Legal Jargon

A form of property ownership where the property is owned for a limited period only, although this can be for anything up to 999 years. The freehold of the property is retained by the freeholder and the leaseholder is usually required to pay them an annual ground rent. All new residential leases now have to be created with a peppercorn rent. When a leasehold property is sold, it is sold with however much of the lease remains, though there are legal mechanisms available now to extend a lease when it becomes too short to be valued by prospective buyers.

Where a lender lends money, such as a mortgage loan, that has to be repaid at some point to a buyer or existing owner and a document is signed by all parties to the arrangement to confirm this. Legal charges are registered against the property at the Land Registry secure the repayment to the lender so that, for example, if the borrower defaulted on their loan repayments or died without having repaid the loan, the lender could recover the value of the loan against the value of the property when it was sold.

When a property is owned as a leasehold, the leaseholder may be required to make a regular payment to the freehold owner. It is literally a payment for renting the ground (land) on which a leasehold property stands. The freeholder is not required to provide any additional services for this payment. The requirement for ground rent is usually created when a freehold piece of land is sold on a long lease or leases. Ground rent is often paid yearly.

A term covering various government schemes that provide first-time buyers with financial assistance or reliefs to help them get on to the property ladder. Help to Buy schemes include Help to Buy ISAs, Equity Loans and Forces Help to Buy.

A fee that may be charged by a mortgage lender when a borrower borrows a high percentage of the value of a property. This is usually set at loans of 75% or more of the property’s value. The fee is used to insure the lender (but not the borrower) against possible loss arising if the borrower defaults on the mortgage payments and the lender is forced to repossess and sell the property, but the sale proceeds are insufficient to cover the original loan.

A form of equity release scheme by which you sell all or part of your home to a private company known as a “reversion company” or group of individual investors in return for a cash lump sum, an income or both. You can remain in the house rent-free or for a nominal monthly rent, for the rest of your life. When the property is sold, usually after your death or when you move into alternative accommodation, the reversioner receives some or all of the proceeds of sale, depending on the share of the property you sold to them.

A house in multiple occupation (HMO), or a house of multiple occupancy, is a residential property in which common areas – usually bathrooms and kitchens – are shared by more than one household. Local authorities maintain registers of HMOs. This register primarily deals with properties that are let in part or whole or occupied effectively as separate households. If you have current or future plans to let all or part of a property or divide it into sections, it will be important for you to check any council requirements before committing to the purchase.

An indemnity policy is an insurance policy that covers a legal defect in the title to a property that cannot be easily resolved or would be very costly and/or timing consuming to do so.

A search at the Land Registry to see if a property is registered or unregistered.

A standard form in which the seller of a property specifies items in or affixed to the property that are included in the sale at the agreed price. Typical examples might include door, window and light fittings, kitchen units and integrated appliances, and fitted carpets, but sellers can include or exclude whatever they choose.