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Abandonment

the voluntary relinquishment of a property or an interest in a property, where there is no intention of resuming possession of the property or of maintaining rights in it

Alienation

the transfer of an interest in property to another - eg sale of a freehold or the grant or assignment of a lease

Amortisation

the gradual reduction of a debt or liability, especially by means of equal periodic payments at stated intervals which, in total, are sufficient to repay the capital or principal at the end of the given period and to pay interest on the outstanding balance throughout the period

Arbitration

an alternative method of resolving disputes paid for by the parties, determined by an arbitrator

Assignee

party to whom a lease has been assigned

Assignment

the transfer of a lease from one party to the other. Once a lease has been assigned, the assignee becomes responsible to the landlord for paying the rent and fulfilling the other obligations of the lease

Assignor

one who assigns a lease

Break clause

a clause in a lease giving either or both parties the right to terminate a lease in specified circumstances

Building lease

a long-term lease, imposing an obligation on the lessee to erect one or more buildings on the leased land, which will become the property of the landlord after the lease expires

Capital allowances

tax allowances that the owner of an asset can offset against taxable income or profits. They provide a deduction for tax purposes in lieu of the depreciation charged in accounts

Capital value

the value of an asset, freehold or leasehold, as distinct from its annual or periodic (rental) value

Capitalisation

the value of an asset assessed in relation to the expected future income (rental) stream

Comparables

in determining the initial rent, or the market rent during the course of a rent review, parties and those acting on their behalf will have regard to evidence of rents for similar properties. Comparables may also be used to analyse properties' sale values

Completion

the point in a property transaction at which the legal transfer of a property from the seller to the buyer is finalised (contracts will have previously been exchanged see exchange). The buyer can take possession of the property from the completion date

Contracting out

agreement between landlord and tenant that the security of tenure provisions of Part II of the Landlord and Tenant Act 1954 shall not apply

Covenant

may be either a clause in a document requiring a party to do something or to refrain from doing something; or a term denoting the worth of a tenant which will have a bearing on the value of the lease

Demised premises

premises which are the subject of a lease

Derogation from Grant

where a landlord having granted rights to a tenant acts so as to interfere with the tenants ability to enjoy that right

Determination

the bringing or coming to an end of a lease, or an estate or interest in property, especially by notice as expressly provided for in the lease or as a consequence of a fundamental breach of a lease condition

Development

property development refers to either the construction of new buildings or refurbishment of existing buildings in the pursuit of gains

Dilapidations

a state of disrepair in a property where there is a legal liability for the condition of disrepair

Distraint

the enforcement of distress for rent

Distress for rent

a remedy enabling landlords to recover rent arrears by the seizure and sale of goods within the defaulting tenant's property

Exchange

the point at which contracts are exchanged between the buyer and seller. This event creates a binding contract on both the buyer and seller and it is not possible to back out once contracts have been exchanged without risking serious financial penalties

Forfeiture

forfeiture of a lease occurs when the landlord exercises his right to regain possession against the wishes of the tenant, where there is a breach

Freehold

an owners interest in land where both the property and the land on which it stands belong to their owner indefinitely ie the outright ownership of a property

Freeholder

one holding the freehold

Full repairing and insuring (FRI) lease

an FRI lease requires the tenant to pay all running costs, eg maintenance, rates and insurance

Head lessee

where a sub-tenancy (or series of subtenancies) exists, the highest leaseholder in the chain (who pays rent to the freeholder)

Headline rent

the rent apparently being paid, which may not take account of concessions such as rent-free periods

Independent expert determination

an independent determination of the rent to be paid on review. Independent expert determination differs from arbitration in that the independent expert is not confined to the evidence presented by the parties

Indexation

the regular adjustment of a rent in accordance with a specified index, eg the Retail Price Index

Institutional lease

the typical institutional lease has been developed in England since the 1960s to meet the requirements of the pension funds and insurance companies investing in property. Generally tenants pay for all repairs and insurance to give the landlord a clear net income and minimise his management costs

Interim rent

a landlord may apply to the court to fix an interim rent when he has given notice of termination of a tenancy or where the tenant has served notice of a request for a new tenancy on the landlord

Land Registry

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

Landlord/Lessor

the party letting the property

Leasehold

the right to occupy a portion of a building for a given length of time

Lessee/Tenant

a party to whom a property has been let.

Market rent

the best rent at which a property might reasonably be expected to be let with vacant possession in the open market, with a willing landlord and tenant, taking full account of all terms of the lease offered

Marriage value

latent value which the merger of two or more interests in land would release

Mesne landlord

an intermediate landlord

Open market rent review

where the rent review clause provides that the rent on review should be based on the open market rent prevailing for new lettings

Prelet

property developments that have been let to tenants (on long or short leases) whilst the schemes are being planned or are under construction

Premium

the price an actual or prospective lessee pays to a lessor, usually in return for the rent being reduced to below what otherwise would be payable. Or a sum paid at the outset for the purchase of a lease

Prime location

the most desirable or sought after location

Prime property

a term used to define property of particular interest to investors. Broadly, prime property is likely to be a modern or recently refurbished building, finished to a high specification, well situated in a commercially strong geographical location and let to a good tenant

Quiet enjoyment

most leases contain a covenant for quiet enjoyment, entitling the tenant to enjoy the lease without unlawful entry, eviction or interruption

Rack rent

the best market rent obtainable

Re-entry

a landlord may exercise his right to regain possession of premises by peaceable re-entry where there has been a breach of covenant by the tenant

Real Estate Investment Trusts (REITs)

close ended companies or trusts that hold, manage and maintain real estate for investment purposes which is leased to tenants

Rent

an agreed charge for the use of a capital asset, typically property

Rent review

leases generally contain clauses providing for a periodical review of the rent, say at five yearly intervals. The lease will generally specify what the basis of the review is to be: eg the open market rent prevailing at the time of the review

Rental value

the rent that a property might reasonably be expected to command in the open market at a given time, subject to the terms of the lease

Restrictive covenant

a covenant in a lease restricting the tenant in some respect

Reverse premium

on assignment, the payment of a sum of money by the assignor to the assignee a sum of money to reflect unfavourable lease terms

Reversion

the return of property to the landlord on the expiry of a lease

Sale and leaseback

an arrangement whereby a property is sold, with the vendor simultaneously being granted a lease on the property by the purchaser

Secondary property

property which is defective in one (or possibly two) of the characteristics of prime property

Securitisation

the conversion of assets into tradeable securities

Security of tenure

the right of a tenant to continue to occupy until the landlord obtains a court order for possession or the tenant terminates of the agreement

Service charge

the amount a tenant pays for services the landlord provides

Side agreement

terms agreed separately by landlord and tenant, or by buyer and seller, which do not form part of the lease or contract of sale

Special Purpose Vehicle (SPV)

an SPV is any entity established for the purpose of undertaking a single property transaction. There are many types of SPVs and each has its own tax status

Stamp Duty Land Tax (SDLT)

this is a tax charged by the government on land transactions and is chargeable at rates between 1% and 5% on the VAT inclusive purchase price and rent

Subletting

where the tenant lets part or all of the premises to a subtenant, as permitted by the terms of the lease. It differs from assignment in that the head lessee remains responsible to the landlord for the payment of rent and fulfilment of other obligations

Termination

the coming or bringing to an end of a lease, by mutual agreement, expiry of the lease, or by the exercise of a right of one of the parties

Turnover rent

where part or all of a rent, especially of retail premises, is based on a specified proportion of the tenant's turnover

Upward only rent reviews

clauses in leases providing for regular reviews, at which the rent will be fixed at either the current rent or the open market level, whichever the higher

Waiver

the act of voluntarily giving up, or intentionally relinquishing, a claim, benefit or interest. A landlord waives his right of forfeiture, when a tenant is in breach of covenant, if he knows of the breach and accepts or demands rent or unequivocally recognises the continued existence of the lease

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