Residential Property Jargon Buster…

In the busy world of residential property it can sometimes be taken for granted that buyers and sellers understand the jargon used when discussing their transactions.  Here is a helpful guide to some of the most commonly used terms:

Freehold

Strictly speaking all land in England is owned by the Crown; ‘freehold’ refers to the ownership of an estate in land. In simple terms, you own the freehold if you own the whole of the land and any immoveable property attached to it.

Leasehold

This relates to the ownership of land under a lease; when the lease term expires ownership reverts to the landlord. Generally speaking flats tend to be leasehold property with leases granted for terms of anything up to 999 years.

Share of Freehold

This arises when the relevant leaseholders (i.e. the flat owners) also jointly own the freehold property. The owners will still hold their leasehold interest but will also have a legal interest in the freehold to the land, whether as individuals or as members or shareholders of a company which has been formed to own the freehold estate.

Licence to Assign

This is an agreement between the landlord, the assignor (or seller) and the assignee (or buyer). By signing the Licence to Assign, the landlord is giving its consent to the assignor to sell the property to the assignee. The grant of a Licence to Assign is sometimes required under the terms of a flat lease.

Deed of Covenant

This is an agreement between the buyer and landlord under which the buyer agrees to comply with the terms and conditions contained in the relevant lease. This binds the new tenant (i.e. the buyer) in the same way as the former tenant (the seller).

Retention

This is a sum of money which is held back when the rest of the sale price is paid. It is usually withheld from the seller of a property pending an event or events happening after completion of the sale – for example, the issue of year-end service charge accounts which may reveal a deficit incurred during the seller’s ownership of the property.

Chattels

A chattel is defined in law as ‘an item of personal property which is moveable’.  When buying a property sometimes the buyer will agree to buy some of the contents, such as furniture or white goods, for an additional sum on top of the agreed purchase price. The price will then be added into the contract and noted as a payment for ‘chattels’.

Restrictive Covenant

A restrictive covenant is an obligation or restriction placed on land, be it freehold or leasehold, that limits what the owner of the land or the lease can do with their property. Restrictive covenants can cover many things but some of the more usual covenants prevent, for example, any extensions to the property being built or the running of a business from the property.

The above are just a few expressions which can come up during a property transaction. At Bolt Burdon we aim to make sure that nothing is lost in translation and that we communicate in a way which is clear and easy to understand.

If you are looking to buy or sell a property and would like some advice, please contact Nicki Iliffe on 020 7288 4719 or nickiiliffe@boltburdon.co.uk.