Glossary

This is quicker to obtain and usually does not require a court hearing. It can only be used if you have an Assured Shorthold Tenancy and have issued a Section 21 notice which has been ignored by the tenant.

These landlords, often describing them as amateur, unprepared and unfortunate.

This is a voluntary process through which landlords can show that they are trustworthy and legitimate. Several accreditation schemes are available nationwide, such as those with the RLA and ARLA.

Local authorities have the power to require other designated types of HMO to be licensed. This is known as additional licensing and can only be introduced if the council considers that a significant number of HMOs are being mismanaged in a certain area. The conditions of the licence will depend on the local authority in question.

This is a service which deals with any deposit disputes, to avoid such matters going to court. It can only be used if both landlord and tenant agree to it.

The Association of Residential Lettings Agents

This is a sum of money owed to a landlord by a tenant in respect of their rent. A tenant gets into arrears after failing to make their agreed rental payments on time, or where they have missed a regular payment entirely.

In general terms, if a local council acquires Article 4 Direction, there is a great extension of the requirement for planning permission in the area. Many of the things you might wish to do to your property will require consent, even if they seem small and insignificant. This can have a big impact on landlords. For example, if a council has obtained Article 4 Direction, it means that planning permission is required for every new HMO, even if minimal work needs to be done on the property. The mere act of making it an HMO requires permission. Check with your local council whether it applies in your area.

Assured Shorthold Tenancy Agreement - contract between landlord and the tenant(s)

ARMA is a trade association for firms that manage private residential leasehold blocks of flats in England Wales.

This limits the total amount of welfare benefits (including Housing Benefit) to £500 for families with children (regardless of size) and £350 per week for individuals. It is going to affect the vast majority of Housing Benefit tenants.

This is a provision inserted into a fixed-term tenancy agreement that allows either the landlord or the tenant to terminate before the end of the term. A break clause is typically used for longer fixed-term tenancies, giving both parties a chance to pull out if circumstances change. A notice period is normally required, and this is usually anything up to two months. The clause can either be a general one, or can be written to include specific conditions that result in a mandatory break.

Short-term secured loans often used by landlords for converting or restoring properties and so especially useful if you are planning on expanding your portfolio.

Buy-to-let

In addition to your rental yield, you should also bear in mind capital growth when considering your return. This refers to the rising value of your property over time, and is another way to measure your potential profits. Of course, property values can go down as well as up, so focusing on rental yield is a more long-term strategy.

This is a sum of money levied by a local authority on every residential property in their control, with the amount depending on the property's location and value. Residential properties are assigned a band from A to H, with the amount of money payable getting higher as the band progresses towards the end of the alphabet. Councils reassess the amount of money owed per band on an annual basis, although the majority of properties are still charged based on a band they were assigned in 1991. If you feel your property may be assigned the wrong band, you can do a quick check by visiting Money Saving Expert.

The scheme administrators hold the deposit but there is no fee as charges are paid by the interest on the deposit. The scheme pays back the money and the tenant will also receive a proportion of the accumulated interest.

A payment made by the council to cover rent for a deserving tenant. The tenant can claim for this if, for example, they are experiencing financial difficulties resulting from periods of illness or any legal costs, or if there is a real threat of homelessness.

Department of Social Security (Housing Benefits)

If a tenant is on very low income and uses very little energy, the Green Deal won’t be able to fund important works like solid wall insulation. In these cases the energy company has a legal obligation to finance the improvements. This also applies to improvements to properties which are hard to treat (usually those without wall cavities built before the First World War).

Energy Performance Certificates present the energy efficiency of dwellings on a scale of A to G. The most efficient homes – which should have the lowest fuel bills – are in band A. The certificate uses the same scale to define the impact a home has on the environment. Better-rated homes should have less impact through carbon dioxide (CO2) emissions. The average property in the UK is in band D or E for both ratings.

An estate agent is a person or business that arranges the selling, renting or management of properties, and other buildings.

If a tenant refuses to leave by the date given in the possession order, a warrant for eviction must be obtained from the court. The tenant will be served and the court will book a time for the bailiff to evict the tenant. You cannot legally evict a tenant yourself.

The tenancy agreement lasts for a fixed length of time, which could be weeks, months or years.

This is a term that refers to the type of legal ownership that a person has over a property or piece of land. If a person owns the freehold, it means that they own the entirety of the land indefinitely - this is otherwise known as a fee simple absolute. The alternative to a freehold is a leasehold, which gives the owner the same set of rights for a fixed period of time. When buying property, it is possible to purchase a long-term leasehold that can last for hundreds of years, giving you the same practical effect as a freehold.

An estate agent is a person or business that arranges the selling, renting or management of properties, and other buildings.

If a tenant refuses to leave by the date given in the possession order, a warrant for eviction must be obtained from the court. The tenant will be served and the court will book a time for the bailiff to evict the tenant. You cannot legally evict a tenant yourself.

The tenancy agreement lasts for a fixed length of time, which could be weeks, months or years.

This is a term that refers to the type of legal ownership that a person has over a property or piece of land. If a person owns the freehold, it means that they own the entirety of the land indefinitely - this is otherwise known as a fee simple absolute. The alternative to a freehold is a leasehold, which gives the owner the same set of rights for a fixed period of time. When buying property, it is possible to purchase a long-term leasehold that can last for hundreds of years, giving you the same practical effect as a freehold.

Financial Conduct Authority

Before renting out a property, it must be registered as gas safe by the Gas Safe Register. You may be familiar with CORGI, but the Gas Safe Register is the current, official group to deal with. Landlords are required by The Gas Safety (Installation and Use) Regulations 1998 to have an annual gas safety check performed by a tradesperson registered with the Gas Safety Register, unless the gas appliance is owned by the tenant or the tenancy is a fixed term longer than 7 years.

This is the Government’s scheme for improving energy efficiency in properties. Landlords can apply for a property assessment to identify potential improvements. If you sign up, an accredited provider must complete the works and the cost is paid off in instalments through the electricity bills. The repayment charges cannot be more than the savings made from the works (in theory) so the bills should not go up.

This is someone who is in full time work who earns equal or over three times the annual rent. They would also be required to have a good credit score. They sign on the agreement and are legally obliged in the case of non-payment or other damages resulted by the named tenant.

This is a technical description in the rental sector and has special significance for HMOs. A ‘household’ is defined as a single person or a family living together. ‘Family’ includes married couples, couples living as married (including same sex couples), and immediate relatives (parents, grandparents, children, step children, foster children, aunts, uncles, cousins, nephews, nieces).

Houses in Multiple Occupation (HMOs) are a special type of property in which people who are not related or part of the same household share the property and its facilities. There must be at least 3 people (excluding a resident landlord, if applicable) from 2 different households sharing (most typically) a bathroom and/or kitchen. Here is a full list of the types of HMO:

• A house or flat in which 3 or more people from at least 2 households share facilities such as a bathroom, toilet and/or kitchen
• A property in which the landlord also lives as the owner-occupier and has more than 2 tenants (lodgers), all sharing at least some facilities
• Accommodation owned by a private landlord and shared by students who have exclusive use of the property (so essentially each student is considered to be a different household)
• A building or part of a building (such as a flat) which is a converted building not solely made up of self-contained flats, whether or not the facilities are shared. ‘Self-contained’ means that all of the facilities are contained within the flat itself for the exclusive use of the household in question

This is one of the most significant pieces of legislation for landlords, introducing the statutory deposit scheme and a number of health and safety requirements. As a result of this legislation, landlords have to comply with the Housing Health and Safety Rating System, which gives local councils the power to force landlords to make alterations to their property if it fails to meet certain health and safety requirements. The Act also introduces a licencing system for Houses in Multiple Occupation, and highlights property management targets.

The local authority must use a system called the Housing, Health and Safety Rating System (HHSRS) to identify and assess risks. The Housing Act 2004 places a statutory legal duty on local authorities, not landlords, to assess tenants’ risk to health and safety. Still, you have a legal responsibility to take ‘reasonable’ steps to make sure your property is safe. So if you know the things the council will be looking out for, you can take your own ‘reasonable’ steps to reduce risk of harm to your tenants. The HHSRS identifies 29 hazards to be aware of: Physiological

• Damp and mould growth
• Excess cold
• Excess heat
• Asbestos and manufactured mineral fibre
• Biocides (e.g. damp and timber treatment products)
• Carbon monoxide and fuel combustion products
• Lead

• Radiation
• Uncombusted fuel gas
• Volatile organic compounds.
• Crowding and space
• Entry and intruders
• Lighting
• Noise

• Domestic hygiene, pests and refuse
• Food safety
• Personal hygiene, sanitation and drainage
• Water supply for domestic purpose

• Falls associated with baths
• Falling on level surfaces
• Falling associated with stairs and steps
• Falling between levels
• Electrical hazards
• Fire
• Flames and hot surfaces
• Collision and entrapment
• Explosions
• Position and operability of amenities
• Structural collapse and failing elements

One of the most important factors in determining your return is the level of your initial investment. Your overall return (as well as the length of time it takes to turn a profit) will largely depend on your initial outgoings. According to the most recent report from the Halifax House Price Index, the average cost of a residential property in the UK is currently £166,898 (June 2013), and the majority of buy-to-let mortgage providers require you to charge rents of at least 125% of your mortgage repayments. These initial and ongoing payments will form the basis of the calculation required to work out your return.

In this scheme the landlord holds the deposit but must pay a fee for the premium. The landlord pays back the deposit directly at the end of the tenancy. If there is a dispute over the amount to be paid, payments are dealt with through the scheme after the court or ADR’s decision.

A special type of home insurance required by landlords (although technically it is not a legal necessity, most mortgage lenders will insist on it). It is different from typical owner-occupier home insurance and will cover you for the unique problems which arise in a rental property.

LandlordReferencing.co.uk is a national tenant referencing database that has been created by Landlords for Landlords in order to reference tenants between one another.

A letting agent is a United Kingdom term for a facilitator through which an agreement is made between a landlord and tenant for the rental of a residential property. In the UK the agreement between landlord and tenant is normally formalised by the signing of a tenancy agreement.

Local Housing Allowance

LandlordLaw.co.uk is a legal resource center for landlords and tenants

A campaign to recover £500 million in unpaid taxes from landlords who have either been unaware of what they owe or are guilty of deliberate evasion. It will run for at least 18 months from September 2013 and represents a window in which landlords can come forward to disclose anything they’ve missed.

This is essentialy the Mayor of London's plan to get as many landlords as possible accredited across London. Accreditation is voluntary and there are a number of landlord accreditation schemes which will fall under the umbrella of the London Rental Standard. More information can be found here.

For HMOs, a licence is compulsory for properties higher than 3 stories (including those above shops) which have 5 or more occupants from 2 or more households. This is known as mandatory licensing

This is issued by the local council and transfers management of an HMO to the council. It may be issued when there is a serious breach of the HMO regulations. It must be issued if the council decide to revoke or not grant a licence to a landlord and/or management agent who has applied for one. There are two types: an Interim Management Order (maximum duration of 3 months) and a Final Management Order (maximum duration of 5 years).

In order to truly determine your return, it's important to think about other costs associated with owning a buy-to-let property. Maintenance, repairs and even travelling to handle tenant problems and enquiries all form part of your monthly and annual costs and must be factored into your calculations. There are also more complex issues such as finding and paying for an approved deposit protection scheme, vetting tenants and advertising your properties. If you're looking to keep these costs down, here at Mycaretaker we offer a full pay as you go property management service, making it quick and easy to keep on top of your portfolio.

This is the return you get from your investment into the property. It’s calculated by taking the annual rent you receive less any direct costs and dividing the total by the purchase price of the property. E.g. If you purchased a property for £200,000 and receive annual rent of £13,000 in rent of which £1,500 goes to direct costs, your net yield will be (£13,000 - £1,500) / £200,000 = a net return (yield) of 5.8%

The National Landlords Association

The tenancy agreement operates on an indefinite rolling basis with rent paid at fixed intervals throughout.

This is the information about the Tenancy Deposit Scheme (TDS) that a landlord has a statutory obligation to provide to the tenant. Your scheme provider will be able to supply you with the necessary details.

If a tenant refuses to leave the property before the expiration of a legitimate Section 21 or Section 8 notice, you must obtain a possession order from the courts to force them legally to leave the property.

Private Rented Sector

A tenant has a right to quiet enjoyment which essentially means that you have to give prior notice before coming to inspect the property

Measures for controlling rent levels in a particular area, typically either through a cap on the maximum rent that can be charged or by setting a limit on rent increases

A form of insurance where, for a relatively small annual fee, landlords can protect against loss of rent.

This allows the tenant or the council to recover rent paid during a period when a licensable HMO was not licensed. A maximum of 12 months’ rent can be reclaimed for any such period. Before it can be issued, the landlord must be found guilty either in court or at a tribunal of operating a licensable HMO without a licence. In the case of the rent being paid through Housing Benefit, the money will be recovered from you, even if you did not directly receive the benefit (and remember that with new Universal Credit, no landlord will receive Housing Benefit directly).

A clause in a tenancy agreement detailing how and when the amount of rent will be reviewed during the tenancy. It will usually specify an annual review and the exact procedure, such as when the tenant must be contacted about any increase.

The next stage is to determine your overall rental yield. This figure comes from taking your annual rent, dividing it by your initial investment and multiplying that figure by 100. For example, a £180,000 property with an annual rent of £8,400 (£700 per month) would produce a rental yield of 4.6%. This is the basic annual income that you will receive from your property, but it's important to remember that this doesn't take into account other costs.

Residential Landlords Association

If the council makes a certain decision about your property which you are not happy about, you may be able to appeal against it through a Residential Property Tribunal. This could be done, for example, if:

• The council imposes an interim or final management order, or empty dwelling management order
• The council issues you with an overcrowding notice
• You want to change the terms of any licence issued by the council
• The council has refused a licence application or revoked a licence
• The council has issued a prohibition notice
• The council has issued a demolition order or closing order
• The council can also use a Residential Property Tribunal to apply for orders against you as a landlord. This could be done, for example, if:
  • The council are seeking a Rent Repayment Order
  • The council want to apply for an empty dwelling order, demolition order or closing order

This term most commonly refers to when a landlord threatens to evict or evicts a tenant with a Section 21 rather than make the changes or repairs that the tenant has asked for.

This simply refers to the requirement for a landlord to provide a tenant with an address where notices may be served on the landlord. The address must be in England and Wales and, if it is not provided, the landlord cannot claim possession for rent arrears nor demand rent from the tenant. The best way to provide it is simply in the tenancy agreement.

Local authorities can introduce licensing for properties which are not HMOs if in an area with low housing demand or one which suffers from anti-social behaviour. This is known as selective licensing.

'Self-contained’ means that all of a flat’s facilities are contained within the flat itself for the exclusive use of the household in question.

This can be used if you have an Assured Tenancy or Assures Shorthold Tenancy and will usually be used if a tenant has ignored a Section 8 notice. A court hearing will be held, usually at least one month from the initiation of proceedings.

If a fixed term tenancy comes to an end without the landlord and tenant agreeing to a new tenancy agreement, then a statutory periodic tenancy begins automatically.

If you display conduct which indicates the tenancy has come to an end, this could be construed by law as acceptance of surrender of the property. This may be as basic as the tenant handing in their keys and you accepting them. This can legally end a tenancy.

Local authorities can introduce licensing for properties which are not HMOs if in an area with low housing demand or one which suffers from anti-social behaviour. This is known as selective licensing.

If you take a deposit from the tenant, it must by law be held in an approved Tenancy Deposit Scheme, also known as a statutory deposit protection scheme. There are two types:

• Insurance based schemes: The landlord holds and pays back the deposit
• Custodial schemes: The scheme administrators hold and pay back the deposit

A central part of the Government’s measures to make the private rented sector fairer. It will include an industry standard tenancy agreement to act as a benchmark and standard information to be supplied to tenants telling them what to expect.

The Property Ombudsman is a UK government-approved organisation which aims to provide better consumer protection for home buyers and sellers, landlords and tenants, by providing independent conflict resolution and raising standards of service in the residential property industry.

Tenants can challenge any terms under The Unfair Terms in Consumer Contracts Regulations 1999 so if you put unfair restrictions in the tenancy agreement they may well be unenforceable.

The Government’s new method of paying benefits, planned to be in operation nationwide by 2017. Recipients will receive their benefits in one payment and be responsible for the budgeting. Landlords will no longer be able to receive housing benefit directly from the local council, unless there are certain exceptional circumstances.