26 November 2019

House buying jargon buster

5 min read


It’s easy to feel intimidated when estate agents and solicitors start throwing around legal jargon about property buying. Find below simple explanations of the most common terms you’ll encounter on your way to becoming a homeowner.

Agreement in Principle

Also described as a Lending Certificate or Decision in Principle, an Agreement in Principle is an official document provided by your mortgage lender confirming that they are willing to lend to you, the borrower.


This term simply describes what goes on between the buyer’s and seller’s solicitors during the sale of a property, most importantly the legal transfer of ownership between the two.

Subject to Contract (STC)

You may come across the term ‘sold subject to contract’. This describes the phase after offers have been made and accepted by the relevant parties, but before the paperwork is fully completed and contracts have been exchanged. It is important to remember that nothing is legally binding at this stage. Estate agents may still advertise properties as ‘sold subject to contract’ which means that sellers could still accept a higher offer from another party (see 'gazumping' below!)

If an offer has been made but not yet accepted, estate agents may use the term ‘Under Offer’ while the seller makes up their mind whether to accept it.

Sale Agreed

Once an offer has been accepted and both parties are happy to go ahead, lawyers will then issue the seller and buyer with a Memorandum of Sale to confirm this before moving ahead to finalise details such as what will be included in the sale. Again, until the exchange of contracts nothing is legally binding and both parties are free to walk away or haggle over the offer.

Exchange of Contracts

This is usually a telephone call between lawyers acting on behalf of the seller and the buyer which sets out the precise terms of the exchange, and marks the point at which the sale is legally binding. Once this happens both parties enter into a legally binding contract, and the expected date of completion is set. Prior to exchange of contracts the buyer sends their deposit to their solicitor.


The moment that conveyancing comes to an end and the sale is officially finalised is known as ‘completion’. The buyer’s solicitor will present them with a ‘completion statement’ that gives the final costs payable to finish the purchase. When these are paid, the buyer has the legal right to take ownership of the property.

Bridging loan

This is a short-term loan used to cover you between buying a new property and selling an old one. 


Even though they may have agreed an offer from a buyer, the seller may accept a higher offer from a new buyer willing to pay more. This is a common reason for sales to fall through and can happen at the last minute. The seller is within their legal rights to do this until the moment contracts are exchanged.


Almost the opposite to gazumping, this is when the buyer reduces their offer at the last minute to force the seller to accept less. Again, this is perfectly legal until the exchange of contracts.


If you own both a property and the land it sits on outright, this is known as owning the freehold. Most properties in the UK are freehold and their owners are known as freeholders.


Some properties, often flats, are held in a leasehold. This is when the owner buys a lease from a freeholder to occupy or own the property for a set period – that being the length of the lease. Sometimes leaseholders are liable to pay charges to a freeholder, such as an annual ground rent or service charges to cover the maintenance of the property.


RICS stands for the Royal Institute of Chartered Surveyors, a professional body whose job it is to carry out surveys of properties and assess their value and condition. This is essential for buyers to fully understand exactly what it is they’re buying.

Homebuyer’s Report

A Homebuyer’s Report is a mid-level survey suitable for modern properties, but does not include a full structural survey. This is in contrast to a Building Survey, which is a more in-depth inspection that includes the structural condition of the property.

Energy Performance Certificate (EPC)

An EPC is the rating given to a property that describes how energy efficient it is- ‘A’ being the highest and ‘G’ the lowest. In theory the higher the rating the lower your energy bills should be in that property. Things like double glazing and good quality wall, floor and loft insulation can increase a buildings EPC rating.

Stamp Duty Land Tax

Stamp Duty is a tax paid to the government by anyone buying a house with a value greater than £125,000. However, first-time buyers are exempt from paying Stamp Duty on properties worth up to £300,000.

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