The tenant remains in the property under the same terms.
A permitted occupier is any person who is licensed by a landlord to live at a property and bound by all terms apart from the payment of rent.
Power of Attorney
Power of Attorney is a legal document that gives a third-party right over a property and/or assets.
A probate sale refers to a property being sold because the owner has passed away.
Public Liability Insurance
Public Liability Insurance covers the cost of claims made by members of the public injured because of someone’s business activities.
Purchaser is another name for a buyer in a property sale.
More detailed definitions of purchasers could see them referred to as a cash purchaser, purchasing requiring a mortgage, purchaser dependent on sale, or a first-time purchaser.
Purchasers who are prepared to exchange contracts unconditionally with a seller are known as ‘ready, willing, and able’ purchasers.
Letting agents often use referencing companies to check a tenant’s suitability for renting a property.
These checks include seeking references from employers and previous landlords, as well as a credit check.
Repossession refers to a property that has been taken by a mortgage company due to the owner failing to pay back their mortgage.
Rescission is where a contract is discharged, and all parties are placed back in the position they were in before the contract was signed.
A resident landlord is a landlord who occupies part of their rental property as a main home, while letting the remainder of it to a tenant.
Retention refers to money held by a letting agent from the landlord to carry out any maintenance or work at their rental property.
Right to Rent
Since February 1, 2016, all landlords and letting agents in England have been required to check every tenant’s legal right to rent under the Immigration Act 2014.
Schedule of condition
As part of a property inventory, a schedule of condition should be included outlining the condition of fixtures, fittings, and free-standing items, as well as the property itself.
A section 21 notice is the notice issued by a landlord when they wish to regain possession of their rental property at the end of a fixed term without needing to provide a reason for doing so.
Section 8 notices are issued by landlords when they wish to regain possession of their rental property during a fixed term but when the tenant has broken the terms of their tenancy agreement.
Service charges are payable by tenants in addition to their rent and cover a freeholder or landlord’s costs.
That could include hallway lighting, garden maintenance, insurance, agent management charges and a cash reserve for major future repairs.
Under Shared Ownership, a buyer purchases a share of a property alongside another ‘stakeholder’, usually a housing association.
The buyer takes out a mortgage for their share, while paying rent to the other ‘stakeholder’.
A tenant who has a legal right to a tenancy and security of tenure is referred to as a ‘sitting tenant’.
Properties that are purchased with sitting tenants do not entitle the buyer to vacant possession once the sale is completed.
Social housing refers to housing issued by the local authority, a housing association or Trust.
A stakeholder is a third party or agent who is responsible for holding on to a tenant’s deposit and handing some or all of it back at the end of a tenancy agreement.
Stamp Duty Land Tax (SDLT) rates
Stamp Duty Land Tax (SDLT), or ‘stamp duty’ as it’s more commonly known, is the tax levied by government on property purchases.
Stamp duty rates vary depending on the property’s purchase price and the buyer’s status, with first-time buyers and buyers of rental properties or second homes paying different rates to existing homeowners.
Required under the Stamps Act 1891 on payment of duty, an amount of money Agreement detailed in the Act due to the Inland Revenue.
A standing order is set up by a tenant to pay rent directly from their bank account on regular intervals.
Statement of Account
Every time money is received from a tenant, a letting agent will send their landlord a statement of account reporting cash received, deductions and the total payment to the landlord.
Statutory obligations refer to a landlord’s requirements and obligations through Acts of Parliament.
Subject to Contract
‘Subject to contract’ is a legal term placed on pre-contract documents.
If a tenant renting a property lets part of the property out to someone else, this is known as subletting.
Damage caused to a property due to its foundations sinking is known as subsidence.
A summary statement is the annual statement of account sent to a landlord by a letting agent.
The Inland Revenue office issues a number to letting agents approving rent money passing to a landlord without a tax deduction.
TDS (Tenancy Deposit Scheme)
Tenancy deposit protection schemes were brought in from April 6 2007 and all landlords or letting agents taking deposits from tenants as part of an Assured Shorthold Tenancy (AST) must safeguard them in a scheme.
Tenure refers to type of ownership and falls under two categories – freehold and leasehold.
Freehold ownership is the outright ownership of both the property and the land it’s built on.
Leasehold ownership is ownership of the property, but not the land it’s built on, which belongs to a freeholder.
Leasehold properties are purchased on a long lease, meaning the owner retains ownership of the property for a certain period outlined in the lease and subject to ground rent and/or maintenance charges.
Most flats and apartments are leasehold, whereas most houses are freehold.
The length of a fixed term tenancy as outlined in a tenancy agreement.
Term of Contract
Term of Contract refers to the rights and responsibilities expressed in a contract.
This refers to the ending of a tenancy agreement.
To clear monies
This refers to money that must pass through the banking system and be cleared for withdrawal.
There are two forms of undertaking when it comes to property purchases.
Firstly, the buyer may undertake to carry out certain repairs to a property as a condition of receiving a mortgage.
Secondly, the buyer will undertake not to move into the property they’re buying until legal completion, including carrying out any alterations.
Utilities refer to services provided by companies for gas, water, and electricity.
Vacant possession refers to a property that will be free of tenants or a tenancy when a sale is completed is offered for sale as ‘vacant possession’.
A vendor is another name for the seller of a property.
Potential buyers can book viewings of properties they’re interested in through estate agents.
‘Open’ viewings also take place in some cases, particularly for properties where a large amount of buyer interest is expected.
Agents will gather information on a buyer during a viewing, assessing their initial interest in the property and their ability to proceed.