I'm getting tongue-tied by landlord lingo - help!

Question

Answer

You’re not alone in being confused. It isn’t only hard to master the lingo when you’re new to the industry -with the amount of jargon flying around nowadays, even old hands are finding it hard to keep up with lettings language.

We’ve put together a guide to try and help decipher some of the traditionally tricky terminology that you might come up against in day-to-day landlord life. However, there’s always something new cropping up, so do add anything else you find helpful in the comments!

A

• Abandonment: Abandonment occurs when a tenant moves out of a property before the tenancy has ended, without informing their landlord. The tenant still has a legal right to return and take up residence at any time and it is a criminal offence for landlords to do anything to prevent the continuation of the tenancy.
• Arrears: Money left unpaid by a tenant after the date given in the tenancy agreement
• Article 4 Direction: A ruling that allows local authorities to limit the number of HMOs in a specific area – for example no more that 10% HMOs in each council ward.
• AST (Assured Shorthold Tenancy): The most common form of tenancy arrangement. An assured shorthold tenancy offers the landlord a guaranteed right to repossess his/her property at the end of the term stated in the tenancy agreement.

B

• Break Clause: A break clause will usually allow either landlord or tenant to give two months written notice at any stage after a particular date or period of the tenancy, thus terminating the tenancy earlier than the end of the original fixed term.
• Buy-to-Let Mortgage: A type of mortgage specifically designed for people buying a property with the intention of letting it out. Applicants are now subject to the same level of testing as residential mortgages.

C

• Council Tax: A local authority tax, which is usually the responsibility of the resident to pay, except in the case of HMO’s where the responsibility usually falls to the landlord.
• Covenants: Rules and regulations governing a property, contained in its Title Deeds or Lease. These regulations are often built into a tenancy agreement in order for a tenant to comply with the requirements of the property.
• Custodial tenancy deposit scheme: A free tenancy deposit scheme, such as the Deposit Protection Service. The scheme holds your tenant’s deposit throughout the period of the tenancy, repaying it when they leave the property.

D

• Deed of Surrender: A legal document transferring property ownership for a given time period, provided certain conditions are met. A deed of surrender allows a tenant relinquish his or her claims on a property to the landlord, no questions asked.
• Deposit: A pre-agreed amount money held by the landlord or agent for security against damage to a property. The landlord or agent must register the tenancy details within 30 days of the tenancy starting. At the end of the tenancy the tenant has to be notified of any deductions.
• Dispute resolution: A process in which any disagreements over the fairness of the withholding of a deposit is referred to an outside source, to be adjudicated by an impartial individual. This is managed by your tenancy deposit scheme, and follows a clear process to ensure a fair hearing for both landlord and tenant. Once evidence has been examined, a report is issued and the deposit is paid accordingly.
• Duty of Care: An obligation owed to others, specifically Landlords and Tenants, to provide the correct advice regarding lettings and ensure the well-being and safety of those who may visit the property.

E

• EPC Certificate: A certificate assessing energy features. The certificate is based on the construction and type of dwelling and relevant fittings (heating systems, insulation or double glazing, for example) – the property is then rated from A (best) to G (worst). An EPC is a legal requirement in order to let a property, and each certificate lasts 10 years. By 2020, it will be required that every rented property has an EPC rating of at least an E in order to be legally able to be let.

F

• Fees: A change is afoot in the letting industry, which will recently see the law banning letting agents from charging tenants any form of fees.
• Fixtures and Fittings: All non-structural items built-in to the purchase/rent of a property.

G

• Gas Safety Regulations: The Landlord must ensure that a gas safety check is carried out prior to a let and then annually after that. An authorised registered engineer must carry out the check and a copy of the record must also be given to the tenant within 28 days.
• Ground Rent: The annual fee levied by the leaseholder to the freeholder.
• Guarantor: The lender may sometimes require a borrower to appoint a guarantor. This is someone who agrees to pay the borrower's liability if the borrower cannot pay. A guarantor is someone who agrees to pay the rent on behalf of the tenant if they are unable to meet payments, this is usually agreed in writing when the tenancy agreement is signed.

H

• HMO: House in multiple occupation, refers to bedsits or flats which normally offer a self-contained room with either cooking facilities in the room, a shared kitchen or shared bathroom and toilet facilities. Under the Housing Act 2004 it will cover any property occupied by more than one household that is a converted building even if the flats are not self contained.
• Household Insurance: An insurance policy that protects against loss or damage to the property caused by fire, natural causes or acts of vandalism.

I

• Insurance backed tenancy deposit scheme: The Housing Act 2004 requires landlords and letting agents to protect deposits on assured shorthold tenancies in a scheme such as the Tenancy Deposit Scheme, or SafeDeposits Scotland Ltd in Scotland.
• Interest Charges: The charges that banks make on a loan, calculated as a percentage of the amount borrowed.
• Inventory: An inventory is a detailed list of everything that is provided with the property, and the condition that the property and it’s contents were in when the tenant took over the tenancy. It should include everything, from flooring, to white goods. The inventory is the key tool you as a landlord have to refer back to should there be any disputes over the deposit at the end of the tenancy.

J

• Joint Income: The total gross income of more than one borrower in a joint mortgage.
• Joint Tenants: A concurrent estate or co-tenancy is a concept in property law which describes the various ways in which property is owned by more than one person at a time. If more than one person own the same property, they are referred to as co-owners, co-tenants or joint tenants.

L

• Lease: A legal document by which the freehold (or leasehold) owner of a property lets the premises or a part of it to another party for a specified length of time, after the expiry of which ownership may revert to the freeholder or superior leaseholder.
• Leasehold: Land or property held under a lease.

P

• Peppercorn Ground Rent: A nominal periodic rent usually paid annually.
• Prescribed Information: This refers to information which the Housing Act 2004 Sections 213 (5) - (6) and The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 requires this to be provided to the tenant within 14 days of the deposit having been received.
• Public Liability Insurance: Insurance which covers injury or death to anyone on or around your property.

R

• Repossession: When the mortgage lender takes possession of a property due to non-payment of a mortgage.
• Right to Rent: You must check that a tenant or lodger has the legal right to reside in the UK. Before the start of a new tenancy, you must check all tenants aged 18 and over, even if they're not named on the tenancy agreement.

S

• Section 8: A section 8 notice is a ‘fault based’ possession notice, and can be issued if your tenant has breached the terms laid out in the tenancy agreement (the most common being one involving rent arrears) and you wish to regain possession of the property.
• Section 21: The legal eviction notice template notice a landlord can give to a tenant to regain possession of a property at the end of an Assured Shorthold Tenancy (AST).
• Section 24: Section 24, a change to the way BTL finance costs are accounted, was introduced in April 2017, and is being phased in over the next four years. In essence, the changes will mean that landlords will no longer be able to offset mortgage interest against their tax. By 2021, when the changes have been fully phased in, rental profit will be taxed with a maximum deduction for finance costs of 20%, the basic tax rate.
• Share of Freehold: The tenure of a commercial property or flat. Typically, the division of one large commercial unit or block of apartments results in the creation of leases and leasehold property, with one freeholder who retains absolute right over the property and land.
• Stamp Duty Land Tax: When an individual purchases a property in the UK, this is the tax they must pay to the UK government. In 2016 this was controversially increased to 3% on top of all purchases of BTL properties and second homes.

T

• Tenancy deposit scheme: The Housing Act 2004 requires landlords and letting agents to protect deposits on assured shorthold tenancies- the TDS are one such scheme. They provide. We provide insurance backed tenancy deposit protection with free, impartial dispute resolution for when disagreements arise over how the money is divided.
• Tenure: Conditions on which a property is held (i.e. freehold or leasehold)

U

• Universal Credit: A variation on the traditional benefit system. Instead of housing benefit being paid directly from the council to the landlord, Universal Credit sees recipients receiving all their benefit payments (housing assistance, child tax credit, job seekers allowance, disability allowance etc.) paid into their own bank account in one lump sum, once a month. They are then responsible for paying their own bills, and rent.

V

• Variable Base Rate: The basic rate of interest charged on a mortgage. This may change with market conditions, meaning monthly payments can go up or down.

W

• Wear and tear: Wear and tear is the amount of damage you would expect to see in a property upon the end of a lease. This would vary depending on the length of the lease and the amount of people living in the property.

Y

• Yield: Profit from a property calculated as a percentage of its value