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Education > Jargon Buster > I to O


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to I to O. Part of the most comprehensive Property Investing
JARGON BUSTING DICTIONARY
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I | J | K | L | M | N | O

 

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

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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.

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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

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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

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

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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 suceeded 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

 

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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

 

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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.

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