talking to an estate agent



When you visit an estate agent you may notice a few differences from your normal home or office environment. Is it the level of aftershave and perfume you can smell? Perhaps it’s the well-cut suits and shiny shoes? It maybe that these sights and smells are not part of your everyday experience, but what can really make you feel like a fish out of water are the sounds. When you visit an estate agent your ears may be experiencing things they’ve never heard before. Remember if someone says something you don’t understand, just ask them to explain. But if you’re feeling embarrassed and you just don’t want to ask, then we’re here to help with part one of our estate agent jargon buster!


Freehold

When you buy a property freehold, you buy the outright ownership of the property and the land which it stands on. You will become the ‘freeholder’ of the property. If you want to make any changes or extensions then it’s up to you and only you, depending on the local planning restrictions. Most houses (as opposed to flats) are sold freehold.


Leasehold

Many flats are sold leasehold. If you buy leasehold, you are buying the property for the time of the ‘lease’. You will own the property for that period of time, but not the land. It’s very likely that you will have to pay a ground rent to the freeholder. This could be anything from a peppercorn rent (normally £1 a year) upwards. The lease will have a specified length of anything up to 999 years. Generally, the longer the lease, the higher the property’s value. If you’re buying a leasehold property with a very short lease (less than 20 years) then it should be cheaper than a comparable property with a longer lease. If you want to make any changes to the property you will need to get the agreement of the freeholder, and the lease will need amending.


Gazumping

In the case of gazumping, Mr Smith the vendor accepts an offer of a certain price from Mrs Jones verbally, but then before the paperwork is done, Mrs Clark offers 5k over Mrs Jones offer, and Mr Smith accepts the offer from Mrs Clark. So Mrs Jones, who thought she was about to buy her dream home, is left out of the deal. Mr Smith gets an extra 5k, and Mrs Clark gets the house.


Gazundering

A relatively new addition to the estate agent lexicon, gazundering is demanding a reduction in price once an offer has been made. So Mr Smith the vendor accepts Mrs Jones’ offer of 250K and takes his house off the market. Just before the contracts are signed and all the legwork is done, Mrs Jones reduces her offer to 240K, stating that the prices in the area have dropped. So Mr Smith can put his house back on the market and risk losing his place in an onward chain, or he’s forced to accept the reduced offer. If he takes the reduced offer we can describe him as gazundered.


Stamp Duty

Stamp Duty is actually a land tax. Yes I know you already pay tax, but here’s another one for you to get your head around. It’s a tax that everyone buying a property over a certain amount has to pay. From midnight on 21 March, Budget Day 2012, a new tax tier was introduced on homes costing more than £2,000,000. These homes now attract a rate of 7%. You will hear estate agents refer to this as the stamp duty threshold. Right now stamp duty thresholds are: 0% of a property’s price up to £125,000, 1% if a property is worth between £125,000-250,000, 3% between £250,000-500,000, 4% between £500,000-1,000,000, 5% between £1,000,000-2,000,000 and 7% for anything worth over £2,000,000.


This brings to a close part one of the estate agent jargon buster. Hopefully gazumping and gazundering are not practices you’ll have to get involved in. Knowing the difference between leasehold and freehold is essential for anyone considering buying or renting a flat, and stamp duty is hard to avoid considering the average London house price. Let us know in the comments if there are terms you’d like to hear explained in part two.

This blog was written by Rachel O'Riordan on behalf of LDG Estate Agents