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
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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
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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
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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
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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.
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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.
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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
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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.
Y
Yield
- The annual rate of return on an investment, expressed
as a percentage. See also ROI
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