Here to help: renting and letting jargon buster
To continue with the jargon buster series, this month we uncover the most commonly used Lettings terms. So whether you are a tenant or landlord and don’t know your AST from your ARLA or your EPC from your TDS all you need to know is summarised below.
ASSOCIATION OF RESIDENTIAL LETTING AGENTS (ARLA)
The professional and regulatory body for letting agents in the UK.
ASSURED SHORTHOLD TENANCY (AST)
The agreement which explains tenants’ and landlords’ rights and responsibilities and the most common form of tenancy agreement in the UK.
Sometimes inserted in a fixed-term tenancy, generally if the initial fixed term is for a year or more. The clause usually allows 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 early. If the initial tenancy is renewed, a break clause may be requested if either party are unsure whether they can continue the contract or not. This term may also be referred to as a Release Clause.
BUY TO LET MORTGAGE
A type of mortgage that is designed specifically for people buying a property with the intention of letting it.
The process of settling a tenant into a rental property. It should include an inventory which describes in detail the condition of the property prior to the tenant moving in. The cost can be shared between the landlord and the tenant.
The process of moving the tenant out of the property and making sure the property is being returned in the same condition as it was originally let. The cost can be shared between the landlord and the tenant.
CLIENT MONEY PROTECTION (CMP)
An insurance scheme that covers any money handled by your letting agent, whether you are a landlord, tenant or other client. Provided by professional bodies such as ARLA.
An agreement to refrain from or engage in a specified action that is laid out in the terms of the tenancy agreement. This refers to obligations or promises made by either the Landlord or Tenant.
This is an amount of money that the tenant pays to protect the Landlord in case they cause dilapidations.
ENERGY PERFORMANCE CERTIFICATE (EPC)
A legally required assessment of how energy efficient a residential property is. It is valid for 10 years and is required for all properties advertised for sale or rent unless the property is a listed building.
A Government scheme which helps fund energy-saving home improvements that make a rental property more efficient.
The annual charge payable by the leaseholder to the freeholder.
A person who is prepared to guarantee rental payments and other obligations of a tenancy to a Landlord. The guarantor is liable for rental payments if a tenant is unable to pay them, so the guarantor will need to have a regular income. References or credit search references will usually be taken up on a guarantor.
HOUSES IN MULTIPLE OCCUPATION (HMO)
A property, located over three floors or more, which is rented to at least five tenants forming more than two households and sharing toilet, bathroom, kitchen and other facilities require a licence. It can also apply to ground-floor commercial premises. An HMO can also be unlicensed but all HMOs are required to meet special regulations.
An essential service which protects both the tenant and landlord. It details the condition of the property and any items the landlord has left in it during the tenancy. The inventory is referred to on check-in and check-out and is paid for by both the tenant and the landlord.
A service in England and Wales which tracks the ownership and possession of a property and land rights.
A person, company or body that has the right to let the property.
Often confused with tenancy agreement this is normally a long lease on an apartment. The actual document governing a rental is normally known as a Tenancy Agreement.
A professional or company responsible under an agency agreement for the maintenance and management of the property.
Refers to a rental figure and stands for per calendar month.
PORTABLE APPLIANCE TESTING (PAT)
Testing for small electrical movable goods such as microwave, lamps and kettles to ensure they are safe. Tests must be carried out by a competent person.
Allows a Landlord to thoroughly check a tenancy applicant’s suitability
STAMP DUTY LAND TAX
A tax payable to HMRC by tenants if the rental paid accumulates to more than £125,000.00.
A legally binding document containing details of the rental terms, sometimes referred to as the rental agreement. It notes the parties, i.e. the landlord and tenant(s), the rental price and the property address along with the Covenants/obligations of the Let.
TENANCY DEPOSIT SCHEME (TDS)
There are three Government approved schemes for the protection of tenancy deposits and the resolution of disputes between landlords, agents and tenants concerning the return of deposits at the end of a tenancy. The TDS is a Government-approved scheme set up in accordance with the Housing Act 2004 and requires tenants’ deposits to be protected either by a third party or via insurance.
A person(s), company or organisation who is entitled to occupy a property under the terms and conditions of a tenancy agreement
THE TERM OF TENANCY
This refers to the length of a tenancy. Most initial tenancy agreements are for a minimum of six months, although they may be shorter and longer
Refers to rental income from a property calculated as a percentage of its value