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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