Glossary of Terms
Common Shared Ownership Terms
We know that when researching Shared Ownership as a first time buyer, the process and language used can sometimes be a little confusing. Here we provide an explanation of some of the key terms that you might come across to help you along the way whilst looking to buy a Shared Ownership or Resale property with Family Mosaic.
Agreement in principle (AIP): This is an indication of how much a bank or building society will lend. The AIP will take account of the applicant's monthly income and outgoings and is based solely on the information provided
Assignment: This is the term used when you sell your flat, because you sell (or ‘assign’) the remaining years on your lease. The new leaseholder is the assignee.
Capital Expenditure Reserve Fund: A fund that all leaseholders pay into. The money is saved for future large repairs or replacements to the outside of the building or to a shared area.
Communal areas: The parts of the building that can be used by all residents such as stairs, lifts, paths, communal gardens.
Completion: This occurs when the solicitors from both sides complete the transaction on behalf of the buyer and seller. All documents, money, etc are handed over and the purchaser becomes the legal owner of the property.
Contents insurance: Insurance that you will need to take out to cover your personal belongings in your home.
Conveyancing: In law, conveyancing is the transfer of legal title of property from one person to another, or the granting of an encumbrance such as a mortgage or a lien.
Council housing register: A ‘waiting list’ held by the local council, with the names of applicants waiting for suitable housing.
Energy Performance Certificate (EPC): Under the law, you need an EPC before you can sell a property. We cannot start to market your home until you have an EPC and have sent us a copy. EPC’s are usually valid for 10 years.
Equity share: This is the share of the property that you own. The share you start with is usually called the share ‘you purchase initially’. You can increase this share by buying further amounts until you own the full value outright.
Estate: The estate includes your flat and building, as well as other land and buildings. The boundary of the estate is shown on a plan attached to your lease.
Exchange of contracts: This is the point in the transaction when the purchaser and the seller agree to sign contracts prepared by the solicitors. The contract is legally binding and if either party pulls out after exchange of contracts penalties may be imposed.
Ground rent: Is a payment made by the owner of a leasehold property to the freeholder, as required under the terms of the lease. A ground rent is created when a freehold piece of land or building is sold on a long lease.
Household Disposable Income (HDI): The amount of money that households have available for spending and saving after income taxes have been accounted for.
Holding or administration fee: Money paid by applicants to reserve the property they want to buy (only required at some developments) and refunded on completion.
Homebuyer’s report valuation: A more in depth report that you should ask for if you are considering buying an older property.
Homes and Communities Agency: A government funded body that regulates affordable housing throughout the UK.
Lease: A legal document between Family Mosaic and the shared owner. The terms in this document are legally binding.
Purchaser: The person who is buying the property.
Rent: The monthly charge you will pay to us for the part of the property that you do not own.
RICS Surveyor: Royal Institute Chartered Surveyor. All valuations must be carried out by an approved surveyor.
Service charge: A monthly charge covering outside maintenance, shared areas, a contribution to the ‘reserve fund’, Leasehold Management administration charges and Buildings Insurance.
Staircasing: Buying more equity (shares) in your property and therefore paying less rent.
Sublet: This means granting a tenancy for the whole or part of your property for an indefinite period of time. Your lease does not allow subletting, as it can cause management difficulties if conditions in the lease need to be enforced.
Survey: A report on the condition of a property that is for sale.
Valuation: The price the property has been valued at on the open market by a Royal Institute Chartered Surveyor.
Vendor: The person who is selling the property.