MBM Ringley
349 Royal College Street, London, NW1 9QS
Tel: 0207 428 1980, Fax: 0207 428 1971
Email: info@mbmringley.co.uk
www.mbmringley.co.uk

Jargon Buster

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Absent Landlord
A Landlord who cannot be contacted is defined as 'absent'. Consequently, Legal recourse is available to acquire the right to manage property.
Acquisition Date
The Acquisition Date identifies the starting date for the Right to Manage Company's assumption of the legal responsibility for the running of the designated property.
Additional security fee
Also known as an MIP (Mortgage Indemnity Premium) or an MIG (Mortgage Indemnity Guarantee), this is an advance fee that is charged on mortgages that are over 75% of the value of the property. It is designed to protect the Lender against the Borrower defaulting on the loan. Therefore, the fee is paid to the Lender.
Annual percentage rate (APR)
For comparison with mortgage interest rates, the total cost of the loan is shown as a percentage of _____. Here, the total cost includes interest charges on the loan and also arrangement fees for the loan.
Arrangement fees
Where a special interest rate is to be used, an additional fee is also charged for the arrangement of the loan.
Assignment
A term used to describe the transfer of the ownership of either a lease or an insurance policy.
Auction
An auction is the process of bidding for the purchase of a property, where the sale is made to the highest bidder.
Basic variable mortgage rate
This is the standard interest rate used by the Lender. It can be changed from time to time, usually in response to economic conditions in general of to changes in the Bank of England's base rate.
Bridging loan
Where the prospective Buyer requires funds to complete the purchase of a property before selling his current property, the short-term loan required is known as a Bridge Loan.
Block / Block of Flats
Self-contained units in a residential property are termed Blocks of Flats. When such blocks seek to form a Right to Manage Company, the Block needs to fulfil legal criteria pertaining to the number of units, its capacity for redevelopment, the proportion of commercial to residential property, and the ability of the tenants to meet qualifying criteria.
Building Insurers
The issuers of Insurance for the Building
Buildings Insurance
The policy issued by the insurers for a Building
Building survey (formerly a full structural survey)
This type of survey does not typically include a valuation of the property. This survey is designed to provide a full assessment of the construction of the building and its current condition. It includes details of major and minor faults detected and may recommend further specialist investigation of particular aspects of the property. It is particularly useful for listed buildings, older properties, or properties of unique design and also for dilapidated buildings or properties where alterations have been made or are planned.
Buy to let mortgage
When Buyers intend to purchase a property in order to let it out, this type of mortgage is offered by the Lender.
Capped mortgage
If agreed between the Lender and the Borrower, the interest rate on the mortgage has a ceiling, or a 'cap'; a maximum percentage of interest to be charged. The 'ceiling' is valid for a fixed period during the lifetime of the loan. Where the standard interest rate during that lifetime is below the 'cap' then the Borrower is charged interest as per the standard rate. Should the standard rate exceed the 'cap', the Borrower is only charged the 'ceiling' interest rate.
Chain
If a Buyer can only complete the purchase of a property subject to the completion of the sale of his current property, the purchase is 'chained' to the sale.
CML
The CML (Council of mortgage lenders) produced the Mortgage Code that ensures customers are treated fairly by lenders.
Claim Dispute Reasons
The Landlord has recourse to three reasons for disputing the Clam Notice. In the Counter Claim Notice, he will either claim that the units in the property do not qualify for Right to Manage status, or that the Right to Manage Company does not comply with legislation, or that the Members insufficiently represent the qualifying Flat Owners within the properties.
Claim Notice - Section 79
A notification issued to the Landlord by the Right to Manage Company advising him that the Company is utilising the legal right to manage the units in the Property.
Commercial Purposes
Commercial Purposes is a general terms explaining the usage of those parts of a property not used for residential purposes.
Commonhold and Leasehold Reform Act 2002
This Act of Parliament permits Flat Owners to assume the responsibility for running their block in a property.
Company Law Company Law governs the activities of a company.
Company Secretary
A Company Secretary is legally accountable for the Right to Manage Company's adherence to Company Law. He, or she, can also be a director of that company.
Counter Notice - Section 84
A Counter Notice responds to the Right to Manage Company. It is issued by the Landlord and either conceding or contesting the entitlement sought by the Claim Notice.
Completion
Legal transfer of ownership of a property to a Buyer only occurs after completion (when all transactions involved in the sale have been completed).
Conditions of sale
Conditions of Sale are list all rights and obligations due to the Buyer and the Seller, and are usually determined by law or by industry regulations or both.
Contents insurance Insurance that protects the contents of the property.
Contract
A Contract is a legally binding agreement between Buyers and Sellers for the completion of the sale of a property.
Contract race
Where more than one Buyer offers for the property, whoever exchanges binding Contracts first secures the purchase.
Conveyancer
A Conveyancer is a qualified advisor of the legal requirements of buying or selling a property.
Conveyancing
The legal work involved in buying or selling of a property.
Covenants
Covenants are rules and regulations relating to the property, which are contained in its lease or title deeds.
Deeds
Deeds are legal proofs of ownership, held by the Lender.
Determination Date
The determination date is the Landlord's deadline (typically at least 30 days after the issuance of the Claim Notice).for response to the Claim Notice.
Director
A Company Director is legally accountable for the running of the Right to Manage Company. He, or she is legally obliged to comply with Company law and with Health & Safety law.
Duty to Provide Information Notice - Section 93
A request that can be sent after the issuance of the Claim Notice to the Landlord by the RTM Company for the information required to run the Block.
Deposit
Paid to the Lender at the time contracts are exchanged, a deposit is usually 10% of the value of the property.
Detached
A property that is physically separate from the neighbouring properties.
Development
A Development is a general term used to describe either modernised & renovated existing property or a newly built property.
Dilapidations
Dilapidations are any decay, damage, or disrepair in a property.
Disbursements
Fees (inc., stamp duty, land registry and search) paid on the buyer's behalf by their solicitor.
Discharge
The discharge of the mortgage is the process of paying it off.
Draft contract
An early version of the contract, issued for discussion and negotiation only.
Elemental Or Specialist Investigation
This kind of survey is carried out when the Building Survey has identified specific problems with the property (such as cracks in the walls) and recommended specialist analysis, by qualified personnel. It may also require the testing of services, which is not carried out in a Building Survey.
ERC (Early redemption charge)
The Lender may charge the Borrower a fee determined in the mortgage contract, if the Borrower re-pays the mortgage before the end of the term agreed in that mortgage.
Endowment mortgage
This is a form of mortgage where monthly premiums are made into an endowment policy that pays off the loan at the end of the term. At the same time, the interest is repaid monthly.
Equity
The difference between the value of a property and the mortgage owed.
Excess
The initial sum paid on an insurance claim.
Exchange of contracts
The occasion where signed contracts are physically exchanged and the Buyer and the Seller become legally bound to the price and terms of the purchase and sale of a property.
Failed valuation survey
The Lender may reject a mortgage application if the surveyor's valuation report shows that the property is worth less than the mortgage sought.
Fixed rate mortgage
A fixed rate mortgage fixes the rate of interest for a given period of time.
Fixtures & fittings
All non-structural items included in the purchase of a property.
Flexible mortgage
A mortgage that allows for agreed increases or decreases in the repayments to be made.
Freehold
Where, the ownership of the property by the owner has no time limit.
Financial Obligations
Financial Obligations identify those obligations to be paid on behalf of all the Owner(s) in a property, and typically covers maintenance, insurance, and repairs.
Flat Owner
The Flat Owner owns the lease of the flat.
Gazumping
When a seller agrees to sell a property to a Buyer, but has not exchanged contracts, and then accepts a higher offer from a third party.
Gazundering
When a buyer lowers the offer to the seller before contracts are due to be exchanged.
Ground rent
The annual sum the Freeholder charges to the leaseholder.
Guarantor
A Guarantor agrees to pay the borrower's debt if the borrower defaults on the loan.
Homebuyer's survey and valuation (house/flat buyer's report)
Unlike the Building survey, this type of survey does include a valuation of the property. This survey is designed to provide a general assessment of the condition of the building and highlights any significant problems that may affect the property value. It is particularly useful for properties of conventional design, built within the last 150 years.
Head Lessee
The Head Lessee owns the Head Lease, out of which all sub leases have been issued.
IFA
Independent Financial Advisor.
Individual savings account (ISA) mortgage
An interest-only mortgage linked to an Individual Savings Account fund. It is designed to pay off the loan at the end of the period.
Interest charges (mortgage)
Interest charges are the percentage of the amount borrowed that the Lender then charges to the Borrower.
Interest-only mortgage
An interest-only mortgage that remains unchanged through the lifetime of the loan. Interest is paid monthly and a separate premium is paid to an investment instrument each month. By the end of the term, the proceeds from the investment instrument are supposed to be sufficient to repay the principal of the mortgage. The borrower is liable to ensure that this is the case.
Inventory
Any dilapidation in a property during the tenancy is shown in an inventory (a list of the contents and condition of those contents at the beginning and end of a tenancy).
Investigation Prior To Alteration
Likely to involve a number of specialists, this survey is required to test the structure and the services of a building prior to any designated alteration to that building.
Land registry fee
The Land registry's fees are for registering ownership of a property.
Lease
A Legal document that establishes the let a property (in part of in its entirety) by a Freeholder or Leasehold owner for a specified duration of time, after which that Freeholder or Leasehold owner recovers ownership.
Leasehold
Leaseholds show that the ownership of a property is by determined in a lease.
Lender's arrangement fees
The Lender's fees to the Buyer for arranging a loan are known as their arrangement fees.
Lender's legal fees
The Lender's legal fees for arranging a mortgage are borne by the buyer.
Listed building
A building protected from demolition or any alteration (without local government permission) due to its being of special architectural or historic interest value.
Loan Offer
A Loan offer is the Lender's formal approval of the Buyer's request for a mortgage. It notes all the applicable terms and conditions.
Loan to value (LTV)
LTV show the mortgage loan as a percentage of the property's value.
Local authority search
A search by the buyer's solicitor for any outstanding enforcement or future development issues affecting a property or its immediate vicinity.
Landlord
The property's Head Lessor or freeholder is the Landlord.
Leasehold Property
A property governed by a Lease.
Leasehold Reform, Housing and Urban Development Act 1993
This Act of Parliament allows those Lessees who meet the necessary qualification criteria to acquire an extension to their lease.
Leasehold Valuation Tribunal
The Public body that oversees disputes regarding Leases, Service Charges and the management of discrete units in a property (i.e. blocks of flats).
Lessee
A Lessee owns the lease to a property
Lessor
The Lessor grants a Lease to the property because they own the Freehold to that property.
Long Lease
A long Lease is a Lease granted for more than 21 years to a property. Maintenance charge (or service charge)
A charge to the Leaseholder or to the tenant for the maintenance & repair of commonly shared internal & external parts of the building
Memorandum and Articles of Association
The defining documents of the running of the Right to Manage Company
Maisonette
A Maisonette is a portion of a house that covers more than one floor and is accessible by private entrance.
Measured Survey
Also known as a Dimensional Survey, this survey involves measuring a building's dimensions in order to prepare accurate scale drawings. The reason such drawings are required must be agreed beforehand to confirm the level of detail required and any acceptable tolerances.
Mortgage
A sum of money lent by a bank or building society and repaid over a fixed (and usually long) period of time where the loan security is the property.
Mortgage deed
The Mortgage deed legal codifies the terms of the mortgage and the Lender's interest in the property.
Mortgage indemnity guarantee (MIG)
See Additional Security Fee.
Mortgage indemnity premium (MIP)
See Additional Security Fee.
Mortgage payment protection (MPP)
An MPP is an insurance policy that protects the Borrower against inability to work (through illness, redundancy, or disability) by paying the monthly mortgage payment for a fixed period of time.
Mortgage rate
The standard variable interest rate all mortgage lenders use as the basis for their discounted mortgage rates. This tends to vary according to the Bank of England base rate.
Mortgage term
The time over which the mortgage is to be repaid in regular payments, or the time at the end of which the mortgage is repaid in its entirety.
Mortgagee
The Lender of the mortgage (usually a bank or building society) is known as a Mortgagee.
Negative equity
If the outstanding value of the mortgage exceeds the market value of the property, the Borrower is said to have negative equity.
Non-Residential
Any part of a Premises not used for residential purposes
Notice of Invitation to Participate - Section 78
After its formation but before its issuance of the Claim Notice, the Right to Manage Company can invite all Qualifying Flat Owners in the property to join it.
NHBC (National House-Building Council) scheme
Some newly-built properties are covered by this form of Guarantee whereby any defects occurring within a fixed period after construction are repaired.
Offer
The offer is the Buyer's proposed sum to pay for a property.
Officers
The Company Secretary and the Directors of the Right to Manage Company
Ombudsman
An independent organization that investigates professionals such as estate agents, or solicitors when complaints by made by their customers.
Open market value
The open market value is the expected price of a property in the marketplace.
Payment break
A Payment break is a window in flexible mortgage repayments that allows Borrowers to suspend payments for a fixed period of time.
Penalties
Penalty charges are incurred by Borrowers when they either transfer mortgages to different Lenders or fully repay the loan before the end of the term.
Peppercorn ground rent
A basic (and usually annual) rent the Freeholder charges to the leaseholder
Pied-a-terre
A property kept for occasional or temporary secondary occupation.
Preliminary enquiries
The initial enquiries made to the Seller about a property. The Seller must fully answers these before any exchange of contracts.
Premium
The monthly payment on an insurance policy is the Premium.
Premium lease
The advance rental for a property is the Premium Lease
Principal
The basic loan upon which interest is calculated
Public liability insurance
Public Liability insurance covers injury or death on or in the vicinity of a property.
Purchaser
The Purchase is the Buyer of a property.
Qualifying Flat Owner<
The Qualifying Flat Owner owns a long Lease on a property (a lease for more than 21 years) ???
Qualifying Tenant
The Qualifying Tenant owns a long Lease on a property (a lease for more than 21 years)
Qualifying Leaseholder
The Qualifying Leaseholder owns a long Lease on a property (a lease for more than 21 years).
Redemption
Redemption describes the point where the mortgage has been repayment in full.
Reinstatement Cost Assessment For Insurance
A survey that estimates the cost of re-construction of a building damaged under an insured risk.
Re-mortgage
Re-mortgaging occurs when a property is used to finance a second mortgage if the property has risen in value since the initial mortgage was agreed. Otherwise, this describes the transfer of an existing mortgage to a new Lender.
Repayment mortgage
Distinct from an interest-only mortgage, this is a mortgage requiring monthly payments that cover both interest and principal so that the amount mortgage gradually reduces until redemption.
Repossession
The lender's assumption of the ownership of a property once the Borrower is deemed unable to pay the outstanding mortgage.
Retention
That part of a mortgage loan that is withheld until specific works or designated repairs have been satisfactorily completed on the property.
Reserve Fund
Funds collected from Flat Owners over time to finance anticipated Major Works to the property.
Right to Information Notice - Section 82
A request for information sent to the Landlord by the RTM Company, issued after the RTM Company has been formed but before the Claim Notice is issued
Right to Manage
The right of Owners to take over from the Landlord (or from that Landlord's appointed manager) the management of their units in a property by means of a Right to Manage Company (see RTM Company)
RTM Company
Not to be confused with a Limited Company, an RTM Company (Right to Manage Company) is separately registered at Companies House as a company that it limited by guarantee (rather than by share ownership). This type of company is usually designed to take over the management of a Block of units within a property.
Schedule Of Dilapidations
A survey that identifies any repairs required on tenanted properties. This is set against a Landlord's or Tenant's obligations to repair a property as identified in the lease.
Self-Contained
A Building or Block that is either detached or otherwise capable of being redeveloped as if it were.
Search The enquiry of information about the property held by the Land registry or by the Local authority.
Semi-detached
A property physically joined to one other property.
Service charge
See Maintenance charge.
Sole agent
The one estate agent authorised to handle either a sale or let.
Solicitor
The legal professional handling all legal documentation involved in buying or selling a property.
Stamp duty
Stamp duties are a tax of between 1% and 4% of the property value if that property has a value greater than £60,000. It is paid by the Buyers.
Stock Condition Survey
A Stock Condition survey assesses the condition of an organization's current building stock prior to the use of that stock in maintenance programmes.
Structural survey
See Building survey
Studio flat
A studio flat has one bathroom/shower room and an open-plan living area that incorporates kitchen and bedroom facilities.
Subject to contract
'Subject to Contract' is a term to show that no legally binding agreement has yet been made.
Surveyor
A professional qualified to carry out the survey.
Tenancy
The tenancy is the temporary possession of a property by a tenant.
Tenancy agreement
The Tenancy agreement legally identifies the rights of both tenants and landlords by detailing all the terms and conditions of the rental arrangements.
Tenant
The Tenant is the party legally entitled to temporary possess a property.
Tenants in common
'Tenants in Common' describes a form of ownership by two or more parties. Should one of them die, the other party does not automatically receive the deceased's share of the property as that share forms part of the deceased's estate.
Tenure
The tenure is the length of the lease by which a property is held.
Terraced house
A terraced house forms part of a connected row of houses.
Title deeds
Title deeds are documentary evidence of the legal ownership of a property.
Transfer deeds
Transfer deeds are documents from the Land Registry that transfer legal ownership to Buyer from Seller.
Under offer
A property is 'under offer' when a Seller has accepted a Buyer's offer but has yet to exchange contracts.
Valuation (Mortgage Valuation)
A valuation of the property prepared for Lenders. They require this basic survey of a property to estimate its value for mortgage purposes before lending. It only answers the Lender's queries on the property and does not necessarily address the concerns of the Borrower.
Variable base rate
A basic rate of interest (charged on a mortgage) that may rise or fall according to market conditions. Therefore monthly payments can rise or fall accordingly.
Vendor
The legal term used to describe the Seller of a property.
Yield
The income from a property calculated as a percentage of its value.