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Additional borrowing    The amount of additional funds that could be raised following a remortgage of the size specified by LTV required.

Advance
        The money lent to you as a loan or mortgage.

Adverse credit    A poor credit score or rating.

Amount due    The amount of rent legally due for the specified rental period.

Amount received    The amount of rent received during the specific rental period.

APR
    Annual Percentage Rate.  This is the true cost of borrowing as it also includes administrative charges associated with the loan.  It’s the one you should use with which to compare the borrowing costs of different loan providers.

Arrangement fee    The charge levied by lenders for arranging a loan.  It can often be out of all proportion to the work done and can be significant.

Arrears    The outstanding overdue loan payments.

Assignment    The transfer of a lease from one party to another.

Balance    The sum of the amount due and amount received during the specified rental period.

Base rate
    This is shorthand for the Bank of England borrowing rate.  It’s often used by lenders when quoting their borrowing costs.  Frequently special lending deals use it as a benchmark i.e. the rate is 1% over ‘base’.

Bond    Deposit paid by tenants to secure a rental property.  It is their to ensure should any damage be caused by the tenant that the landlord has access to means that can be used to effect the repairs.

Broker    These are financial ‘middle men’.  They act for their client to source the most suitable products for them.  Landlords would most commonly come across them when trying to locate a mortgage or insurance policy.

Buy-to-let    A generic term adopted by the residential investment industry with which to label itself.

Capital    A financial expression that describes a store of wealth.

Capital appreciation    The increase in the value of a property.

Capped Rate    A loan where the interest rate is prevented from rising above a predetermined level i.e. it’s cap.

‘Cash back’    A term that refers to the repayment of monies to the borrower on taking out a loan.

‘Caveat emptor’    Latin expression that means ‘buyer beware’.  Traditionally used by surveyors to remind purchasers that you better be sure on what you are buying before you hand over the money.

CCJ    County Court Judgement – this is the ruling issued by the Courts where a debtor has failed to pay off their debts.  It is used by landlords and particularly credit reference agencies for identifying tenants that may represent a financial risk.

Chattels    Items in a property that can be moved as a posed to fixtures which are attached to the structure.

Completion    Often referred to in respect of a property purchase as the day when a property legally transfers from one party to another.

Content insurance    This insurance covers items within the buildings fabric.

Contract    Legally binding agreement most commonly referred to during the purchase of a property.

Conveyancing    This is the legal process of transferring the legal rights of ownership from one party to another.

Covenant    A restriction placed on the use of land by an adjoining land owner.

‘Crashpad’    Microflat found in city centres, meant for use by urban professionals who would often have another family home in the country.  Modern version of the ‘pied de terre’.

Credit check    The process that is undergone to ascertain the financial worthiness of an individual.  Undertaken by lenders and landlords prior to entering into an agreement.

Date due    Date that the rent is legally due according to the Tenancy Agreement. It is generated by the Property Manager using the Start Date and Frequency.

Date of entry
    Scotland.  The date the buyer takes possession of the property.

Date valued    The date when the property valuation was carried out.

Deed    A legal document that normally contains an undertaking between parties.

Deposit    Money used to secure purchase of a property or by tenant as a bond to secure a rental property.

Description  
  The Description of tenancy unit is important when a property is divided into a number of separate letting units i.e. where rooms or flats are rented separately so that the tenancy can correctly identify the tenant and their accommodation.

Disbursements
    charges paid out by solicitors in connection with the purchase or sale of a property.  These include local authority searches, land registry fee

Discount rate    A mortgage interest rate which is below the prevailing rate for a limited period of time.

Early redemption    The ending of a loan before the period has run its full course.  Often associated with having to pay a fee to the lender which, is referred to as an early redemption charge.

Endowment    The investment savings policy which traditionally accompanied a mortgage and was the main ‘repayment vehicle’ for a loan.  As a result of falling returns during the 90’s they have lost credibility in certain circles.

Equity    This is a measure of the capital in a property which does not have a loan secured against it.  For example a £100,000 house with a £75,000 loan would leave the owner with £25,000 of equity.

Estimate date    The date that the property’s value was estimated.

Estimated value
   The value of the property on the given date.



Exchange    The exchange of contracts is the point when the purchase of a property becomes binding on the purchaser.  At this point they are required to pay over a non-refundable deposit which is forfeited should the purchaser fail to complete the purchase.

Existing equity    The equity is the sum remaining as a result of current value of the property or purchase price if the former is not given, minus any outstanding loans.

Expiry of conditions    Where a loan has an introductory rate it is possible to record the date when this expires.  Frequently the mortgage company applies a significant charge for the early redemption (repayment) of this type of loan.

Exposure
    The degree that the investor is subject to the financial risk inherent in any investment.

Fixed rate    A mortgage with a loan that has a fixed rate of interest for part or all of the loan period. 

Fixtures    Items fixed to the building and included in a sale unless specifically excluded.

Flexible mortgage    A mortgage where over and underpayments are accepted.

Flying freehold    Where the owner of the freehold does not own the property below i.e. where a bedroom of a house projects over the entrance hall of another property.

Freehold    The most complete form of ownership where the holder of the right owns the land and even the air above it.

Frequency    How often the rent is due as set out by the Tenancy Agreement.

Furnished 
   This field identifies a property as furnished or unfurnished.  It’s important in setting the Terms of the tenancy agreement N.B. an unfurnished property can still include white goods, carpets and curtains.

Gazumping    Term used to describe the practice of purchasing a property after a sale is agreed by offering a higher price.

Gearing    Financial expression referring to the ratio of income generated by an asset compared to the costs of borrowing the funds to secure it.  A highly geared property is one where a high proportion of the rent is paid out in loan repayments whilst the opposite is true for a lowly geared investment.

Generate    Clicking on this button produces a form utilising information from the selected property and tenancy.  The form is then automatically saved as a generated form.

Ground rent
    The rent paid by a leaseholder to the freeholder in return for the use of their land on which the leaseholders property is situated.

Guarantor    A person who commits to being responsible for a loan in the event that the borrower can no longer make repayments.

HIPs    Home Information Packs.   To be introduced in summer 2007.  These packs will be mandatory for all sellers of residential property and will contain basic information about the repair and condition, evidence of deeds and local authority searches.  It is anticipated that they will cost between £700-1000.

Homebuyers report    A cheaper and more basic surveyors report carried out for the purchaser prior to exchange.  A homebuyers survey will not include an inspection of the loft.

IFA    Independent Financial Adviser – regulated financial adviser

Interest only    A type of mortgage where only the interest is paid and the outstanding balance always remains.  This ultimately is normally repaid using a repayment vehicle.

Land Registry    This is the government body responsible for maintaining the registry of land ownership in England & Wales.  It allows people to know who owns what piece of land and is also fundamental when it comes to the transfer of land from one party to another through the sale or purchase of land or property.

Loan Interest    Interest payments on a loan.  These payments are deductible in calculating your overall income tax liability under the land and property section on your personal tax return.

Loan type 
   Used in the Property Manager to define whether the loan is a mortgage or unsecured personal loan.

Lease
    The document that contains details of the rights of a leaseholder in respect of their property.

LIBOR    London Inter Bank Offer Rate.  This is the rate that banks are prepared to lend to each other.  It’s another benchmark rate against which other loan interest rates can be ‘pegged’.

Local authority search    The check carried out by conveyancers with the Local Authority to check for factors that might affect the value of a property.  These include: mining activity, planning restrictions, etc.

LTV    Loan to value is an important ratio that measures the size of a loan in relation to the value of a property.  This is important when looking at the size of the mortgage available to a purchaser (max normally 85%).

Market Value    This is the criteria used by surveyors to value property.  It’s assessed as what a standard buyer would pay for the property in its current state at the time of valuation.

Maisonette    A two storey horizontally arranged living space like a flat but with it’s own private entrance.

Management company    A company set up to organise the running of communal services found in a block of flats such as cleaning, decoration or concierge.  The company can be owned by the residents or by a specialist management company.

Memorandum of sale    A written summary of the terms and conditions of the sale.  Sent to seller, buyer and solicitors once the sale is agreed.

Micro flat    A very small purpose built apartment where the size is below 350sft and often found in city centres.  Designed for one person living where living/bedroom/kitchen functions are combined into one space.

Monthly cashflow   Measures monthly revenue (income after deductions) and is calculated by taking regular expenses including loan payments from the rent.

Monthly outgoings    Regular expenses incurred every month or can be calculated on a monthly basis.

Monthly rent   
The rent for the property calculated on a monthly basis as specified in the Tenancy Agreement.

Mortgage deeds    The legal agreement between the lender and borrower that contains the terms of the loan agreement.

Mortgagee    The mortgage provider.

Move out    The date on which the tenant vacates the property.

LTV required    This is to enable the user of the Property Manager to specify the size of any loan required as a proportion of the Estimated Current Value of the selected property.

Negative equity    Where the property value is less than the purchase price.

Net costs    Comprises of cost of purchase, purchaser’s costs, works and other costs.

Net profit / loss    
Net value minus net costs.

Net value    Value of the investment property net of seller’s costs.

NHBC
    National House Building Council provides insurance for builders, which also acts as a guarantee for purchasers and covers new build property against defects for 10 years.

Non – status    Refers to the financial credentials of the borrower i.e. not in guaranteed employment or with poor credit history making obtaining a standard mortgage impossible.

Off-plan    Buying a new build property where construction has yet to be  started and therefore making a decision based purely on the plans for the development.

Original LTV (%)
    The size of the loan expressed as a percentage of the original purchase price of the property.

Other costs 
   Other capital costs incurred in establishing the investment property.

Payment date    The date the rent was received.

Payment type    In the Property Manager under loans it is possible to record the type of payments as either capital and interest or where no payments are made towards the original capital sum, interest only.

Portfolio
    The collective name for the entire holdings of a property investor.

Portability    Refers to the ability of a borrower to transfer a mortgage from one property to another.
   
Potential mortgage    The size of the mortgage generated by the figure input in LTV required.

Premium
    The payment required for insurance.

Preview    View blank forms in either word or as a PDF.

Primary contact   
The main contact for a tenancy.

Purchase date
    The date of Final Completion.

Purchase price   
The price paid for the property.

Purchasers costs    Comprises of legal costs, stamp duty, agents, surveyors, mortgage costs and miscellaneous costs.

Rate 
   The interest rate being charged by the lender.  It is best to use a standard measurement such as the APR to enable the comparison of rates.  The comparison of these rates may be complicated because some mortgages have an introductory rate.

Redemption
    The ending of a loan agreement, normally involving the payment of some or all of the outstanding amount.

Remortgaging    The replacement of the existing mortgage by another, which is often used to repay the outstanding loan.  Where the new mortgage is larger than the existing, there will often by a return of equity to the borrower in the form of a cash payment.

Rent due    Where an informal arrangement is agreed with the tenant on when the rent is due which differs from that contained in the Tenancy Agreement.

Repayment mortgage 
   The traditional form of property loan where a payment is made that covers the interest charges and also goes towards the ultimate repayment of the loan over the agreed term of the mortgage.

RICS    Royal Institute of Chartered Surveyors.  The professional body for surveying professionals.

Right to buy    A scheme originally set up in the 80’s which allows tenants to purchase their property often at a discount to the market value.

Ripple effect    The way increases in property value spread from their starting point (normally in London) outwards.

ROCE    Return On Capital Employed.  The financial gains made from an investment as a proportion of the original capital invested.  Often used as a measure of the true value of your investment returns.

Searches    The request for information, made by your solicitor or yourself to the relevant organisation for information about a property you are proposing to buy.

Self certification    Declaration of earnings to a lender of the amount and nature of an applicants income.  It is then used by them to ascertain whether they are prepared to advance the required loan.

Service charge    Money paid to the management company by the tenants in return for them managing the communal services i.e. organising the maintenance of a lift, sorting out the redecoration of the external woodwork, etc.

Snagging    Architectural term that refers to the process of finding faults in  a new build property prior to the hand over from the developer.

Sitting tenant    A person that has the right to remain in a property, although there is no tenancy agreement between the landlord and tenant.

Stamp duty    Tax incurred by the purchaser of a property.  Currently the threshold for the starting rate of 1% is on properties of £125k and above.

Standard construction    Brick built house with tile or slate roof.

Start date    The date the tenancy commences (commencing means on and including this date)

Studio flat
    Single room property with separate bathroom and possibly kitchen.  Similar to the microflat.

Subject to contract    This is a disclaimer that surveyors and estate agents use to ensure that whilst a property may be under offer there is no legally binding agreement between the parties until contracts are signed and exchanged.

Sum assured    The payout value of an insurance policy.

Syndicate    These are groups of investors that have got together either independently or through the actions of a facilitator.  Their aim is to bulk buy off plan property investments and in so doing extract a discount to the market price for these properties.

TDS    Tenancy Deposit Scheme.  To be introduced by the Government in an attempt to prevent disputes arising between landlords and tenants over the return of their deposit at the end of a tenancy.

Tenancies
    The number of tenancies secured against the specified property.

Tenant
    The person renting a property.

Term    The length of the tenancy.  This has a practical minimum of 2 months when a Section 21 Notice is served concurrently on the tenant (see Landlords Bible for more guidance.)

Title deeds 
   The legal documents that provide legal ownership to a property.

Total loan    Total amount of loan funds secured against a property N.B. system allows a maximum of two.  If this causes a problem please go to Your Forum – bugs or fixes or e-mail us at ideas@propertyhawk.co.uk.

Tracker rate    Where a mortgage interest rate relates to that of a benchmark rate such as the Bank of England Base Rate.

Under offer    Expression used by estate agents to describe a property where the seller and purchaser have agreed the terms of a sale but have not necessarily entered a binding contract.

Vacant possession    A property that is empty and therefore ready for immediate occupation.

Valuation    The process by which a property is valued.  Several of these can be carried out during a single purchase.  The first is a valuation for the mortgage company to ensure that their security is adequately protected.  Frequently the purchaser will also instruct a valuation such as a Homebuyers Report, which gives them information on the repair and value of the building.

Vendor    The seller.

Works    The building or renovation costs carried out on the property.

Yield    The measurement of the ratio between income and capital value of an investment.  Where a property is worth £100,000 and produces £10,000 of rent pa it would have a gross yield of 10%.  After taking off letting agents fees and running expenses of £2,000 the net yield for the property would be 8%.



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FORMS FOR LETTING PROPERTY

FREE TENANCY AGREEMENT (AST)
FREE SECTION 213 NOTICE
FREE PROPERTY INVENTORY
FREE SECTION 21 NOTICE
FREE SECTION 8 NOTICE
FREE TENANCY GUARANTOR FORMS
SERVING NOTICE

FINANCE AND TAX ON RENTAL PROPERTY

INCOME TAX
CAPITAL GAINS TAX
LANDLORD INSURANCE
PROPERTY INVESTMENTS
OTHER BTL FINANCE
BTL FINANCE - THINGS TO KNOW
BUY TO LET MORTGAGES
BTL MORTGAGE BROKERS
SELLING A BTL PROPERTY

RENTAL PROPERTY REGULATIONS

GENERAL SAFETY
GAS SAFETY
ELECTRICAL SAFETY
FURNITURE AND FURNISHINGS
FIRE SAFETY
TV LICENCES
HMO (HOUSE IN MULTIPLE OCCUPATION)
TENANCY DEPOSIT SCHEME (TDS)
ENERGY PERFORMANCE CERTIFICATES
COMMUNAL HEATING REGULATIONS

INVESTING IN BTL PROPERTY

A GUIDE FOR NEW LANDLORDS
WHICH PERIOD OF PROPERTY
CALCULATING RETURNS
RENTAL YIELDS
FINDING PROPERTY
SELECTION STRATEGY
INVESTMENT CHECKLIST
PROPERTY AUCTIONS
BMV PROPERTY
BUYING OFF PLAN
BUYING APARTMENTS
BUYING HOUSES
BUYING HMO'S
ALTERNATIVE INVESTMENT
KNOWING THE RISKS
PROPERTY INVESTMENT CLUBS
RENTAL TYPES

MANAGING RENTAL PROPERTY

GIVING NOTICE TO LEAVE
NON - PAYMENT OF RENT
TENANT ABANDONMENT
GETTING YOUR MONEY BACK
THE TENANT WONT MOVE OUT
THE TENANT DOES A BUNK
SQUATTERS
RAISING THE RENT
REDUCING THE RENT
REPAYING THE TENANCY DEPOSIT
FAIR WEAR AND TEAR
MOULD AND CONDENSATION
MAINTENANCE OF A RENTAL PROPERTY
APPLIANCES
LANDLORD ASSOCIATIONS

 

LETTING RENTAL PROPERTY

TEN STEPS TO LETTING
PROPERTY MARKETING
WRITING A LETTING ADVERT
FURNISHING A PROPERTY
LETTING AGENT OR DIY
SELECTING A LETTING AGENT
VETTING TENANTS
TENANTS ON BENEFITS
LETTING TO STUDENTS
PREPARING AN INVENTORY
PROPERTY HANDOVER
RENTAL DEPOSIT
TERMS OF A TENANCY
LENGTH OF A TENANCY
RESPONSIBILITY FOR REPAIR AND MAINTENANCE
TENANCIES IN SCOTLAND
ALTERNATIVE TENANCIES
LETTING TO TENANTS WITH PETS

 

LEGISLATION OF LETTING PROPERTY

INTRODUCTION
TENANCY DEPOSIT DISPUTES
ARBITRATION
ALTERNATIVE DISPUTE RESOLUTION
TRIBUNALS
HOUSING ACT APPEAL DISPUTES
THE LANDS TRIBUNAL
RIGHTS OF LIGHT APPLICATION
APPEALS FROM LEASEHOLD VALUATION TRIBUNALS (LVT's)
POSSESSION PROCEEDINGS
POSSESSION - SECTION 8 NOTICE
POSSESSION - SECTION 21 NOTICE
SECTION 21 TIMETABLE AND PROCESS
N5B POSSESSION
POSSESSION ORDERS
GROUNDS FOR POSSESSION
PREPARING FOR A POSSESSION HEARING
LEASEHOLD DISPUTES
HARASSMENT BY LANDLORDS
RENT DISPUTES BETWEEN LANDLORD & TENANT
FAIR RENT (RAC)
MARKET RENT UNDER AST
LEASEHOLD VALUATION TRIBUNALS
MODIFICATION OF RESTRICTIVE COVENANTS