Instant Access Properties

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Assignable contracts

A relatively rare contractual situation that allows the holder to convey his or her rights to a third party, i.e. selling a property on to a new buyer after contracts have been exchanged with the developer, but before completion.

Association of Foreign Investors in Real Estate (AFIRE)

An independent, not-for-profit organisation based in Washington. It provides advice and opportunities for members to meet and exchange information at regular meetings in the US and Europe.

Association of Residential Letting Agents (ARLA)

Formed in 1981, ARLA is the regulatory body for letting agents in the United Kingdom.

Back-to-back

The act of exchanging contracts with a new buyer and completing on a property almost simultaneously.

British Property Federation (BPF)

A trade association that represents the interests of the property-owning and investing industry to Government.

Brownfield site

A derelict and vacant plot of land that has been affected by former uses, often in urban areas, requiring significant intervention in order to bring it back to beneficial use.

Buy-to-let

Buying a property for investment purposes. The return is generated by tenants' rent and capital appreciation, if any.

Capital Gains Tax (CGT)

A tax levied on the increase in value of an asset when it is sold or given away. Under normal circumstances CGT only applies when you no longer own the asset. For example, if you bought a flat as a buy-to-let property three years ago for £150,000 and sold it for £175,000, CGT would have to be paid on the capital gain, i.e. £25,000.

Capital growth

An increase in the market value of an asset. Also called capital appreciation.

Capitalisation rate

A ratio that estimates the value of properties which produce income. It is the net operating income divided by the sales price (or value) of a property and is shown as a percentage.

Caveat emptor

Trans.'Buyer beware'. It is up to the buyer to find out that what they are buying is really what they want.

Certified personal accountant

When buying property in Florida, a 'non-resident alien' will need a certified personal accountant to get a withholding certificate to enable them to claim back the ten per cent of a property's value held by the agent for the IRS.

Commonhold

A recent alternative to the traditional two ways of buying property, namely leasehold and freehold. Under a commonhold system, each resident in a property effectively owns their own flat freehold as well as a share in the common structure. There are no landlords and every unit holder has equal rights.

Completion

The final stage in legally transferring the ownership of a property when the buyer pays the purchase price and the vendor hands over the property.

Conclusion of missives

A term used predominantly in Scotland for the process of exchanging contracts.

Costs (re. cash-on-cash returns)

Calculated by adding the stamp duty, the mortgage broking fee, legal fees and any introduction fees.

Council of Mortgage Lenders (CML)

The trade association for the mortgage lending industry. Its aim is to 'help foster a favourable operating environment in the UK housing and mortgage markets' (www.cml.org.uk). Around 98 per cent of UK mortgage lenders are members of the CML.

Covenant

A condition within the title deeds (if the property is freehold) or lease (if the property is leasehold) that the buyer must comply with: maintaining the exterior of the building by repainting it every ten years, for example. A restrictive covenant is one that prohibits the owner from doing something.

Decision in principle (DiP)

A term used to refer to the likely outcome of a mortgage application. It is not a formal offer but does include a credit check and is therefore useful for highlighting any possible credit problems you could have but are unaware of.

Department of Trade and Industry (DTI)

Government department concerned with business and enterprise.

Deposit

A partial payment paid in full on a property you wish to purchase outright. When buying off-plan, two deposits are sometimes required. The first deposit is required upon exchange of contracts, normally between five and ten per cent of the full purchase price.

Dual zone development

A development for both residential and short-term rental purposes.

Easement

A legal right regarding a property, such as a right of way.

Equity

The difference between the amount owed on a mortgage and the current value of the property. If property prices fall, a situation of negative equity can occur.

Euribor (Euro Interbank Offered Rate)

The established benchmark rate of the euro money market. It was created in 1999 with the introduction of the European single currency.

Exchange of contracts

The point when a deal between buyer and developer becomes legally binding, but before completion. The date of completion will be set, as well as the price of the property and what fixtures and fittings, if any, are included.

Financial Services Authority (FSA)

An independent, non-governmental organisation regulating the financial services, accountable to Parliament through the Treasury. It works to "promote efficient, orderly and fair markets and help retail consumers achieve a fair deal" (www.fsa.gov.uk). At present, the property investment market is not regulated by the FSA, but diligent property investment providers are lobbying for regulation.

Fixed rate mortgage

A mortgage in which the interest payments are fixed and not subject to alterations as a result of increases or decreases in the level of interest rates.

Florida Association of Realtors (FAR)

A real estate trade association based in Florida with 90,000 members.

Foreign Direct Investment (FDI)

A component of a country's national financial accounts. FDI is the investment of foreign assets into domestic structures, equipment and organisations, but not stocks. FDI is often used as a measure of development in emerging markets.

Freehold

The owning of a property outright absolutely. Freeholds last until the 'end of time'.

FTSE 100

The share index of the largest 100 companies on the London Stock Exchange. It is seen as the leading share index across Europe and is often used as a barometer for the performance of the British economy as a whole.

Gearing

The use of rental income to cover the cost of mortgage repayments when buying a property.

Gifted deposit

When part of the balance, usually up to five per cent, is paid by the company or individual selling the property.

Green belt

An area of undeveloped or agricultural land surrounding an urban area.

Gross profit (re. return on investment)

The current market value minus the price paid for a property.

Handover

The stage in purchasing when funds pass from the buyer's solicitor to the vendor's solicitor and the keys to the property are formally handed over.

House Price Index (HPI)

The HPI provides a weighted average of prices for a standard mix of dwellings. In the UK there is no official HPI and various banks and building societies, notably the Halifax and Nationwide, produce their own.

Income tax

A tax levied on personal earnings or business income. Any potential earnings from the renting out of investment properties are also classified as taxable income.

Independent Financial Adviser (IFA)

An IFA is bound by the FSA to provide impartial financial advice tailored specifically to your personal circumstances. They are able to select from all products available in the marketplace and ensure you get the right product for your individual needs.

Inflation

A way of measuring the increase in the general level of the cost of goods and services. There are a number of ways of measuring this - the most common, the Retail Price Index (RPI), includes housing costs.

Inheritance tax

The tax paid on your estate on death. It applies if the taxable value of an estate is over £285,000 when you die.

Interest rate

This is the rental price of money. When a resource or asset is borrowed, the borrower pays interest to the lender for its use. Low interest rates can encourage consumer spending, including investments in property.

Internal Revenue Service (IRS)

The Government department in the United States concerned with collecting tax.

Investment Property Databank (IPD)

An independent company devoted to the objective measurement and analysis of property markets.

Leasehold

As opposed to freehold, a leasehold property is owned for a set number of years. When the lease expires, the property returns to the freeholder. MIPIM - the world's leading real estate event. Bringing together key industry decision-makers from around the world to present new projects, and to discuss subjects at the heart of the property industry.

MIPIM

The world's leading real estate event. Bringing together key industry decision-makers from around the world to present new projects, and to discuss subjects at the heart of the property industry.

Mortgage

From the French for 'dead pledge', a mortgage is a loan method whereby an individual can purchase a property without having to pay the full value up front. The property is then used as security against the debt. Regular payments must then be paid by the mortgager (borrower) to the mortgagee (lender) until the full value of the loan, plus interest, has been repaid. There are two main types of mortgage offered by lenders: fixed-rate mortgages and variable-rate mortgages. However lenders have become ever more sophisticated in recent years, with products now including buy-to-let mortgages, cashbacks, self-certification and trackers.

Negative equity

A situation whereby your mortgage is higher than the value of your property, which can occur when property prices fall.

Off-plan

Buying off-plan involves purchasing a property that exists on paper only in the form of an architect's drawing. Because developers are keen to offset the cost of the initial building work, substantial savings can be made when buying off-plan, often in the region of 10-20 per cent on the cost of a completed unit.

Pre-vetting

This process involves researching numerous aspects of an investment to ensure it meets exacting standards. It involves not just looking at the condition and location of a particular development, but also involves researching the political and economic risks associated with investment in a particular country. For developments that meet the strict criteria, key financial details then have to be analysed: price per square foot, discount vis-à-vis market price and potential rental income, for example. Developers themselves are not immune from the process either, and savvy investors should make thorough checks into previous schemes they have been involved in, their financial position, and whether or not they have appropriate insurance.

Principal

The amount borrowed, or the part of the amount borrowed that remains unpaid. Principal can also mean the amount of an initial investment.

Real Estate Investment Trusts (REITs)

A collective investment in which investors' money is pooled, allowing you to invest in a number of different types of property.

Realtors

The name given to an estate agent in the US.

Rendering

A coating of plaster, often on brick.

Rental cover

Most lenders insist that the rental yield is 125 per cent of the mortgage repayments. This rate can vary between lenders.

Reservation fee

A fee of (usually) between £500 and £1,000 required by a developer if you wish them to hold a property for you. In some circumstances this fee may be wholly or partially refundable depending on whether or not completion occurs.

Retail Price Index (RPI)

A way of calculating inflation. It measures the average change in price of a sample of 600 goods and services.

Return on investment

A metric that measures the level of return on a property investment, effectively the gross profit divided by the cost of investment.

Royal Institution of Chartered Surveyors (RICS)

An independent organisation for professionals involved in land, property, construction and environmental issues. They also provide impartial advice on all the above issues.

Shortfall

The difference between what is required to pay as a deposit on your buy-to-let mortgage property and what you can actually raise on a mortgage (based on current interest rates and projected rental yield).

Snagging

A thorough inspection carried out on a property to ensure the builders have completed their work to the required standard.

Stamp duty

The tax that is paid when buying property or shares. It ranges from one per cent of properties valued between £125,000 and £250,000 to three per cent for values of £250,000 to £500,000 and four per cent over £500,000.

Succession

The passing of property or legal rights after death.

Title deeds

Documents showing ownership and the extent of a property. They also set out any rights or obligations that affect the property and show whether there are any mortgages on it. Title deeds are held by the mortgage lender until such time as the mortgage has been redeemed.

Variable rate mortgage

A mortgage loan where repayments are subject to changes in interest rates. Base rates are set by a country's central bank, whichin the UK is the Bank of England.