Buy to Let - This is currently a fashionable way of investing. Individuals buy houses or flats to rent out for income in the hope that they will secure long term appreciating in the value of the property itself.
This is seen as an alternative to the more traditional ways of investing such as stocks and shares etc. We have a section on Landlords Insurance; please refer if you require any more information.

Certificate of Practical Completion - Under a building contract, a certificate issued by the architect, surveyor or supervising officer stating that the works to the building have been substation ally completed and that the building is ready for occupation. This certificate will;

A. Release an agreed percentage of any retention money.
B. Begin the defects liability period.
C. Transfer responsibility for the insurance of the building from the contractor to the owner.

Charge - an interest in land, which secures the payment of a present or future debt.

Collateral (Security) - This is traditionally used to mean some security in addition to the personal obligation of the borrower, but also commonly used to refer to a security provided in addition to the principal one.

Collateral Warranties - Arrangements giving direct contractual remedies to someone who is not a party to the principal contract..  For example a building contract will be between an employer and a contractor. A finance company has little or no right of action against the contractor if there is a defect in the building. The collateral warranty gives that right of action. It also gives the financer step in rights.

Common Parts - The parts of a multi occupied building which are not let to individual tenants but are either retained by the landlord, eg for the provision of services or held in common by the tenants for providing access for themselves to their own parts of the building.
These common parts of a building usually include; halls, stairways, passages, lifts etc.

Common Hold - a new form of freehold created by the Common hold and Leasehold reform act 2002. Whereby each individual flat or unit is a separate freehold and the reaming elements of the building are a “ common part” owned by the owners of the flats who form a Common hold association- a private company limited by guarantee. The association has duties and rights to manage, maintain and insure the common parts of the building along with the individual flats.

Completion - The final step in the legal process of transferring ownership of a property e.g., when the documents in connection with a sale of land are signed sealed and delivered.

Concessionary Rent - A rent, which is lower than otherwise obtainable, granted as a privilege, sometimes with a gratuitous intent, to a particular tenant often at the beginning of the term of a lease.

Covenant - A legally binding promise, in a property context, the term is used to indicate the perceived ability of a tenant to meet his or her rent obligations- sometimes called covenant strength.

Demised Premises - The extent of land, (including any building or part of a building) subject to a lease.

Dilapidations - Those items of disrepair, which arise through breech of contract, especially by one of the parties to a lease, giving rise to a right to damages or remedial action.

Enfranchisement - In England & Wales where qualifying criteria are met, long leaseholders of flats have the right to purchase the freehold and superior lease such as a head lease of their building. This known as “The right to enfranchise.” The opportunity to exercise the right occurs in various circumstances such as if the landlord is in breech of an obligation under the lease or the landlord wishes to sell his freehold interest in the building.

Exclusive Rent - Originally rent payable under the terms of a lease, which imposed upon the tenant an obligation to pay the rates. More commonly, today a rent under a clear lease, which makes the tenant responsible for payment of rates, costs and services and other outgoings.

Fag End - A term used for a lease having only a short time to run and normally having only a nominal value.

Finance Lease - A financial arrangement. The lessor is a financier who acquires the asset and takes the benefit of any available capital allowances. The lessee is the person who actually wants to use the asset, pays a rent for it and is responsible for maintenance and insurance.
The availability of capital allowances provides a cash flow benefit to the lessor which is shared with the lessee in the form of reduced rental payments.  Rental payments over the term of the lease are sufficient for the lessor to recover the cost of the asset plus a return on its investment. At the end of the lease, the lessee has the right to require the lessor to sell the asset at the best price obtainable. The proceeds are then rebated to the lessee.

Fixtures - Chattels (or in Scotland) movables which are so affixed or annexed to land or a building as to become in fact a part thereof, thereby losing their character as chattels (or movables) and passing with the ownership of the land.
Whether or not a chattel or movable has become a fixture a fixture depends on the degree and object of annexation. For example, if the article cannot be removed without serious damage to itself or to the land or the building to which it is attached, then it will be as fixture.
However if the purpose of affixation is to enjoy the article such as fixing a tapestry to a wall rather than for the benefit of the building or the land, it may not have become a fixture.
Those fixtures, which are commonly regarded as easily removable are often, described as fittings, hence the term fixtures & fittings.

Full Repairing (and Insuring) FRI lease - A lease, under which the lessee is responsible for the whole cost of repairing and maintaining and insuring the building.

Greenfield Site - A site, which unlike a Brownfield site, has not been previously developed, or used other than for agricultural purposes or as an open space.

Ground Rent - A rent payable for land under a lease for a specified period, which historically imposed, on the tenant an obligation to build on the land. Sometimes used to describe the element of a geared rent which is payable to the landowner. The obligations of the lease may extend to require the landowner to arrange insurance.

Heads Lease - A leasehold interest held directly from the freeholder and subject to one or more under leases of the whole or part of the building.

Housing Corporation - A body first established by Act of Parliament in1964 which promotes voluntary, non-profit making Housing Associations to provide homes for people most in need. It registers Housing Associations so that they may receive public funds to build new homes or to renovate older property. It then supervises and controls them to ensure that those funds are properly accounted for and effectively used.

Investment Yield - The annual percentage return, which is considered to be appropriate for a specific valuation or an Investment, being expressed as the ratio of annual net income (actual or estimated) to the capital value. It is therefore a measure of an investor’s opinion about the prospects and risks attached to that investment. The better the prospects and the lower the risks, then the greater the expected yield and thus the greater the capital value. The required yield from an investment is estimated in the light of such factors as;

A. The security in real terms of the capital invested
B. The security in real terms and regularity of the income.
C. The ability to adjust the income to reflect market conditions.
D. The complexity and cost of management.
E. The ease and likely cost of realising the capital.
F. The tax position.

Investor - An investor holds property and lets it out, with a view to generating an income and capital gains in the long term. Property is a vehicle to be compared with equity and gilts for its investment performance.

Landlord - The owner of an interest in land who in consideration of a rent or other form of agreed payment, grants the right to exclusive possession of the whole or part of their land to another person for a specific and determinable period by way of a lease or a tenancy.

Lease -

A. The grant, subject to consideration of a right to the exclusive possession of land for a definite period (or one capable of definition) which is less than that held by the grantor.

B. The right so granted i.e. the leasehold estate.

C. The document granting the right.

Leasehold Reform. - Provisions made under the Common hold and Leasehold Reform Act 2002 which give improved rights and benefits to leaseholders such as the right to manage their own block of flats by the establishment of a “Right to Manage Company”. At the same time it includes safeguards to protect the legitimate interests of the landlord and other occupiers of the building.

Lessee - A person owning a lease.

Lessor - The Landlord, granting a lease to a lessee.

Listed Building - A building of special architectural or historic interest included on a list compiled and kept by the Secretary of State for the Environment under the Town and Country Planning Act. There are Three Grades of Listed Building;

1. Grade 1- Buildings regarded of exceptional interest
2. Grade 2-Buildings of special interests, which warrant every effort being made to preserve them.
3. Grade2* Buildings are particularly important Grade 2 buildings. The owner of a building must be informed (but not consulted beforehand) if a building is listed and they may not alter, extend or demolish it without listed building consent.


Listed Building Consent - Official approval must be sought to demolish or alter a listed building or a building in a conservation area. Planning permission is sought from the local Public Authority with final decisions on listing being made by the Department for Culture Media & Sport.

Market Rent - Rent currently payable in the Market

Novation - The transfer of all benefits and obligations under a contract. The transfer requires the consent of the person to whom the obligations are owed. This is to be contrasted with an assignment, which is the transfer of the benefit only of a contract or other right and may not require the consent of the person owning the obligation.

Option to Tax - A phrase used to describe an election to waive exception for VAT purposes. Some property transactions are subject to VAT. Others are exempt unless the owner opts to tax. If the owner opts to tax, any supply of that property for example, a sale or a lease is charged to Vat at the current standard rate. By opting to tax, the taxpayer will be able to recover any input tax suffered by him in relation to the property. The owner cannot revoke an option to tax.

Owner-Occupier - Owns and occupies premises for business or residential purposes.

Passing Rent - The rent ,.currently payable under the terms of a lease. It may differ from the estimated rental value of the property

Peppercorn Rent - A token rent payable as consideration to a Landlord being either a nominal amount of money or more imaginatively a peppercorn. In modern terms, this usually occurs when the tenant has paid a premium to the landlord.

Percentage rent (Turnover rent) - A rent, which is calculated as a proportion of the annual turnover of the lessees business. Usually, it does not fall below a base rent. More common in America although in recent years being applied with increasing frequency in the United Kingdom especially with regard to more profitable retail out lets.

Practical Completion - The date at which the architect or other specified person certifies that a building contract for practical purposes has been completed. Some minor works may remain outstanding before a final full certificate is issued.  From an insurance point of view, when the final certificate is issued, it usually signals the point at which the building ceases to be insured by a Contract Works Insurance policy and needs to be covered under a more standard Property Owners Insurance policy. Of course if the building remains empty, the insurers will probably want to apply terms & conditions and perhaps restrictions in insurance cover may apply.

Prelet - A binding commitment from an occupier before building works have been completed, that it will enter into a lease on specific terms on completion of the building works.

Prime Tenant - A tenant whose reputation is such that there is no doubt that they will fulfil their obligations under any lease they enter in to .

Private Finance Initiative - The initiative launched by the Government in 1992 to find ways in which the private sector may be encouraged to meet needs traditionally met by the public sectors. It is intended that billions of pounds worth of infrastructure projects will be developed as a result. Dedicated units have been set up in various government departments as well as a specialist unit within the Treasury to promote the initiative.

Privity - Under a lease, the original landlord and tenants are subject to privity of contract and are bound by all the provisions of the lease for as long as the lease lasts. It is under this rule that an original tenant remains liable for the entire term of the lease, even though he may have disposed of his interest many years before. Subsequent landlords and tenants are only bound by those provisions of the lease, which” run with the land” which of course normally means most of them. Insurance cover exists to protect Property Owners and thereby help them protect their obligations under privity

Rent Back - Commonly used today to mean full open market rent under a full repairing and insuring lease.

Rent Free Period - A period, when rent is not charged as part of an offer to a tenant on the grant of a lease. In normal market conditions, a rent-free period is usually a few weeks or a few months to assist the tenant with fitting out costs etc In a difficult market, rent free periods are used to attract new tenants.

Rental Value - the rent that a property may reasonably be expected to command in the open market at a given time subject to the relevant terms of the lease.

Residual Value - In a finance lease, the value of an asset at the conclusion of the lease terms. In appraising a property development, the amount payable to pay for the site, i.e. the anticipated developed value less the development costs.

Restrictive Covenant - An obligation not to do something, such covenants are said to” run with the land “and there fore bind future freehold owners unlike” Positive covenants “obligations to do something. The distinction does not apply to leasehold land.

Sale & Leaseback - A sale of a building, which is immediately leased back to the seller from the buyer.

Service Charge - The amount payable by the tenant on account of services provided by their landlord. In the specific case of residential blocks of flats as defined for the purposes of sections 18 to 30 of the Landlord and Tenant Act 1985, this means an amount payable by a tenant, as part of or in addition to rent for services, repairs, maintenance or insurance or the landlords cost of management, the amount varying with the relevant costs.( including overheads)

Social Ownership - Comprises Housing Associations, Local Authorities, Tied cottages etc.

Speculator - Buys and sells property with our without tenants or buys land and develops it.

Stamp Duty - Stamp Duty on Uk Land and Buildings is largely governed by a self assessed tax called stamp duty land tax. It is charged on acquisition, creation surrender, release or variation of any estate, interest, right or power in or over Uk land, or of the benefit of an obligation or condition affecting the value of UK land.

Tenants Fixtures - Objects installed by a tenant, which although strictly fixtures, are capable of being removed without doing serious damage to the building. They are therefore legally removable by the tenant on vacating the premises.
The qualify as such, they must be;

A. Trade fixtures, i.e. attached to the property for the purpose of the tenants particular trade
B. Ornamental and domestic fixtures, i.e. chattels or movables affixed to a house for ornament or for better enjoyment of the object itself.
C. Agricultural fixtures installed by a tenant farmer for the purpose of agricultural operations.

Tenancy Agreement - A tenancy agreement is a contract between a tenant and a landlord. It may be written or oral.  The tenancy agreement gives certain rights to both parties, for example the tenants right to occupy the accommodation and the landlords right to receive rent for letting the accommodation.  A number of agreements are common within the market, which have been established by the Housing Acts, namely Assured tenancies. Short hold Tenancies ( Scotland) and Assured Short hold Tenancies.

Tenants Improvements - Improvements to land and buildings or to meet the needs of and carried out wholly or partly at the expense of the tenant. When subsequently seeking a renewal of their lease, they may under the Landlord and Tenant act 1954 be entitled to the rent being assessed on the assumption that their improvements had not been carried out. If they vacate the premises they may be entitled to compensation under part 1 of the Landlord and Tenant act 1927, the basis of such compensation will reflect the extent to which their improvements have increased the rental value of the premises to the benefit of the landlord.

Upward/Downward Rent Review - A rent review calculated under a clause in the lease which requires that such rent becomes payable regardless of whether this is equal to, greater or less than the rent payable immediately before the review.

Upward only Rent review - A review where the rent payable following a review date is greater than the rent
payable immediately before the review or the amount calculated upon review under the terms of the lease.

Void.
A. Empty or unusable space. Especially in a building
B. Unoccupied or unlet space, particularly in a multi tenanted building
C. Having no legal effect, e.g. If an alleged contract.