The housing market is a complex place. It doesn’t matter if you’re saving to buy a house or if you’re already an experienced property owner, there’s bound to be an acronym or abbreviation that you’ve had to double check at one point, either with your estate agent or on Google.
With estate agents receiving plenty of requests for help, we wondered what the most common things were that people didn’t understand about the housing market when looking to buy a property. Let’s find out if your knowledge is on par with others…
The Most Confusing Terms Defined
From APR to yield, buying a property comes hand-in-hand with complex words, phrases and acronyms that we’d never come across normally. Here are some of the terms that people find the most confusing when it comes to the housing market:
- Annual percentage rate(APR) – the annual rate charged on the total cost of a loan (including all costs, interest charges and arrangement fees). Usually shown as a percentage.
- Agreement in principle – provided by a mortgage lender, this proves to a prospective seller that you can get a mortgage to cover the purchase price of the house
- Freehold – a technical word that means a property belongs to the owner outright
- Negative equity – when the value of the property drops to less than the outstanding mortgage
- Shared ownership scheme–when a Registered Social Landlord provides you with some of the funds to purchase your home and you get a mortgage to pay for the rest
- Stamp duty – a government tax imposed when buying a home. Currently the tax is 1% of the property’s total value for those valued at between £125k and £250k, 3% for properties valued between £250k – £500k and 5% for properties over £500k.
If you’re confused about a term that’s not listed above, consult an online jargon buster to help you get a better understanding of the terminology when you’re looking at or buying a property.
How Much Do Young People Know About the Housing Market?
If you’re wondering how your knowledge compares to that of others, we found a quiz performed by leading online estate agents, Hatched, that questioned participants of different ages to find out they know about housing.
With the age categories questioned including Year 7 students, A-level students and millennials, do you think it’s possible that you might know less than an 11-year-old?
The term ‘stamp duty’ (defined above) seemed to cause the most confusion amongst the older participants and they also seemed to be left puzzled about how long the house buying process would take, as well as how much they’d be required to pay for a deposit.
There was also a visual element to the quiz as participants were shown 20 images of different homes on sale in the UK and they were asked to rank them from cheapest to most expensive.
As of October 2017, data from the Land Registry and Office of National Statistics stated that the average house price in the UK is currently £223,807. Of course, there are many variables that affect this price tag, including location, property type, number of bedrooms and bathrooms, whether it’s an old or new property and whether it has a garden or garage.
This is what the participants had to figure out after seeing just one picture of the property and limited details. Surprisingly, the younger participants seemed to have a better grasp of house prices, with their estimations of house prices more accurate than those of the eldest candidate!
So, it looks as though young people aren’t too sure about prices until they begin their search themselves.
All in All…
It seems like it doesn’t matter how old you are – the housing market can baffle even the best of us! If you’re hoping to buy a property in the near future, you might want to start swotting up on some of the complex terms and remember, there’s always experts, like estate agents, on hand to point you in the right direction. All that’s left to say is – happy house hunting!