Glossary of Terms
There are many thousands of words and phrases associated with the property industry, some of which are very common and some of which are rarely used. This guide is intended to give you an overview of the most common words and phrases we use.
As always, if you need a more detailed explanation or clarification, please contact us and we’ll give you all the information you need.
Arbitration – A method by which disputes between landlord and tenant – usually pertaining to rent reviews and lease renewals – can be resolved without having to go to court. An arbitrator will determine a dispute only using the evidence submitted by the parties.
Break Clause – An opportunity granted to the tenant to terminate the lease at a pre-agreed date before its quoted expiry date.
Business Rates – These are dues paid by businesses to the local council as a contribution to the cost of local services and amenities.
Capital Value – The monetary value of an asset.
Commercial Property – Property and land whose primary intended use is for business purposes, such as offices, shops and industrial units.
Completion – The end point in a property transaction where the legal ownership of a property (commercial or residential) is transferred from seller to buyer and possession can occur.
Covenant – A clause in a lease requiring the tenant to act in a certain way, or indeed to refrain from acting in a certain way.
Dilapidations – These are defects or disrepairs which tenants are required to deal with (‘to make good’) or pay to have remedied when a lease comes to an end.
Exchange – The point at which contracts are exchanged between buyer and seller. This is a legal contract which neither party can walk away from without incurring a financial penalty.
Freehold – A property owned by the title holder in perpetuity.
FRI Lease – A Full Repairing and Insuring lease requires the tenant to bear the costs of all repairs and insurances for the duration of the lease term.
Land Registry – The Land Registry is a government department responsible for keeping and maintaining the Land Register of England and Wales. The department registers title to land in England and Wales and records dealings, such as sales and mortgages, with registered land. Searches will be requested from the Land Registry by solicitors as part of all property transactions.
Leasehold – The right to occupy a specified part of a building – such as an office block or apartment – for a specified length of time as written into the lease.
Lease – A lease is a binding contract in law which sets out the terms and conditions of the tenancy agreement between landlord and tenant and defines the rights and obligations of each party. It is enforceable by law.
Managing Agent – A Managing Agent is a firm appointed by a property owner to manage the property on their behalf. Instructions usually include collection of rent and insurance premiums from the tenant, as well as service charges and inspections to ensure the property has been satisfactorily maintained.
Market Rent – The annual rent a property can be expected to achieve on the open market with vacant possession.
Rent – A tenant’s regular payment to a landlord for the use of property or land.
Rent Review – The three to five-yearly review of the tenant’s rent paid to the landlord, usually on an ‘upwards only’ basis.
Service Charge – An independently audited amount of money as outlined in the lease used to cover the cost of maintaining common parts of the building (halls, gardens, heating, lighting, porter etc.) and a proportionate share of the costs of repair or redecoration of the building, for example roof or lift repairs.
Termination – The end of a lease, either at the end of the contractual term or by the exercise of a break clause by one of the parties.
Uniform Business Rate – The UBR (also known as the ‘multiplier’) is set annually by the Valuation Office Agency (VOA), an executive agency of HMRC and determines the percentage of the rateable value of your property that you will pay in business rates.
Use Classes –The separation of the uses of specific land and buildings into various categories, known in the industry as ‘use classes’, as laid out in The Town and Country Planning (Use Classes) Order 1987.