House Buying Terminology

Hello

In this post I'm going to explain some of the terminology you will encounter when buying a house. Some of the terms might be really obvious to some of you, but they weren't to me. I'm sure I'm not the only one!

"No Chain"- this one might be obvious but when we were looking for our house we only understood what it meant when an estate agent mentioned it. A property that has "No onward chain" is the best scenario to have as it means the seller is not dependent on another house purchase to move out. So they might be going into rented accommodation, they are selling a buy-to-let, or moving in with family for example. When there is a chain it can make the whole process very lengthy (8months plus in some cases) and unstable. Each person in the chain has to find somewhere else to buy, which can take a while. There is also the chance that one part of the chain falls through, delaying things further. Obviously you aren't going to buy a house purely on this basis, but if you had two houses you couldn't decide between and one was no chain then that would probably influence your decision. First time buyers are also not in a chain which makes them very desirable to sellers. If you are a first time buyer you can use this to your advantage. As you can move quickly the seller is more likely to accept your offer ;)

"Leasehold"- I have covered this in more detail in this post but will do a brief definition here. Leasehold means that you are in an agreement with the owner (freeholder) that you can occupy the property for a period of time (usually about 100 years maximum).

"Freehold"- Again I went into a lot of detail about what freehold means in this post. Freehold means you own the property and land it sits on 'absolutely'. So you are free to do with it what you want (subject to planning permission).

"Conveyancing"- We had no idea what this was before we started our purchase. Unfortunately those that work in the industry assume that you know what this means so don't explain it unless you ask. Conveyancing is concerned with all the legal documentation that is required to purchase a house. As I understand it you could do this yourself, but it is much easier and more sensible to employ someone who knows what they are doing (although it is not cheaper!). You can employ a conveyancer or a solicitor that specialises in conveyancing. It costs an awful lot of money for what seems like not a lot. But it is very important. They will liase with the sellers solicitor/conveyancer, obtain information on the cost of running the property, check planning permission, conduct 'searches' (explained more below), sort out boundary or rights of way issues. This is all done so that you can make an informed decision about whether to go through with the purchase.

"Searches"- This was another thing that we didn't understand, yet had to pay £250 for! As the name suggests they are searches of databases and records. But what are they searching for you may ask. They check to see if the property is built on a coal mining area, radon area (some dangerous gas), to see if you might have to pay for the upkeep of a church (this is called a Chancel check/search), bankruptcy search and a Land Registry search, amongst others.

"Exchange of Contracts"- this is the point at which you become legally responsible for the property and can no longer pull out of the purchase without serious ramifications (you will have to pay compensation to the seller and vice versa if they pull out at this stage). Buildings insurance needs to be arranged for this date.

"Completion"- yey you finally own the property and can pick up the keys!! This is the day you have spent months waiting for. It should take place one to two weeks after you have exchanged contracts.

"Stamp Duty"- Or Stamp Duty Land Tax (SDLT) to give it its full title. This is that horrible and hugely costly tax that the lovely people in government want you to hand over (as if you haven't spent enough money already). I will be doing another blog post which will explain this in more detail. But basically if you purchase a property costing £125,000 or more you will have to pay stamp duty.

I hope this is useful, TTFN!