Jargon Buster

A

Acceptance – Signed document to send back to the Lender to accept a mortgage offer

Accrue – To increase, to grow.

Accrued Interest – Interest that has been charged but not yet paid.

Acre – Measurement of land – 43,560ft2, or 4,840yrds2,, or 4,047m2, or 0.4047 hectares.

Acquisition Costs – Additional financial costs incurred when buying property other than the purchase price of the property, Eg Solicitors disbursements, Fees etc

AER (Annual Equivalent Rate) – The interest paid from current, deposit or savings accounts
Addendum – An addition to a written document (e.g., a contract).

Additional Security Fee – Upfront free charged by lenders in order to protect themselves against default on the loan. This fee is usually charged on mortgages over 75% LTV. See also Mortgage Indemnity Guarantee (MIG)

Administration Fee – This usually refers to a fee you pay to a financial services firm for a service or product. All regulated firms have to give you details of administration and other fees before you buy a service or product. This can also refer to charges on an investment fund or for setting up a loan or mortgage

Advance – The amount of money the lender is prepared to lend

Adverse Credit – refer to people with a poor credit history. This may include but is not limited to, things such as county court judgments (CCJ’s), bankruptcy, mortgage arrears, Individual voluntary agreements (IVA’s) and credit card or other borrowing arrears or defaults

Agent – One who acts or has the power to act for another. (US) A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.
Agricultural Covenant -This is a very specific planning condition that allows the building of a residential dwelling on the condition that it is occupied by a person employed or associated with working the land in someway

AIP (Agreement in Principle) – An indication of the likely outcome of a loan application. Not a formal offer, but includes a credit check with a credit reference agency and an assessment of your ability to repay the loan amount requested.

Annuity – A contract you buy from an insurance company, to guarantee you an annual income for a period of time (eg. Ten years).

Apartment (APT) – Self contained unit that occupies only part of a building

APC – Surveyors qualification, two year training for Assessment of Professional Skills

APP (Accelerated Possession Procedure) – A cheap and straightforward way for landlords to gain possession of their property without a court hearing. Unless it considers a hearing is necessary, the court makes its decision based solely on documents provided by the landlord and tenant. This procedure can only be used where there is a written tenancy agreement and the tenant has been given a Section 21 notice. The procedure cannot be used to claim for arrears of rent.

Appraisal – An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.

Appreciation – An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.

Appurtenance – Something that belongs to someone else. (An example would be the right to cross through someone else’s property).

APT (Apartment) – Self contained unit that occupies only part of a building

APR (Annual Percentage Rate) – Annual percentage rate of the total charge for credit. This must be disclosed to borrowers by lenders (laid down by the Financial Services Authority Mortgage Conduct of Business rules) of working out the true interest rate. By law, the APR has to be shown by all lenders alongside their quoted interest rates for each mortgage term, to enable potential borrowers to make comparisons between offers made by different lenders

ARLA (Association of Residential Letting Agents) – Professional association for letting agents which operates code of practice and bond scheme that protect the clients of ARLA members

ARM (Adjustable-Rate Mortgage) – A mortgage that consists of two terms, the first of which has a fixed rate of interest, and the second an adjustable rate.

Arrangement Fees – Charged to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed or capped rates.

ASA (Advertising Standards Authority) – Independent regulator for advertisements, sales promotion and direct marketing in the UK

ASB (Anti-Social Behaviour) – Is behaviour which goes against what is generally acceptable to society. This can include criminal acts as well as less serious behaviour such as general un-neighbourly behaviour.

ASBO (Anti-Social Behaviour Order) – Allows a Council and/or a Housing Association to apply to the court to stop an individual behaving in a particular way and/or from going to particular places. ASBO’s can be issued against any individual over 10 years old. Breaching the order can carry a 5 year prison sentence.

Association of Home Information Pack providers (HIPP) – Association for those involved in the production of Home Information Packs

Association of Residential Letting Agents – See ARLA

Assets – Things that have a value and which can be expressed in money terms. ‘Fixed assets’ cannot be readily converted into cash, such as properties which take time to sell. Current assets include cash and bank balances and those assets which are readily convertible into cash e.g. debts due.

Assessment – The imposition of a tax, charge or levy, usually according to established rates

Assign – To transfer your property rights, or contract rights, to another person.

Assignable Contract – This is where you can sell on a property before the completion date

Assignment – To transfer something from one party to another. The transfer in writing of interest in a bond, mortgage, lease or other instrument.

Assignee – The person to whom an agreement or contract is assigned. If you are assigning interest in your note to an investor, that investor would be the assignee.

Assignor – A party who assigns or transfers something to another. If you are assigning interest in your note to an investor, you are the assignor.

Assured Tenancy – A form of tenancy introduced under the 1988 Housing Act for property let out as a separate dwelling and used as the tenant’s only or main home. An assured tenancy will generally allow the tenant to stay in occupation until either he or she decides to leave of the landlord obtains a possession order

AST (Assured Shorthold Tenancy) – A form of tenancy that assures the landlord right to repossess the property at the end of the term specified in the tenancy agreement, which can be for any length of time. To gain possession the landlord must service a notice under section 21 of the Housing Act 1988 giving a minimum of two months’ notice. Landlords may also apply for possession during the course of a tenancy on various ‘grounds for possession’ . Some give the court no option but to grant possession. Any new tenancy started after 28 February 1997 is automatically an assured shorthold tenancy unless otherwise specified

ASU (Accident Sickness and Unemployment Insurance) – Insurance to cover mortgage payments of the borrower in the event of an accident, sickness or involuntary unemployment. See MRRI

ATC (Assessment of Technical Competence) – Surveyors qualification, needed for RICS membership

Average Clause – This is a condition included in some home insurance policies that limits what you can claim if you are under-insured. For example, if the contents of your home are worth £40,000 but you insure them for just £20,000 you are under-insured by 50%. If your contents are damaged, destroyed or stolen, the most you will get from your insurance company is 50% of the total damage

B

BACS (Bankers Automated Clearing System) – Method of transferring funds between bank accounts.

Bankers Draft – Different to a cheque in that the money has already been debit straight from your account, therefore the person receiving the bankers draft is confident the money is safe, whereas with a cheque the money would not be safe until it has been cleared. There is normally an administration fee to obtain a bankers draft, as well as you having to give a notice period, normally of at least 24 hours
Bank of England’s Monetary Policy Committee (MPC) – Set UK base interest rates or Repo rate, thus a benchmark for other interest rates such as personal loan, mortgage interest rates. Although Government has the power to instruct the Bank on interest rates for a limited time period. The MPC meets monthly and comprises the Governor of the Bank, the two deputy governors, the Bank’s chief economist, the executive director for market operations and four external members appointed directly by the Chancellor

Bankruptcy – Court proceedings to relieve certain debts of a person or business unable to pay its debts.

Beneficial Owner – This is the person owning land and who is therefore entitled to it for his/her own benefit. This is different from say a trust etc that may hold land for the benefit of someone else

Beneficiary – One who benefits from the act of another, such as the beneficiary of an insurance policy, or the beneficiary of a deed of trust.

Benefit Overpayment – Is a deduction from existing housing benefit payments. Used to recover payment from tenants. Such recoveries occur for a variety of reasons and can impact upon rental income, creating a shortfall if such benefits are paid direct to landlord. Housing benefit overpayments are not rent arrears and cannot be included in possession proceedings via the court.

Block Management – This refers to the agents that manage/act on behalf of the freeholds and leaseholds, normally for a block of flats or apartments. The will usually arrange things like, the insurance,tending the garden, general cleaning and re-decoration

BMV (Below Market Value) – Price agreed below the Open market value, usually expressed as a percentage

BOE (Bank of England) – Central bank of the United Kingdom. Responsible for the issue of banknotes,setting interest rates and monetary policy. See also MPC

Bona fide – Made in good faith; good, valid, without fraud; e.g., a bona fide offer

Booking Fee – Another term meaning arrangement fee. Booking fees may be charged upfront.

Borough Council – Self governing administrative divisions within a county

BR (B/R) – Bedroom. Abbreviation. Room intended for sleeping

Breach of Contract – A default or failure to abide by the terms of the contract without legal excuse; for example, failure to make a payment when it is due.

Break /Release Clause – These are sometimes used in conjunction with fixed term tenancies. For example: in an AST after the first 6 months is over when it comes to renewal, either party (landlord or tenant), will often request that a break/release clause be entered into the agreement, if they are unsure whether they will want to continue renting the property for the duration of the next 6 months. This clause will normally allow either party to get out (normally with about 2 months notice) before the end of the new term

Broker – Acts as an intermediary for a fee or commission. See also Mortgage Broker

Bridging Loan – A short-term, high interest loan used in house purchase to bridge the gap between the date on which you have to pay for your new home and the date you receive money from the sale of your old home

BS (Building Society) – Financial institution, owned by its members, offering banking, other financial services and Mortgage lending

BTL (Buy to Let) – Purchase of property for the sole purpose of providing a rental income

BTS (Buy To Sell) – Purchasing strategy. Resale for profit usually involving some level of refurbishment.

Building Inspection – Examination of a building by an independent authorised home inspector.

Buildings Insurance – Compulsory insurance for a mortgaged property which pays the cost of rebuilding or repairing your house if it is damaged or destroyed.

Building Permit – (US) Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.

Building Regulations – legislation that relates to the standards of premises or construction. One or more could apply at any given time. Set out the requirements with which the individual aspects of building design and construction must comply in the interests of the health and safety of building users, energy conservation, and access to and use ofbuildings

Buy To Let Mortgage – A mortgage used to buy property, which is to be used solely for the purposes of renting out to a third party. Usually based on projected rental income, rather than multiples of the borrower’s income

C

CAGR (Compound Annual Growth Rate) – The year over year growth rate of an investment over a specified period of time

Capped Rate Mortgage – A limit placed on adjustments to the interest rate or payment level as protection for borrowers. During the capped rate period the interest rate can fall below the capped rate but will never rise above it.

Capital – Accumulated wealth; a portion of wealth set aside for the production of additional wealth.

Capital Appreciation – How much the property is likely to increase in value over the course of 12 months.

Capital Expenditure – Cash outlay or Investment in permanent assets such as land & property

Capital Gains Tax – A tax payable on profits from the sale of assets or property other than your home

Capital & Interest Mortgage – monthly payments pay off the initial loan and the interest charged. At the end of the loan term, the entire debt will be repaid with nothing outstanding. See Repayment Mortgage

Capital Repayment – There are 2 ways of repaying a mortgage – capital repayment or interest only. With a capital repayment mortgage, the capital and interest elements of the loan are paid off with each monthly instalment, so that the balance reduces over time. At the end of the mortgage term the balance
will be nil.

Capital Rest Period – This is to do with the regularity with which the Lender calculates the outstanding balance on any give mortgage and hence the size of the monthly repayments. This figure is normally calculated annually, monthly or daily

Capitalisation Rate – The rate of return a property will produce on the owner’s investment.

Capped Rate – This is a rate of interest that you agree to with your lender that will be the maximum you will pay during a set period of time. Often the first 1-3 years, but it can be for longer. The interest rate cannot go any higher than this capped rate during this specified period of time

Cash – Liquid Asset. Money in the form of currency such as coins or banknotes.

Cashback – Rebate to purchaser upon completion of a sale

Cash Back Mortgage – Type of mortgage where the lender will refund back a sum of money to the borrower on completion either be a percentage of the loan or previously agreed lump sum. May be tied to lender for specified period at a specific rate

Cashflow – The net disposable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.

Cash on Cash Return – See ROI

Caveat emptor – A Latin phrase meaning “Let the buyer beware.” Under this doctrine, the buyer is duty bound to examine the property being purchased.

Caution – Entries on the Land Register to protect third party interests.

CCJ (County Court Judgement) – A judgement for debt recorded at a County Court which will show up when a credit check is undertaken

CEAR (Consumers, Estate Agents and Redress Bill) – Government Act to make provision for the establishment of the National Consumer Council. In order to make provision for the handling of consumer complaints by certain providers; to make provision requiring certain providers to be members of redress schemes in respect of consumer complaints; to amend the Estate Agents Act 1979; to make provision about the cancellation of certain contracts concluded away from business premises

Central Heating – Provides warmth to the interior of a building from one point to multiple rooms

CGT (Capital Gains Tax) – The Tax payable on profit from the sale of an asset

Chain – sequence of buyers and sellers all trying to buy a property while at the same time potentially trying to sell their own property.

Chain Free – First Time Buyer or Purchaser who has no need to sell in order to buy new property.

CHAPS (Clearing House Automated Paying System) – Same day transfer of funds between accounts

Charge – the means by which lenders in England, Wales and Northern Ireland enforce their rights to a property. The charge is recorded at the land registry. A primary mortgage will normally be secured by a first charge.

Charge Certificate – Certificate issued to the lender by the Land Registry that gives evidence of the lender’s charge over the property

Chattels – Items of moveable personal property, such as animals, household furnishings, money, jewelry, motor vehicles, and all other items not permanently affixed to real property that can be
transferred from one place to another.

Chief Rent – Payment made on freehold land to the original freeholder forever. Differs from ground rent because ground rent normally has a limited period

Clear Title – Title that is not encumbered or burdened with “clouds”, such as mortgages or unpaid taxes.

Closing Statement – A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.

COCR (Cash on Cash Return) – The ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage

Cognate – Graduate with an accredited degree in a property related subject

Collateral – The property is used as a guarantee that you will be able to pay the lender the loan. If you aren’t able to repay this loan the property could be sold by the lender in order to recoup the money they originally paid you

Commission – Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Commonhold – Form of tenure created by Commonhold and Leasehold Reform Act 2002 in which leaseholders in a property jointly hold the freehold through an association

Company Let – Agreement with a business to provide property for use by delegates of said company.

Comparables – Properties used in an appraisal that are substantially equivalent to the subject property.

Completion – The last step in purchasing a property where the ownership title is transferred from the vendor to the purchaser.

Compound Annual Growth Rate (CAGR) – The year over year growth rate of an investment over a specified period of time

Condominium – (US) Individual ownership of a dwelling unit and an individual interest in the common areas and facilities serving a multi-unit project.

Consideration – Something of value, usually money, that is the inducement of a contract. Any right, interest, property, or benefit accruing to one party.

Contents Insurance – Insurance to cover the cost of personal belongings, that are in your property, against anything detrimental that could happen

Contingency – A condition that must be fulfilled before a contract can be regarded as legally binding.

Contingency Fund – Pot of money for emergency use, used to cover extra unplanned expenses

Contract – binding agreement made between seller and buyer that commits the parties to proceeding

Contract Race – Multiple potential buyers want to buy the same property. Instigation by either seller or one or more buyers. The winner of the race will be the first buyer to reach exchange of contracts

Conveyance – The document used to transfer property from one party to another.

Conveyancing – The legal process of creating or dealing with an interest in land that is a right of ownership in or over land, such as a freehold or leasehold.

Cooperative Housing – An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate.

CORGI – The Confederation for the Registration of Gas Installers maintains the register of competent gas installers, inclusion on which is a legal requirement for businesses and self-employed people working on gas fittings or appliances. CORGI also investigates gas safety related complaints from the public. It is a requirement under the Gas Safety (Installation and Use) Regulations 1998 for use landlords to have gas appliances and flues checked annually by a Corgi registered engineer. Soon to change to GAS SAFE

Council Tax – Tax levied on households by local authorities; based on the estimated value of the property and the number of people living in it

County Council – The elected governing body of a County

Court Service – Publicly available service that provides online access to various forms that landlords may require when commencing proceedings for possession. The website also has guidance on such subjects as dealing with squatters. Forms available to download include N5 for use in possession claims, and N5B for use in use of the accelerated possession procedure

Covenant – A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts for deed.

Covenant of Quiet Enjoyment – The covenant implied by law by which a landlord guarantees that a tenant may take possession of rented premises and that the landlord will not interfere in the tenant’s use of the property

CPD (Continuing Professional Development) – Mmaintain, improve and broaden professional knowledge, skills and competence in order to develop throughout a person’s working life

CPO (Compulsory Purchase Order) – Subordinate legislation under powers given to Local Authorities in existing legislation. Allows certain bodies which need to obtain land or property to do so without theconsent of the owner. Compensation will include the value of the property and costs of acquiring and moving to a new property.

Credit – On a closing statement, an amount entered in a person’s favour – either an amount the party has
Paid or an amount for which the party must bereimbursed.

Credit Bureau – Firms that collect information on individuals and businesses for the purpose of providing the information to subscribers. There are three nationwide private agencies that produce credit reports and credit scores on private consumers:,Eg. Equifax, and Experian.

Credit Check – An enquiry made on the credit history of an applicant, normally by reference to one of the major credit agencies

Credit Reference Agency – Companies that can provide credit information about individuals (including CCJs) and confirmation of addresses included on the electoral register

Credit Report – A report from a credit bureau that provides a credit rating and other financial data: credit transactions, records of outstanding debts, foreclosure or bankruptcy.

Credit Score – Your credit standing in a digital format.

D

DEAs (Domestic Energy Assessors) – Authorised agent for the provision of Energy Performance Certificates

Debit – On a closing statement, an amount charged; that is, an amount that the debited party must pay.

Debt – An obligation to repay a specified amount at a specified time.

Decision in Principle (DiP) – An indication of the likely outcome of a loan application. Not a formal offer, but includes a credit check with a credit reference agency and an assessment of your ability to repay the loan amount requested. See also AiP

Deed – A written instrument that, when executed and delivered, transfers ownership of a property.

Deed of Covenant – An agreement in a deed to transfer income from one person to another in a tax efficient way

Deed Restriction – Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions, for example, they may limit the density of buildings, dictate the types of structures that can be erected or prevent buildings from being used for specific purposes or even from being used at all.

Default – A failure to abide by the terms of the contract. Generally, 30 days after the due date if payment is not received, the mortgage is in default.

Deposit – Monies used as a down-payment on a property.

Deposit Protection Scheme – Government backed scheme for holding a tenants deposit.

Depreciation – Loss in value of an asset over its estimated useful life.

Developer – One who puts land to its most profitable use, through the construction of improvements.

DG (Double Glazing) – Refers to windows, Two parallel layers ofglass separated by an air space. Reduce heat loss and reduce noise

DiP (Decision in Principle) – An indication of the likely outcome of a loan application. Not a formal offer, but includes a credit check with a credit reference agency and an assessment of your ability to repay the loan amount requested. (see AiP)

Direct Debit – Method of payment for bills via a bank account.

Disbursements – Fees that must be paid to third parties by solicitors

Discretionary grounds for possession – Grounds that may be cited in possession proceedings which allow the court discretion as to whether or not to grant possession – there are also eight mandatory grounds for possession. The discretionary grounds cover circumstances in which: the landlord has offered suitable alternative accommodation on the same basis; there are rent arrears but not of more than eight weeks (or two months if the rent is paid monthly, or one quarter if paid quarterly); there are persistent and continuing rent arrears; the tenant has breached the terms of the tenancy agreement; the tenant has neglected or damaged the property or has sub-let; the tenant is causing nuisance to neighbours; furniture supplied under the tenancy agreement has been damaged; the accommodation is linked to employment which has ended; and the tenant has knowingly or recklessly made false statements on which the landlord has relied in granting a tenancy

Discount Rate – A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan, discounted from the published bank standard variable rate, for an agreed period from the start of the mortgage.

Discounted Rate Mortgage – Mortgage in which the lender agrees a fixed discount off the normal variable rate for a guaranteed period of time. Likely to include penalties for early redemption

Domestic Energy Assessors (DEAs) – Assessor authorised to provide Energy Performance Certificates

Down payment – Amount of payment in cash by the purchaser. Traditionally the down payment on a building was 10 percent of the total price.

DPC (Damp Proof Course) – Horizontal barrier in a wall of impermeable material to prevent moisture rising by capillary action

DPM (Damp proof Membrane) – Impervious material such as mastic asphalt or a plastic sheet.

DSS (Dept of Social Security) – Benefit Agency responsible for maintenance payments to the unemployed. Often avoided by many landlords as payments are always in arrears and there is a mountain of red tape.

DTi (Department of Trade and Industry) – Government department concerned with business and enterprise. A good resource for impartial advice

Due Diligence – Process of making your own efforts to ensure that all is well with the property, before finalising a purchase. This involves getting comparables for both rentals and property values in the area.

E

EA (Estate Agent) – Traditional method of property purchase. Agent for the selling, renting or management of homes, land and other buildings

Early Repayment Charge (ERC) – A charge payable of some mortgages to cover administration costs in the event of a loan being repaid before the due date

Easement – A right, such as a right of way, which the owner of one property has over an adjoining property

EDMO (Empty Dwelling Management Order) – May be made by a local housing authority in respect of dwellings which are wholly unoccupied. An interim EDMO is an order made by a local housing authority to enable it to take steps for the purpose of securing that a dwelling becomes and continues to be occupied. A final EDMO is made in succession to an interim EDMO for the purpose of securing that a dwelling is occupied

EOT (End of Terrace) – The dwellings at either end of a row or terrace of houses

EPC (Energy Performance Certificate) – An assessment of household energy usage and the extent to which this can be lowered if the recommendations of the Domestic Energy Assessor preparing the certificate are adopted. Certificates giveproperties a rating from A to G presented graphically in much the same style as used for fridges, washing machines and other white goods. Dwellings offered for sale must have an EPC that is not more than 12 months old, and from October 2008 rental properties must have a certificate that is not more than 10 years old.

ERC (Early Repayment Charge) – A charge payable of some mortgages to cover administration costs in the event of a loan being repaid before the due date.

ERRP (Estimated Restricted Realisation Price) – The amount of money expected to be achieved within a short timescale from the sale of assets by auction, tender or private treaty. Crisis figure. Replaced forced sale value. See also BMV

Easements – A right of use over the property of another. A utility easement, for example, allows the utility company to lay its lines across another’s property.

Emerging market – Countries where the property market is in its infancy. Usually no mortgages would be available, roads and infrastructure would not be the best. Not easy to get there (no cheap airlines yet). Possibly waiting for entry into the Euro Zone

Encroachment – An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighbouring private or public land, or a building extending beyond the building line

Encumbrance – Anything, (a mortgage, tax, or judgment lien, an easement, or a restriction on the use of the land) that may diminish the value or use and enjoyment of a property

Endowment Mortgage – An endowment life assurance policy is often linked to a mortgage. Throughout the term of the mortgage, payments made by the borrower cover only the interest due on the loan. The capital sum borrowed is paid back in one lump sum at the end of the loan period, using the proceeds from an endowment policy taken out at the start of the mortgage

Energy Performance Certificate (EPC) – Assessment of household energy usage. Certificates give properties a rating from A to G and the extent to which this can be lowered if the recommendations of the Domestic Energy Assessor preparing the certificate are adopted. Dwellings offered for sale must have an EPC that is not more than 12 months old, and from October 2008 rental properties must have a certificate that is not more than 10 years old.

Equity – The difference between the value of your property and the amount you actually borrowed.

Equity Release – Schemes that allow you to release some of the equity, or the value you have built up in your home, without having to move out or sell it on the open market. Also used to refer to straightforward re-mortgaging

Escrow Account – A bank account into which funds are paid, usually for the fulfillment of a mortgage or other contract.

Eviction – A legal process to oust a tenant for possession of property. In most cases it is illegal for a landlord to evict a tenant without a court order. The Protection from Eviction Act 1977 also protects tenants against being forced to leave a property through harassment, such as threats or physical violence, or through withdrawal of services such as disconnecting the electrical supply or refusing to carry out vital repairs

Evidence of Title – Proof of ownership of property; commonly a certificate of title, an abstract of title with solicitor’s opinion.

Exchange of Contracts – Point within conveyancing process at which the agreement between a property buyer and seller for transfer of title becomes binding in law subject to penalties for non-completion.

EXCL – Abbreviation. Excluding, not including

F

Fair Rent – Rent determined by the Rent Service applicable to Regulated tenancies, set according to local market conditions but any increase capped, except where the landlord has made substantial improvements to the property, by a formula based on the rate of inflation.

F/F (Fully Furnished) – Accommodation offered in ready to move into condition including basic furniture, white goods and equipment

FH (F/H) – See Freehold –

Fiduciary – (US) Having a duty to act primarily for another’s benefit. If you hire a solicitor, for example, that solicitor has a duty to act primarily for your benefit.

Fittings – Fittings are items that are not attached to the building or land and are not subject to the sale unless they are specifically included, carpets and curtains would normally be thought of as fittings

Fixed Rate Mortgage – A mortgage in which the interest rate is fixed for an agreed period (usually from two to ten years) and it is unaffected by changes in the lender’s variable rate. This means that during the specified period, you will know exactly how much your monthly repayments will be. At the end of this period, interest on the mortgage will be charged at the lender’s variable rate. Early repayment charges may apply on these types of arrangements

Fixer-Upper – A house which can be put on the market again after some renovation.

Fixtures – Items on a building or land that have become part of the building or land and are therefore included in the sale.Usually physically fixed to the building such as shelves or fitted wardrobes. If it is firmly secured onto the land or house and cannot be removed without damage, then it qualifies as a fixture.

Flexible Mortgage – A mortgage in which you can vary the amount you pay each month and take breaks from your monthly payments

Flip – Purchase and immediate resale of property.
Foreclosure – (US) The sale of mortgaged property. Proceeds from the sale go to the lien-holders as repayment.

Freehold – A term which means that you own the property and the land it is situated on outright.

FSA (Financial services Authority) – The main regulatory body for the UK financial services industry

FSBO (For Sale by Owner) – Popular acronym

FSS (Full Structural Survey) – The most comprehensive, and therefore most expensive, survey available. A full structural survey will examine all aspects of a property Normally reserved for properties of unusual construction, older properties that have been heavily extended.

FTB (First Time Buyer) – A potential house buyer who has not previously owned a property or who has never taken out a mortgage before; often qualifies for various discounts and incentives

Further Advance – A secured loan to release equity in your house or investment property for any purpose.

G

Gazumping – Gazumping is where a seller agrees to accept your bid and then accepts a higher bid from someone else

GCH (Gas Cental Heating) – Provides Gas powered warmth to the interior of a building from one point to multiple rooms

GDN (Garden) – Abbreviation. Outside space belonging to a property

GDV (Gross Development Value) – Final end value of a development or project before deductions

Gearing – To use a small amount of money to control a large amount of money/asset. US=Leverage.

Gentrification – Socio-economic rise of a neighbourhood.

GF (G/F) Ground Floor – The floor of a building nearest to the level of the ground around the building

Good Repair – Landlords are required by law to keep their rented properties in good repair and fit for human habitation. Should local environmental health officers rule that a tenant’s health has been affected by the state of living conditions, he or she would be able to claim compensation from your landlord

Grace Period – A period of time granted by a loan agreement during which default will not occur even though payment is overdue. Your contract may or may not have a grace period.

Gross Return – The money made before the subtraction of the costs of doing business.

Gross ROCE (Gross Return On Capital Employed) – Amount of financial return calculated from the annual rent minus the annual interest cost divided by the property purchase price and acquisition costs.

Gross Yield – Amount of financial return from property before expense deductions. Calculated by dividing the annual rental figure by Property purchase costs (including Acquisition costs)

Grounds for Possession – There are 17 grounds for possession laid down in the Housing Act 1988, as amended by the Housing Act 1996, that may be cited in possession proceedings against a tenant. Eight are Mandatory grounds for possession where the court is obliged to award possession provided the landlord has complied with the procedure set out in the Housing Acts and has served the tenant with the appropriate notices. Nine are Discretionary grounds for possession allowing the court some leeway. Landlords may also seek possession when it can be demonstrated that a tenant is no longer using the accommodation as his or her principal home.

Ground Rent – Rent payable by the owner of a leasehold property to the freehold owner.

Guaranteed Rental Income – Amount of income guaranteed per year, make sure you are aware of who is the guarantor, for how long and that there is a contract in place

H

Harassment – Harassment is a criminal offence under the Protection from Eviction Act 1977. The term refers to acts by a landlord or agent likely to interfere with the peace or comfort of a tenant or involve the withdrawal or withholding of services reasonably required for occupation. Harassment can include the landlord continually visiting the property or contacting tenants

HB (Housing Benefit) – A means tested welfare benefit administered by the local authority providing eligible tenants assistance in meeting the cost of rent. Helps tenants to pay their rent. All tenants, Council, Housing Association or private, are eligible to apply. How much help anyone receives depends on their income and other circumstances. See also LHA

Higher Lending Charge (HLC) – A charge due on a mortgage with a LTV greater than 90%.

HIPs – Home Information Packs. Introduced by Government in 2007. Compulsory for every residential property put on the market.
House of Multiple Occupation (HMO) – A property occupied by five or more people. Each local council has different licensingrequirements, See HMO

Housing Associations – A provider of social housing

Housing Authority – Section of Local Government responsible for social housing

HLC (Higher Lending Charge) – charge due on a mortgage with a Loan To Value (LTV) greater than 90%.

HMO (House of Multiple Occupation) – Entire houses or flats let to three or more tenants from two or more households who share a kitchen, bathroom or toilet. Houses converted entirely into bedsits or other accommodation that is not self contained, let to three or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities. Converted houses containing one or more flats which are not wholly self contained, occupied by three or more tenants who form two or more households and who share facilities; and buildings which have been converted entirely into self contained flats but the conversion did not meet the standards of the 1991 Building Regulations and more than one third of the flats are let on short term tenancies In each case the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as such tenants’ only or main residence. The same will apply to properties which are used as domestic refuges. All of these properties could be subject to mandatory or additional licensing requirements, but not all are. It is only those that are of three or more storeys with five or more occupants that in fact require a licence In Scotland there is a separate definition and all must be licensed

HMO Licensing – In England and Wales a requirement that larger houses in multiple occupation should be licensed by local authorities came into effect on 6 April 2006. After 3 July 2006 it is an offence to let properties caught by the mandatory licensing provisions of the Housing Act 2004 without a licence which could incur fines of up to £20,000

Homes and Communities Agency – The new housing and regeneration agency for England. They provide funding for affordable housing and improve quality of life by raising standards for the physical and social environment.

Housing Ombudsman – The Ombudsman can investigate complaints and other matters referred to them and make recommendations for action. They are independent of the people and organisations they investigate. They are impartial. Tenants can refer matters to the Housing Ombudsman,

HPI (House Price Index) – Published by Land Registry using sales data collected on all residential housing transactions in England and Wales.

HVAC (Heating, Ventilation & Air Conditioning) – Acronim

I

IFA (Independent Financial Advisor) – A finance professional who must by law give impartial ‘best advice’ on financial companies, markets and products. IFA’s are completely independent and can recommend the products of any company

Inc – Abbreviation. Inclusive, opposite of exclude

Income Tax – Tax payable if you have income above the minimum level taxable in the UK

Independent Financial Advisor (IFA) – A finance professional who must by law give impartial ‘best advice’ on financial companies, markets and products. IFA’s are completely independent and can recommend the products of any company

Inflation – An increase in the amount of money or credit available in relation to the amount of goods or
services available, which causes an increase in the general price level of goods and services.
Over time, inflation reduces the purchasing power of a dollar, making it worth less.

Inheritance Tax – Tax payable after you die on the value of your assets in excess of a certain threshold value. Certain gifts between husband and wife are exempt. IHT is also chargeable in certain circumstances while you are still alive

Injunction – A writ or order of the court to restrain one or more parties from committing an
unjust act in regard to the rights of some other party in the proceedings.

Inland Revenue – The Tax Man. Part of HM Revenue & Customs. Responsible for the collection of tax and issue of tax credits

Interest Charges – The fee charged for borrowing money

Interest Only – There are two types of mortgage, interest only or capital repayment. With interest only
mortgages, the balance of the mortgage remains the same throughout the mortgage term. Interest
and a premium to an investment vehicle are paid monthly. At the end of the term, the proceeds
from the investment vehicle are intended to repay the mortgage. The amount depends on the performance of the investment vehicle. With an interest-only mortgage, you are responsible for
ensuring you have sufficient funds to repay the mortgage at the end of the term.

Interest Rate – Percentage of loan paid per year by the borrower to the lender in addition to the principal.

Intestate – The act of dying without a will.

Intrinsic Value – The underlying value of an object that does not diminish over time.

Investment – An outlay of cash or credit with an expected return

IRR (Internal Rate of Return) – Discounted cashflow concept, represents the discount rate at which the present value of a projects cash flows equal to a projects cost

J

Joint Tenancy – A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of survivorship.

Joint Venture – An entity formed between two or more parties to undertake economic activity together.

Judgement – A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.

K

KFI (Key Facts Illustration) – Document issued by Mortgage broker giving a full breakdown of the interest rate of the Mortgage and full cost of repayments over the term that has been chosen. Also highlights all other costs associated with the mortgage such as product fees payable by you

L

Landlord – The owner of property that is rented to an individual or business (Tenant).

Landlord Accreditation – A growing number of local authorities are introducing voluntary private landlord accreditation schemes, as are universities for student lets, and landlord associations. Generally landlords who belong agree to adhere to given standards in return for being able to say they are accredited

Landlord’s Energy Saving Allowance – Tax allowance originally introduced in April 2004 and which now covers loft insulation, cavity wall insulation, solid wall insulation, draught proofing, hot water system insulation, and floor insulation

Landlord Licensing – In England and Wales landlords must obtain licences from local authorities for HMO properties of three or more storeys with five or more occupants who form two or more households. Households being partners and relatives living together and using shared facilities such as kitchens and bathrooms. The licensing process includes assessment of whether or not they are ‘fit and proper’ to be HMO landlords and apply adequate management standards. In Scotland (as from 30 April 2006) all landlords must register with their local authorities under the Antisocial Behaviour etc. (Scotland) Act 2004. Letting property without registering could result in a fine of up to £5,000 and to rental income being withheld. To place landlords on their registers, local authorities will have to be satisfied that they are fit and proper to let property. Authorities can take into account any relevant information including: any relevant convictions, particularly in relation to fraud, violence or drugs; any evidence that the applicant has failed to take adequate steps to deal with antisocial behaviour in his or her properties; any evidence that the applicant has failed to comply with the law relating to housing or letting, including management, money and physical issues; and any evidence that the applicant has practised illegal discrimination in any business activity. There is a central website through which landlords can register

LandlordZONE
A portal web site for landlords involved in letting property – novice and experienced alike. It is also an on-line community with a Forum, News, Blogs and RSS feeds. It provides free access to information, resources and suppliers of value to residential and commercial landlords, tenants, letting agents, property managers and other property professionals.

For more information visit www.landlordzone.co.uk

Land Registry – Official registry of property titles. The world’s largest property database,listing £1,300bn worth of property. The Land Registration Act 2002 which came into effect in October 2003 gives owners of registered property greater protection against squatters and allows them to block applications for adverse possession with time allowed for recovery of possession

Lease – A written agreement between the property owner and a tenant that stipulates the conditions under
which the tenant may possess the real estate for a specified period of time and rent.

Leasehold – A system whereby you own the property for a set period, before returning it to the freeholder.

Lease Option – A deal to buy a house within a certain time by making a down payment and paying rent, with a fixed amount of the monthly rent being put toward the purchase price. If the purchase is not made as agreed, the down payment is forfeited.

Legal Fees – The fees charged by a solicitor or other qualified individual to carry out the legal work associated with buying a house.

Lessee – A person who leases property from another person; the tenant.

Lessor – The owner or person who rents or leases property to a tenant or lessee; the landlord.

Let to Buy – Process of getting a mortgage to purchase a new property to move into whilst the previous property is let out to tenants. Retains original property as an investment with mortgage paid by tenant.

Leverage – To use a small amount of money to control a large amount of money/asset. UK=Gearing

LHA (Local Housing Allowance) – A proposed replacement for Housing Benefit. This will allow tenants fixed amounts to spend on housing dependent upon the local rental market, and permit them to keep any saving or to contribute an additional amount needed according to their choice of properties. Payment direct to landlords will be precluded

LIBOR – The London Inter Bank Offered Rate is the rate at which banks lend money to each other. LIBOR changes daily and a LIBOR linked mortgage will normally be adjusted every three months

Life Coach – Personal mentor. Somebody who provides advice and support to people who wish to improve their lives, helping them to make decisions, solve problems and achieve goals

Lien – A charge against income or a property making it security for the payment of debt.

Liquidity – The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.

Loan to Value (LTV) – The relationship between the amount of the mortgage loan and the value of the property being pledged as collateral. For example, a £85,000 mortgage on a house worth £100,000 would have an LTV of 85%.

Local Government Ombudsmen – Investigate complaints of injustice arising from maladministration by local authorities and certain other bodies. There are three Local Government Ombudsmen in England and they each deal with complaints from different parts of the country. They investigate complaints about most council matters including housing

Local Housing Allowance (LHA) – The replacement for Housing Benefit. This will allow tenants fixed amounts to spend on housing dependent upon the local rental market, and permit them to keep any saving or to contribute an additional amount needed according to their choice of properties. Payment direct to landlords will be precluded unless certain conditions are met such as the tenant being more than 8 weeks in arrears with the rent

Local Search – Application to local authority for information about a particular property and its surrounding area which should reveal whether the property is affected by road building or outstanding matters such as sanitary notices

LVT (Leasehold Valuation Tribunals) – Rent Assessment Panels, which sit as LVTs, determine specified aspects of leasehold disputes under the Landlord and Tenant Acts of 1985 and 1987, asamended by the Housing Act 1996

M

Managing Agent – A person appointed by the owner of a property (usually a landlord) to act on his behalf, usually in collection of rents or maintenance of the property

Mandatory Grounds for Possession – Grounds that may be cited in possession proceedings which, provided the correct procedures have been followed and notices given, require the court to grant possession. In brief the mandatory grounds cover situations where: the landlord requires the property for personal occupation; a mortgage lender is foreclosing the mortgage; property let for a fixed period is required for return to holiday letting; an educational institution requires return of a student let; a religious body requires return of its property for an alternative tenant; the landlord wishes to demolish, reconstruct or redevelop the property; a landlord wishes to claim possession against the resident heir of a tenant who has died; and the rent is in arrears by eight weeks or more (two months if it is paid monthly, or one quarter if paid quarterly).

Market Value – The most probable price property would bring in a transaction under normal conditions on the open market. The highest price a buyer, willing but not compelled to buy, would pay, and the lowest price a seller, willing but not compelled to sell, would accept.

Mentor – A trusted friend, counselor or teacher, usually a more experienced person. In property a mentor has already succeeded with various investment strategies and has adapted to an ever changing market and is still successful.

Mentorship Programme – Property investment training course with a difference, run for small number groups of property entrepreneurs who wish to learn by working with other smart, like-minded people. Mentors are able to figuratively Hold your hand whilst walking you through the complete property process from selection to management.

MIG (Mortgage Indemnity Fee) – If a bank or building society lends more than it’s usual ‘loan to value’ limit on a property, it may take out insurance to cover the risk of default. If it becomes necessary to repossess a property and the lender cannot recover the full amount of the original mortgage, the difference is covered by the insurance. The cost of the insurance is covered by the MIG fee, payable by the borrower.

Mortgage – A loan you take out on a property that you repay over a specified time, against the security of property

Mortgage Broker – An agent of a mortgage lender who brings the lender and borrower together. The broker receives a fee for this service.

Mortgage Payment Protection Insurance – Covers all or part of your monthly mortgage payment, plus an extra amount to cover mortgage related expenses, for up to 12 months should you lose your income through an accident, sickness or unemployment

Mortgage Rate – The standard variable interest rate quoted by all mortgage lenders which normally varies with the Bank of England base rate. All discounted rates are based on this Mortgage Rate.

Mortgagee – The lender in a mortgage agreement.

Mortgagor – The borrower in a mortgage agreement.

MPC (Bank of England Monetary Policy Committee) – set UK base interest rates or Repo rate, thus a benchmark for other interest rates such as personal loan, mortgage interest rates. Although Government has the power to instruct the Bank on interest rates for a limited time period. The MPC meets monthly and comprises the Governor of the Bank, the two deputy governors, the Bank’s chief economist, the executive director for market operations and four external members appointed directly by the Chancellor.

MRICS – Member of the Royal Institution of Chartered Surveyorshttp://www.rics.org.uk

N

National Association of Estate Agents (NAEA) – The largest professional estate agency organisation in the UK. Representing nearly 10,000 members, the NAEA is committed to raising professional standards across all aspects of the property market for the benefit of member agents and ultimately the home moving public

NALS (National Approved Letting Scheme) – Government backed accreditation scheme which all letting and letting management agents can join. In doing so they agree to meet defined standards of customer service, to maintain necessary insurances to protect clients’ money, and to have customer complaints procedures in place offering independent redress. The scheme is supported by the Association of Residential Letting Agents, National Association of Estate Agents and Royal Institution of Chartered Surveyors. It currently has almost 1,000 member offices throughout the UK.

NASARB (National Association Sale and Rentback) – See NLA

National Federation of Residential Landlords (NFRL) – The umbrella landlord organisation bringing together some 40 private landlords’ association covering every main postcode area in Great Britain and Northern Ireland

National Home Building Council (NHBC) – The standard setting body and leading warranty and insurance provider for new and newly converted homes in the UK. Providing risk management services to the house building and wider construction industry, NHBC has approximately 18,000 registered builders who agree to comply with its rules and standards. An NHBC certificate gives substantial protection against building faults for 10 years
National Inspection Council for Electrical Installation Contracting

(NICEIC) – An independent consumer safety organisation and has been the electrical contracting industry’s voluntary regulatory body for electrical safety matters for nearly half a century

Negative Equity – If the market value of your house is less than the amount you owe on your mortgage, you are said to have negative equity

Net Yield – The return on an investment after tax has been deducted

New Building Regulations – Effective from January 2005 requires most substantial electrical work to be carried ‘competent’ person such as a contractor approved by the NICEIC

NFRL (National Federation of Residential Landlords) – NFRL is the umbrella landlord organisation bringing together some 40 private landlords’ association covering every main postcode area in Great Britain and Northern Ireland

NHBC (National Home Building Council) – The standard setting body and leading warranty and insurance provider for new and newly converted homes in the UK. Providing risk management services to the house building and wider construction industry, NHBC has approximately 18,000 registered builders who agree to comply with its rules and standards. An NHBC certificate gives substantial protection against building faults for 10 years

NICEIC (National Inspection Council for Electrical Installation Contracting) – An independent consumer safety organisation and has been the electrical contracting industry’s voluntary regulatory body for electrical safety matters for nearly half a century

NLA (National Landlords Association) – Largest UK association of private landlords, protecting and promoting their interests and providing membership benefits such as fact sheets, newsletters, insurance discounts, meetings and workshops, and favourable terms with selected suppliers of advice and services

NMD (No Money Down) – Method of purchase of property by way of structuring the deal so that the cost of deposit is covered by the valuation, resulting in no capital outlay

Non-Cognate – Graduate from a non property related degree background.

Non-Resident Landlords Scheme – A scheme for taxing the UK rental income of non-resident landlords. The scheme requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords. If non-resident landlords don’t have UK letting agents acting for them, and the rent is more than £100 a week, their tenants must deduct the tax. When working out the amount of tax the letting agent/tenant can take off deductible expenses. Letting agents and/or tenants don’t have to deduct tax if the Inland Revenue tells them not to. The Inland Revenue will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied for Approval to receive rents with no tax deduction. But even though the rent may be paid with no tax deducted, it remains liable to UK tax. So non-resident landlords must include it in any tax return to the Inland Revenue. Details of the scheme are available from the Inland Revenue website

Non-status – Some lenders will offer non-status facilities which allow them to lend without proof of income and sometimes without proof of existing mortgage repayment record. The maximum loan to value on these schemes is normally 70 per cent or below and a credit search will usually be carried out

Note – A document that acknowledges a debt and promises payment.

Notice to Quit – A Notice to quit or more properly Notice requiring repossession issued under section 21 of the Housing Act 1988 is notice to a tenant that he or she must vacate a property at the end of an assured shorthold tenancy agreement. There is no prescribed form for the notice but it must specify the date after which the tenant is to give up possession. At least two month’s notice is required and possession may not be required until expiry of the first six months of the tenancy

NPV (Net Present Value) – Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met

O

ODPM (Office of the Deputy Prime Minister) – Government department, headed by Deputy Prime Minister, which has responsibility, among other things for housing, dealing with homelessness, planning, building regulations, sustainable communities, urban policy, and local government. The ODPM website has a section devoted to housing which, among other things, contains consultation papers, guidance for homeowners, tenants and landlords, and information on housing policy and statistics. The Government also has online information about letting property

Off plan – Buying a property before it is built

Offer of Loan – A formal document approving your mortgage, detailing terms and conditions.

OFT (Office of Fair Trading) – Promote and protect consumer interests in UK. Ensure business are fair and competitive

OMV (Open/On Market Value) – The price at which a traditional vendor places property for sale with an estate agent. Valuation figure perceived as the true market value of a property.

Operating expenses – Amount paid to maintain a property, such as property taxes, utilities and insurance.

OPM (Other Peoples Money) – Finance of investment purchases using none of your own capital

Option – An agreement to keep open for a set period an offer to sell or purchase property.

P

P&L (Profit & Loss) – Accounting report of the profit on sales over a fixed period, normally one year.

PA (Per Annum) – Amount due on a yearly basis

Partnership – An agreement between two or more entities to invest or go into business together.

Passive Income – Income generated from rents, royalties, dividends, interest and gains from sales of securities.

PCM (Per Calender Month) – Amount due on a monthly basis following a Gregorian calender

Periodic Tenancy – A periodic tenancy comes into being when a landlord does nothing to reclaim possession at the end of an original assured shorthold tenancy and allows the tenants to remain without issuing a new tenancy agreement. The terms and conditions of the original assured shorthold tenancy agreement remain in place, as does the right of the landlord to bring the tenancy to an end by service of the required two month’s

Physical Deterioration – A reduction in a property’s value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.

PI (Professional Indemnity) – Insurance that protects your business from financially crippling and damaging claims by dissatisfied clients. Cover to protect against Negligence or breach of duty of care, Intellectual property – unintentionally infringing on others’ copyrights, trademarks, broadcasting rights, any act of passing off, Loss of documents/data: damaged, lost or stolen data and documents belonging to your clients, Dishonesty: liability arising from the theft of your clients’ money.

PIC (Property Investment Clubs) – Utilisation of bulk purchasing power by use of Joint Ventures with other investors. Membership usually required. Massive negotiating power, are often able to purchase well below OMV and in large multiples

PIQ (Property Information Questionnaire) – Part of HIP (Home Information Pack). Vendors must fill in this section giving details of Council Tax banding, Structural information, Flood risk , Parking arrangements and Lease details (for leasehold properties)

Planning Permission – Needed before commencement of works or alterations on property.

Portfolio – The combined holdings of real estate assets by an investor.

Possession – when the Purchaser takes over legal control of the premises. There is a distinction from Occupation as only an owner or potential owner can possess, whereas a tenant can occupy without any intention of owning the property

Power of Attorney – A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.

PP (Planning Permission) – Consent from the planning department of a local authority to carry out approved works on a property including extending a property. Dividing off part of a property for business or commercial use or for a separate dwelling. Using a building or caravan in a garden as a separate dwelling. Building a parking place for a commercial vehicle. Minor changes are allowed without needing to apply for planning permission. See Permitted Development Rights

PPR (Principal Private Residence) – Tax reference for owners main home. Exempt from capital gains tax when sold

Principal – The amount of money loaned without counting interest, costs, or fees.

PROBAS (a Property Buyers Association) – Unregulated body established in 2007 due to the need for high ethical, moral and professional values within the sale and rent back industry. Whilst awaiting regulation, PROBAS members will adopt best practice procedures in line with the FSA principles of ‘Treating Customers Fairly, ensuring all of its members have the highest standards of practice.

Probate – A legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets are.

Property – Asset. Dwelling or building which its owner has a legal title to.

Property Investment Clubs (PICs) – Utilisation of bulk purchasing power by use of Joint Ventures with other investors.

PPRR (Principle Private Residence Relief) – Used to mitigate CGT on second homes. 2 year window to decide which of your properties is to be your PPRR in order to maximise the relief on the biggest gain from each residence.

PRS (Private Rented Sector) – Classification of UK housing tenure. Dwellings owned by Private landlords.

Purchase Price – The price at which something is purchased or amount of money required to complete the sale

PW (Per Week) – Amount due on a weekly basis

Q

Quiet Enjoyment – Allowing tenants ‘quiet enjoyment’ is an implied term within any letting agreement and affords tenants the right to uninterrupted use of the property during the course of their tenancy without interference from the landlord or the landlord’s agents

R

RACs (Rent Assessment Committees) – When a landlord or tenant of a Regulated tenancy has objected to the rent assessed by the Rent Service, the case will be passed to a Rent Assessment Committee to decide the Fair rent. Tenants with assured tenancies may also apply to the RAC for a determination of the open market rent they should be paying. They may also apply if the landlord serves notice of a proposed rent increase. Tenants with assured shorthold tenancies may also apply within the first six months of their tenancy. Rent assessment committees are made up of two or three people – a solicitor, a property valuer and a lay person, all of whom are drawn from panels of people with appropriate expertise. There are 14 rent assessment panels in England and Wales appointed by the Government. The rents they set will be the legal maximum that can be charged for one year from the date of the decisions, after which an application for an increase can be made. Relevant forms are available from the Rent Service website

Rate cap – The limit on the amount the interest rate can be increased each period in an adjustable-rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.

Rate of Return – See ROI

RdSAP (Reduced Data Standard Assessment Procedure’) – An industry agreed standard that allows Domestic Energy Assessors to calculate energy usage by reference to standard tables.

Real Estate – A parcel of land and everything attached to it (US).
Real estate investment trust (REIT) – Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.

Redemption – Paying off (redeeming) a mortgage, either at the end of the mortgage term or when you move to another property or switch to another lender

Refinance – To replace an old loan with a new loan.

Registered rent – Rent included on the publicly available Rent Register as determined by the Rent Service or Rent Assessment Committee recording the maximum that can be charged until a new determination is agreed or the tenant leaves

Regulated tenancy – Most continuing private tenancies entered into before 15 January 1989 are regulated tenancies under the Rent Act 1977. This means that the tenant has long term security of tenure and that both the landlord and the tenant have the right to have a Fair rent registered for the tenancy by an independent rent officer. Both also have a right to appeal to a rent assessment committee if they are dissatisfied with the rent officer’s decision. Once a rent is registered, the landlord cannot normally charge a higher rent without reapplying to the rent officer and a new application for registration is not possible for two years unless there is a relevant change of circumstances. The Housing Act 1988, which introduced assured and assured shorthold tenancies at market rents for most new lettings on or after 15 January 1989, did not change existing tenants’ rights to security of tenure and rent control

REITs – (Real Estate Investment Trusts). Tax-efficient investment funds to make property more popular with big investors.

Re-mortgaging – Moving mortgage from one mortgage value to a higher value, or one lender to another, without moving house.

Rent – A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.

Rent Assessment Committee – See ‘Residential Property Tribunal Service’

Rent officer – A local authority official responsible for housing benefit. He or she will usually rely on the local Rent Service to assess whether the rent being asked is reasonable or not, or whether the property is too large for the needs of the claimant

Rent Service -This is an executive agency of the Department for Work and Pensions which carries out rental valuations for housing benefit purposes, makes fair rent determinations; advises local authorities about the effects on rent of housing renovation grant applications by landlords; and carries out rental valuations and provides information, on a more informal basis, for a variety of customers within the public and private sector

Rental yields – Precise definitions can vary but the gross rental yield is usually taken to be the annual rent of a property as a percentage of its capital value or acquisition price. The net rental yield is the annual rent after deducting expenses as a percentage of capital value or acquisition price. The rental return or capital return is the annual income from renting less the costs plus annual capital appreciation as a percentage of the original investment in the property

Repayment Mortgage – Also known as a capital and interest mortgage. Your monthly repayments consist of instalments of capital (the amount of money you have borrowed) as well as interest due on the amount you borrowed

Repo rate – The rate set each month by the MPC as the benchmark for other interest rates, including personal loans and mortgages

Repossession – Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default

Residential Property Tribunal Service – Formed due to the increased powers made available to Residential Property Tribunals under the Housing Act 2004. Umbrella organisation for the five regional offices or Rent Assessment Panels which provide the support for three statutory tribunals (The Rent Assessment Committee ,The Leasehold valuation tribunal, The Residential Property Tribunal ),which make decisions on residential property matters.

Return on Investment (ROI) – The amount earned per year on an investment, usually expressed as a percentage of the investment.

RICS – Royal Institution of Chartered Surveyors. The professional body of the property sector. 110,000 members globally and represents, regulates and promotes the work of property professionals throughout 120 countries

RICS Valuation – An ESTIMATED value of what price a property could possibly achieve on the open market. Usually a value range calculated in the residential market by comparative valuation with surrounding properties of a similar specification.

ROI (Return On Investment) – Percentage figure showing the ratio of profit or loss made on investment in relation to the amount of money invested

ROCE (Return on Capital Employed) – Financial return from initial investment calculated as a gross or net figure. Annual Rent minus Interest divided by Deposit and Acquisition Costs

RPTS (Residential Property Tribunal Service) – An independent body whose remit covers England aims to provide a fair and accessible tribunal service to help landlords and tenants and leaseholders settle disputes about rents and about leasehold property. Made up of five regional Rent Assessment Panels, each covering a different geographical part of the country – London; Southern England; Northern England; the Midlands; and Eastern England. Rent Assessment Panels do not have the power to deal with all types of dispute about rents and leasehold matters

S

Schedule A – Letting income is taxed under schedule A. Although expenses may be set against income there are special rules that apply which vary from those which apply to most other types of business income, which is taxed according to ‘Schedule D’. The Inland Revenue has an explanatory leaflet, IR150, which can be downloaded.

Seasoning – This term refers to the pay history on a loan. A loan that is “seasoned” will have at least six months of pay history. Non-seasoned loans are more risky than seasoned loans because they lack a pay history.

Section 8 notice – Notice to tenant to quit due to them being more than 8 weeks in arrears with the rent. Warning – if the tenant brings the arrears of rent to less than 8 weeks, even if that is the day before an eviction Court heaing, the notice is no longer valid.

Section 21 notice – See also ‘Notice to quit’. Notice to a tenant that he or she must vacate a property at the end of an assured shorthold tenancy agreement

Security deposit – A payment by a tenant held in escrow during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.

Security of Tenure – Variable dependant on tenancy type. Periodic, it will only come to an end either by an order of the court or surrender by the tenant. Fixed Term tenancy, may be ended either by the passage of time, or by the landlord exercising the power to end the tenancy if clause in agreement grants the right. If a fixed term assured tenancy comes to an end in one of these ways, a new periodic assured tenancy will be created, known as a statutory periodic tenancy. Security of tenure remains. In order to regain possession, the landlord may only do so on one of a number of statutory grounds which are set out in Schedule 2 of the Housing Act 1988. To obtain an order for possession, the landlord must serve a section 8 notice on the tenant, setting out the ground or grounds that are relied on and then, after a period of time that varies depending on the grounds chosen, apply to the court for possession.

Service charges – Service Charges are paid by leaseholders and tenants living in blocks of flats. The charges cover the cost of: Upkeep and landscaping and other shared areas. Repair, maintenance & cleaning of exterior and internal communal areas. ( inc. shared lighting, heating or emergency alarm systems). Service charges are based on the actual cost of delivering the service. They are reviewed once a year and may increase or decrease.

Snagging – The process whereby small defects in a new property are identified and referred to the developer to be rectified.

Stacking – The process of assessing a deal by comparing the financial variables within it, in order to see if the deal is financially viable.

Stamp Duty – A charge levied by the government on house purchases over £125,000.
Up to £175,000 (until 2 September 2009 inclusive) = 0% , £175,001 – £250,000 = 1%
£250,001 – £500,000 = 3% , £500,001 or more = 4%

Survey – A thorough evaluation of the condition and value of a property. A map or plot plan depicting the property boundaries, improvements, easements, rights of way, encroachments, and other physical features.

Statute – A law established by the act of the legislative powers; an act of the legislature.

Sub-letting – The leasing of premises by a lessee to a third party for part of the lessee’s remaining term.

SVR (Standard Variable Rate) – Can go down, as well as up, during the course of your mortgage. Normally based on The Bank of England’s Base Rate

T

TDS (Tenancy Deposit Scheme) – The Housing Act 2004 has provisions for mandatory tenancy deposit protection. As from 6 April 2007 landlords who take deposits have been required to comply by participation in a custodial or insured tenancy deposit scheme.

Tenancy – An agreement between a landlord and the person/s who who take legal residence in a property in return for rent payments

Tenancy deposit protection – Government Legislation introduced in 2007 any landlord taking a monetary deposit must safeguard it by participating through membership in a tenancy deposit scheme. There are two types of scheme available – a custodial scheme which holds the deposit, or insured schemes whereby the landlord retains the deposit but pays an insurance premium. Both approaches include dispute resolution arrangements. Until deposits have been safeguarded by a scheme, landlords are unable to regain possession of the property using usual ‘notice only grounds’.

Tenancy in common – Ownership of property in which several owners each own a stated percentage of the property. Each owner may deal with their portion of the property as they wish (giving it away, mortgaging it, bequeathing it, etc.) and, upon their death, their share becomes part of their estate.

Tenant – The person who takes legal residence in a property in return for rent payments

Tenements – Possessions that are permanent and fixed to land.

Tenure – Amount of time granted for renting a property

Term – The length of time taken to repay your mortgage.

Testate – To die leaving a valid will: opposite meaning is to die intestate.

Time-share – A form of joint ownership of property where numerous owners share title and enjoy use or occupation of the property according to a specific schedule.

Title – The legal term for written evidence that the owner of the land has lawful possession.

Tracker Mortgage – This is a mortgage that is set at a fixed percentage or ‘margin’ above the Banks base rate. E.g it could be set at base rate plus one percentage point. So, if the banks base rate rises by a percentage point, so does your rate. It will also ‘track’ the Bank of England Base rate when this rate goes down. Tracker rates continue over the term of your mortgage

Trust Deed – The legal document used to create a trust.

Trustee – One designated to hold property for another, pendingthe performance of an obligation.

U

Underwriting – In mortgage lending, the process of determining the risks involved in a particular loan and establishing suitable terms and conditions for the loan.

Usurp – To overturn or better a previous agreement

Usury – Charging an illegal rate of interest.

V

Valuation – An independent assessment of the value of a property carried out by an approved surveyor. Paid for by the customer, the valuation is used by the lender to decide how much they are prepared to lend. Many customers also choose to arrange a more comprehensive survey for their own purposes before they decide to buy a property.

Variance – An exception to a zoning ordinance granted to meet certain specific needs, usually
given on an individual case-by-case basis.

Void Costs – These are the costs associated with an empty property and can include the cost of repairs to that property or the rent loss from that property whilst it is empty

Void – A term used to describe a property which is not let.

Void Loss – Rents lost as a result of non-occupation of a property

Voids – Empty rented properties generating no income.

VAT (Value Added Tax) – A form of indirect taxation levied on goods and services at the point of sale

W

WFTC – Working Families Tax Credit – Means Tested Benefit given to working families with children on a low wage to top up living expenses. If you are not claiming them the check your eligibility with Tax Credits

WTF – Expletive often used by Landlords and Investors when they open the post in to discover a large bill

Will – A written statement of a person’s wishes for the disposition of their estate, after their death.

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