Glossary ARLA - The Association of Residential Letting agents
Arrangement fees - fees which relate to a specific mortgage product
Agent - A letting – rent collection – management – estate agent or other duly authorised person (or company / organisation) who is acting on behalf of the landlord.
Assured Shorthold Tenancy - An assured shorthold tenancy is a kind of assured tenancy, which offers the landlord a guaranteed right to repossess his/her property at the end of the term. (See also Tenancy Agreement)
Bankers Draft - It is similar to a cheque, however the money has been debited to your bank account and it means the person receiving this will know it is safe money. You will normally need to give a bank in the UK 24 hours notice. You will normally be charged an administration fee.
Block Management - Agents who act for the freeholders and leaseholds for block of apartments and flats. Normally will organise internal cleaning, garden maintenance, arrange the insurance and arrange red-decoration
Break Clause - Also referred to as a Release Clause. This is a clause sometimes inserted in a fixed term tenancy, typically if the initial fixed term is for a year or more. It will not normally be applicable during the first six months of an Assured Shorthold Tenancy. If the initial tenancy is renewed either party will often request a break clause if they do not know if the can continue renting or not. A break clause will usually be worded in such a way as to allow either landlord or tenant to give two months written notice at any stage after a particular date or period of the tenancy, thus terminating the tenancy earlier than the end of the original fixed term.
Bridging Loan - a short term loan (usually at a very high rate) to finance buying a new property before one has actually sold one's existing property
Buildings Insurance - insurance against the damage or destruction of the permanent structure of a property.
Bungalow - a house with only one storey.
Buy-to-Let - buying property with the express intention of letting it out to tenants after the purchase.
Capital and Interest - a mortgage repayment option whereby the amount borrowed (capital) and the interest accrued are paid back on a monthly basis to the lender.
Capital Gains Tax - the taxable profit derived from the sale of a capital asset - the difference between the sale price and the basis of the property, after making appropriate adjustments for closing costs, fixing up expenses, capital improvements, allowable depreciation, etc.
Capped Rate Mortgage - this is where your mortgage interest rate is guaranteed not to rise above an agreed fixed rate for a defined period of period of time.
Completion - the point at which all transactions concerning the property’s sale are concluded and legal transfer of ownership passes to the buyer.
Conservatory - a glass room, usually connected to a house, which is often used as a dining area, playroom, or sitting room.
Contents Insurance - insurance to cover the damage or loss of items and belongings within a property.
Contract - a legal document that details the agreement between buyer and seller that binds both parties to complete the transaction.
Conveyancing - a term to describe the legal work involved in a property transaction that is conducted by a property solicitor.
Covenants - agreements written into title deeds which detail an rules or restrictions concerning a particular property.
Credit Check - a search most commonly invoked by a lender through a specialised company to ascertain if an individual has CCJs or a bad payment history.
credit scoring - a numerical value that ranks an individual's credit risk at a given point in time based on a statistical evaluation of information from a credit search.
Credit Search References – References taken up on a tenant applying for rented accommodation. Many agents and individual landlords use an outside company who for a fee will contact the applicant’s employer, landlord and also check out the tenant’s credit history. They will be providing a report on the prospective tenant’s financial suitability. See also references.
Company Let - Let to a bona fide company.
Council Tax - Local authority tax for England, Wales and Scotland. In most cases this will be the responsibility of a tenant to pay.
Covenants - The terms of the tenancy agreement – obligations - “promises” made by either Landlord or Tenant.
Deposit - Amount of money held by the landlord or agent for security against damage. In Britain approximately the equivalent to six week rental is held. In April 2007 a new system has been introduced in England and Wales for Assured Shorthold Tenancies. The Tenancy Deposit scheme is a mixture of custodial and insurance backed deposit holding mechanism. The landlord or agent has to register the tenancy details within 14 days of the start. If an agent is holding the deposit it must be held as "stakeholder". At the end of the tenancy the tenant has to be notified of any deductions within a given time. In Scotland the Scottish Executive are looking to introduce similar legislation in due course
Direct Debit - See section on Standing Orders
Deeds - a document detailing the ownership of a property, usually held by a mortgage company.
Deposit (for buying a property) - a sum of money (most commonly 10%) paid by the buyer of a property to a mortgage lender upon exchange of contracts.
Deposit (for renting a property) a sum of money (usually 1.5 x a month's rent in advance) paid to the landlord (or agent) of the property, which is returned at the end of the tenancy, subject to the condition of the property.
Dilapidations - any disrepair or damage to a rented property.
Disbursements - fees paid by a solicitor on the buyer’s behalf such as Land Registry fees, stamp duty and search fees.
Duplex - an apartment or flat spread over two floors.
En Suite - a bedroom constructed with its own toilet and bathroom (i.e. it does not share these facilities with any room).
EPC – Energy Performance Certificate. A Legal requirement for both Rental and Sale properties.
Equity Release - a means of retaining the use of your house or other object which has capital value, while also obtaining a steady stream of income, using the value of the house.
Estate Agent - a business that arranges the selling, renting (letting agents) or management of homes, land and other buildings
Excess - the amount you have agreed to pay an insurance company towards the cost of a claim.
Exchange of Contracts - when contracts are exchanged between the buyer's and seller's solicitors, legally committing both parties to the sale/purchase of the property at the agreed price.
Fixed Rate Mortgage - where the interest rate on a mortgage is fixed for a set period of time, meaning monthly repayments are unaffected by upward or downward movements in the standard variable rate.
Flat - a set of rooms for living in which are part of a larger building.
Flexible Mortgage - a mortgage product that offers the borrower the flexibility to overpay or underpay on their mortgage in a given month.
Freehold - the ownership of a property, meaning that it belongs to the owner without the limitation of time.
Fixtures and Fittings - Items usually provided in a letting – curtains, carpets, blinds, light fittings, kitchen units, appliances, (in the case of some lettings there will beds, chairs, tables and other items of fixtures and fittings provided). It is advisable to always check as to what is provided and not to assume that items will be provided.
Gas Safety Regulations - The Landlord of a rented property must have a gas safety check carried out prior to a let and then annually. A copy of the record must be given to the tenant. An authorised CORGI Registered engineer can only carry out the check
Guarantor - A person who is prepared to guarantee rental payments and other obligations of a tenancy. The guarantor will be liable for rental payments if a tenant is unable to pay them, so the guarantor will need to have a regular income. Normally references or credit search references will be taken up on a guarantor.
Gazump - when a seller accepts a higher offer from a third party on a property that they have already agreed to sell to another party, but have not yet exchanged contracts.
Gazunder - when a buyer offers the seller a lower offer than the previously agreed selling price just before contracts are about to be exchanged.
Ground rent - an annual charge levied by the freeholder to the leaseholder.
Guarantor - a individual who offers to be contractually liable, both financially and legally, should a tenant fail to pay the rent during their tenancy, or in the event of damage to the property.
Guide price - an indication of the price that the property is expected to sell for and what the vendor is hoping to achieve.
High Rent Tenancy - Tenancy agreement when the annual rent is over £25,000 per annum and known as a contractual tenancy.
Holding Deposit - This is usually a nominal amount (£250) that will be asked for when a tenant applies for a tenancy of a property. If the tenancy does not proceed – tenant pulling out – references not acceptable this is then often retained by the agent. Assuming the tenancy proceeds, then the amount is normally deducted from the first months rental/ deposit.
HMO - House in multiple occupation – Bedsits / flatlets normally self-contained room with either cooking facilities in the room or a shared kitchen or shared bathroom and toilet facilities. Under the Housing Act 2004 it will cover any property occupied by more than one household that is a converted building even if the flats are nort self contained. A converted building that does not comply with the 1991 Building Regulations and some of the flats are let out on AST — Assured Shorthold Tenancies. There will be 29 national standards that will appear in secondary legislation.
Home Information Packs (HIPs) - a series of documents (including an Energy Performance Certificate) recently introduced by the UK government to speed up the home buying and selling process and also to save consumers money on house sales and purchases which, for one reason or another may not complete.
IFA - Independent Financial Adviser.
Inheritance Tax - a tax paid to the government based on wealth (money, property, etc.) passed from one person to another during their lifetime or as part of their estate after death.
Insurance - an agreement in which you pay a company money and they pay your costs if you have an accident, injury, etc., or if your property or possessions are damaged or lost.
Interest Only Mortgage - a mortgage repayment option, whereby the borrower only repays the lender the interest on the amount borrowed - the borrower must still pay back the capital, or amount borrowed (usually through an investment vehicle).
Inventory - Listing of the contents of a property. This can include the state and condition of a property including the garden, the state of a property – clean – dirty etc and also the structural fixtures and fittings – power points – windows etc. They should be checked in with the tenant at the start of the tenancy and then checked out with the tenant at the end. It is more and m ore usual that a professional inventory clerk is employed.
Joint & Several Liability - Where there is to be more than one (adult) person living in the property, the tenancy will say they are “jointly and severally” responsible. This means that, jointly, the tenants are liable for the payment of all rents and all liabilities falling upon the tenants during the tenancy, as well as any breach of the Agreement. Individually each tenant is responsible for payment of all rent and all liabilities falling upon the tenant, as well as any breach of the Agreement until all payments have been made in full.
Joint Sole Agency - the use of more than one estate agent to sell your property simultaneously.
Land Registry - a government body which maintains and updates records of land ownership and property ownership.
Landlord Insurance - specific insurance taken out by landlords to cover their properties and investments – usually the contents and buildings insurances cost more than for owner occupiers owing to the greater amount of risk. Landlord is a person, persons, company or body that has a formal interest in the premises and has the right to let the property.
Lease - Often confused with tenancy agreement this is normally a long lease on an apartment (see Superior Lease) where as the actual document governing a rental is normally known as a Tenancy Agreement.
Leasehold - a legally binding document whereby the freeholder grants the right for the leaseholder to possess, or the use of land or a building for a specific period of time.
Lender - usually a business, such as a bank or building society from whom one borrows money, or to whom one owes money.
Letting Agent - a business that arranges the letting or management of homes rented on behalf of private and corporate individuals.
Lifetime Mortgage - a form of equity release, whereby one can borrow an amount of money against part of, or all, the value of your home, and interest is charged on the amount you borrow.
Loan to Value - the size of a mortgage relative to the property's value.
Local Authority Search - when a solicitor makes an enquiry to the land registry to ascertain if there are any future development issues or outstanding enforcements that might affect a property or surrounding area, which might influence the decision to purchase the property.
Maisonette - a property arranged over more than one floor, usually as part of an existing house.
Managing / Management Agent - a third party business that manages the letting of properties, in exchange for a fee, on behalf of a landlord or property owner. see www.2manageproperty.net
Mezzanine - a small additional floor between one floor of a building and the next floor up.
Mortgage Deeds - a legal document detailing a lender's interest in a property along with the terms of the mortgage.
Mortgage - an agreement which allows you to borrow money from a bank or lender in order to buy a property.
Mortgagee - a bank, or similar organisation, which provides mortgages to people especially so that they can buy a property.
NAEA - National Association of Estate agents
Negative Equity - when the value of a property is less than the value of the mortgage outstanding on a property.
New-Build - a house or flat that has been built from scratch by a building company or developer to be sold on.
NHBC - National House-Builders Council
Off-Plan - the purchase of a property before the building work itself has started, or has been completed.
Ombudsman - independent professional bodies that deal with complaints by consumers made about particular organisations, such as estate agents. (Ombudsman of Estate agents)
Open Day - when a property is opened up to prospective buyers to view over a set period of time to increase the competitiveness of a property sale.
Penthouse - a luxurious apartment, or set of rooms, at the top of a hotel or tall block.
PCM - Rental figure “pcm” – per calendar month.
Property Search Agent - a company that will find and arrange viewings for particular properties to buy or rent matching your search criteria on your behalf.
Rebuilding Cost - the cost of fully rebuilding a property, usually requested as part of a buildings insurance policy.
Redemption - when a mortgage is paid off in full.
Repayment Mortgage - a mortgage where monthly repayments include both the capital and interest components, meaning at the end of the term, the mortgage will be paid off in full.
References - Checking a tenant applicant’s suitability to be able to pay the rent and also the applicant’s track record in earlier rentals. This often involves contacting previous landlords, the present employer or accountant if self employed and bank (banks normally charge for providing references) See also Credit search references.
Release Clause - see break clause
Repossession - when a mortgage company takes possession of a property, primarily due to non-payment of a mortgage.
Rent - a fixed amount of money that you pay regularly to the owner of a property for the uninterrupted use and enjoyment of it for an agreed period of time
Rent Guarantee and Legal Expenses Insurance - an insurance that guarantees to pay the landlord the rent if the tenants should cease paying, plus insurance for the cost of legal fees to recover the property and/or any outstanding rent/costs etc
Retention - the process of withholding money from a seller until certain improvements or corrections to the property have been completed to satisfaction.
Sealed Bid - where interested parties send a letter detailing the amount they are willing to pay for a property (to buy or rent) - the highest bidder usually secures the property.
Searches - a request for any information concerning a particular property, usually held by a local authority or the Land Registry.
Semi-Detached - a property that is joined to another house on one side.
Services - See utilities
Service Charge - a charge to cover the cost of repairing and maintaining external or internal communal parts of a building, usually paid by the tenant or leaseholder.
Serviced Apartments - self-contained apartments designed to provide general amenities for short stays.
Solicitor - legal expert who handles all of the documents relating to the purchase or sale of a property. solicitors & surveyors
Stamp Duty - a tax property buyers pay to the government, the value of which depends on the value of the property being bought (ranging between 1% and 4% of the purchase price).
Structural Survey - a detailed assessment of a property's structure, designed to highlight faults or defects that might impact upon it's value of the property.
Studio Flat - a flat with one main room, or open-plan living area, that usually incorporates cooking facilities with a separate bathroom.
Subject to Contract - a term meaning that an agreement for buying a property has been reached, but will not be legally binding until after the exchange of contracts. Standing Order - Standing order mandate is an instruction that the tenant makes to his/her bank for payment of rent. It can either be set up on a form or on line (by the tenant). Normally payments are made each month and the instruction will state the number of payments or will continue to be paid until cancelled by the tenant. A landlord or agent cannot cancel a standing order mandate, only the person whose bank account the fund are coming from. A standing order should not be confused with a Direct Debit. This is not often used for the payment of rent and is more common for payments that differ each month and the company notifies the bank’s customer in advance you are paying money to of the amounts and dates. e.g. annual AA subscription 25th July, electricity company £so much for next 10 months commencing 15th August etc.
Studio Apartment / Flat - Flat with bedroom/living room all in one either with a separate kitchen or corner of the main room as a kitchen with separate bathroom and toilet.
Superior Landlord - People or person to whom the ownership of a property might revert to at a later stage. e.g. an apartment with a 99 year lease. See also Superior Lease.
Superior Lease or Headlease - This is the lease that the landlord holds. This is often the case in an apartment/flat where the owner has the leasehold interest, but another individual owns the freehold. There is then this lease under which the landlord is responsible for the obligations / covenants. When a property is let out the tenant renting a property then also has to comply with any of these obligations – e.g. not to hang out washing on a balcony etc.
Standard Variable Rate (SVR) - the basic interest rate offered by a mortgage lender that may increase or decrease at the lender's discretion.
Tenants Contents Insurance - insurance to cover the damage or loss of items and belongings within a property.
Tenant Referencing - a process whereby a landlord investigates the financial history and current situation of a prospective tenant.
Tenant – a person, persons (company or organisation) who is entitled to temporarily occupy a property under the terms and conditions of a tenancy agreement.
Tenancy Agreement - This is a legal binding document containing details about the rental terms. Sometimes known as a rental agreement. It will state the parties – landlord – tenants the rental price and the property address along with the “Covenants” / obligations (promises) of the let. It should be written in plain clear language. Usually an Assured Shorthold Tenancy
Term of Tenancy - Length of tenancy - most initial tenancy agreements are for a minimum of six months, they can be shorter and longer.
Tenure - refers to the status of a property, usually in terms of whether it is leasehold or freehold.
Title Deeds - documents displaying the legal owner of a property.
Tracker Mortgage - a mortgage that tracks movement in a specific index – either the building society's standard variable rate, LIBOR (the London Inter Bank Overnight Rate – rate at which the bank's lend to each other) or the Bank of England Base rate. It is usually best to have one which tracks the Base Rate because if it goes down the building socity HAS to reduce your rate.
Transfer Deed - a document from the Land Registry highlighting the transfers in legal ownership of a property from a seller to a buyer.
Utilities Or Services - These are normally electricity, gas and water. Under most circumstances the tenant is responsible for paying for these.
Under Offer - a term indicating the status of a property after an offer from a buyer has been accepted, but before contracts have been exchanged.
Valuation - the process of understanding a property's value, usually conducted by either a surveyor or an estate agent.
Vendor - the technical name for someone selling a property.
Void Period - the period in which a property lies empty in between periods of tenant occupation.
Water Charges - see utilities
Yield - income generated from a property relative to the value of the property.
The above has been compiled to assist people with property terminology. We advise that this information is for guidance only and cannot be relied on for accuracy and that you should consult a qualified legal representative if you require full explanation.