Residential lettings can be confusing. With over 160 laws and regulations related to renting, there’s a lot of complicated jargon thrown around. Landlords and tenants can not be expected to know every lettings definition and technical term, however, there are some words worth knowing.
Accidental Landlord
An accidental landlord is someone who became a landlord without intending to. This usually happens when a person inherits a property and decides to let it, or they are struggling to sell a property but want to buy another.
Accelerated Possession Procedure
Accelerated Possession Procedure is a quicker and cheaper way of gaining possession of a property created under an Assured Shorthold Tenancy, provided a Section 21 notice has been served and has expired. The tenant must be the original tenant, and the landlord must not be claiming any rent arrears.
Agent of Necessity
Acting as an ‘agent of necessity’ is essentially acting on another person’s behalf in a sudden emergency situation. If a landlord lets their property through an agent, they cannot make any decisions without the landlord’s instruction. However, if there is an emergency situation that requires quick action, the agent may go beyond normal authority and act as an agent of necessity.
An example of this would be reacting to a fire, flood or burglary at the rental property. If the landlord is away or unable to be contacted, the letting agent would step in and manage the situation.
ARLA Propertymark
ARLA Propertymark is the Association of Residential Letting Agents. They are the UK’s recognised industry body for property agents, with over 9,000 members.
Arrears
Arrears is money (rent) unpaid by the tenant in whole or in part after the due date specified in the tenancy agreement.
Assured Shorthold Tenancy (AST)
An AST is a type of assured tenancy under the Housing Act 1988. An AST can be a fixed or periodic term, giving the tenant only limited security of tenure. ASTs are the default tenancy created between residential landlord and tenant. Landlords must give at least two months’ notice to end an AST. Tenants have security for the fixed period, or six months, whichever is longer.
Break Clause
A break clause is when either a landlord or tenant wishes to exercise an option to terminate a tenancy agreement during a fixed-term lease. This may be exercised after a certain period or on the occurrence of a specific event. A break clause must be written into the agreement before both parties signed.
Buy to let (BTL)
A buy-to-let (BTL) is a property bought by a person with the intention of letting it out rather than living there. Landlords typically need a specific buy-to-let mortgage to purchase a property for this purpose.
Council Tax Band
This indicates how much council tax will be paid; based on the value of the property. Council tax is usually paid by the tenant, unless the tenancy agreement specifically states otherwise.
Client Money Protection (CMP)
CMP is a scheme in which funds are protected should a letting agent misappropriate money they hold.
Contract
A contract is simply an agreement recognised in law that courts can enforce. It may be written, spoken, a mixture of both, or implied by the parties’ conduct. Contracts in lettings are commonly referred to as licences or leases.
Deposit
A deposit is a sum of money that a landlord or letting agent can request at the beginning of a tenancy as security against non-payment of rent or property damage. In England in Wales, deposits can be no more than 5 weeks’ rent. In Scotland, they are capped at 2 months’ rent.
Deposit Protection Scheme
Landlords in England, Scotland and Wales must protect their tenant’s deposit in a government-approved deposit protection scheme. The scheme will protect the funds and resolve any deposit disputes at the end of the tenancy.
Dilapidations
Dilapidation means ‘disrepair’ or ‘damage’. It is usually the letting agent’s role to assess dilapidations at the end of a tenancy. Allowances must be made for fair wear and tear, but if serious damage has been made, these costs can put forward to the deposit protection scheme to raise a deposit dispute.
Due Diligence
Due diligence may often be used by landlords or letting agents as a defence against prosecution. For example, under the Plugs and Sockets (Safety) Regulations 1994, if an agent or landlord can prove they have taken all reasonable precautions to ensure furnishings are safe, they have not committed an offence.
Electrical Installation Condition Report (EICR)
An Electrical Installation Condition Report, or EICR, is an assessment of a property’s electrical safety. All rental properties in England or Scotland must have a valid EICR in order to be let. The inspection itself involves a qualified engineer assessing the property’s electrical wiring and identifying any potential hazards. Landlords must organise an electrical report every five years, or sooner if the engineer specifies.
Energy Performance Certificate (EPC)
An EPC, or Energy Performance Certificate, is a certificate measuring the energy efficiency of a property on a rating scale from A to G. All privately-owned properties must have a rating of at least E before they can be sold or let. Tenants must be given a copy of the EPC at the beginning of their tenancy. EPCs last for ten years and do not need to be renewed until the property is resold or relet.
Exclusive Possession
Exclusive Possession determines a tenant’s sole right to live in a property or part of it and makes them lawful tenants. Exclusive possession is one of the three key elements of a tenancy (along with rent and time), established by the court case of Street v Mountford in 1985.
Fixed-Term Tenancy
A fixed term is a tenancy lasting for a predetermined amount of time, e.g. 12 months. Fixed-term leases can’t be ended early. At the end of a fixed-term lease, it will automatically become a periodic tenancy.
Gas Safe Register
The Gas Safe Register is the trade organisation for registered gas fitters, replacing CORGI registration in 2009. All rental properties must have a Gas Safety Check every year carried out by a Gas Safe Registered engineer. A gas safety check involves an inspection of the gas appliances, including the hob, oven and heating systems. The engineer will issue a certificate stating whether the property has passed or failed the inspection. Tenants should be given a copy of this valid certificate when they move in, and a copy of the latest certificate within 28 days of every inspection.
Guarantor
A guarantor is someone who agrees to pay a tenant’s rent if they cannot pay – typically a parent or close relative. If tenants cannot pay what they owe, landlords can ask their guarantor to pay instead. Tenants opt to have a guarantor if they cannot pass formal reference checks alone or do not meet the property income requirements.
Holding deposit
A holding deposit is paid by a prospective tenant to secure a rental property. The deposit can be no more than one week’s rent and is usually paid during the application process. If all goes well, this deposit is returned to the tenant when they move in – typically as a deduction from their first month’s rent. If the tenant withdraws from the process, or fails referencing based on false information provided, the holding deposit may be kept to cover these administration costs.
Home Emergency Cover
This is an insurance policy that covers emergency repairs and maintenance in situations such as flooding, burst pipes, boiler break down, and loss of hot water or electricity.
House in Multiple Occupation (HMO)
An HMO is any residential property occupied by three or more people with shared facilities such as a bathroom or kitchen, who form two or more ‘households’.
How to Rent Guide
The How to Rent Guide is a government document outlining the rights and responsibilities of tenants. Landlords must give tenants a copy of the guide at the start of their tenancy.
Inventory
A property inventory is a comprehensive report, recording the condition of a property at the beginning of a tenancy. It provides information on the furniture, fixtures, fittings and general condition. An inventory and schedule of condition are crucial evidence during deposit disputes. Without one, landlords will rarely be able to make a successful claim for damages.
Kerb Appeal
Kerb appeal refers to how good the exterior of a property looks. This can include guttering, paint, front garden and windows. A property with good kerb appeal typically makes a better first impression with prospective tenants.
Legal Expense Cover
This is an insurance policy covering the landlord’s legal fees, should they need to take their tenant to court. All lettings plans with LettingaProperty.com come with LetsProtect.
Legionella
Legionella is a bacteria that can be found in water systems. In England and Wales, the government recommend that landlords conduct a Legionella risk assessment at their rental property to ensure their water is safe. Legionella risk assessments are legally required for private rentals in Scotland.
Letting
This is a simple one, but it can cause some confusion. Letting refers to the act of renting out a property. If a property is advertised as “to let”, it’s available to rent.
Mid-term Inspection
Halfway through a tenancy, some landlords like to do a mid-term inspection. This is a general check-up on the property and the tenant, to ensure everything is going well and that the property is in good condition. It’s also an ideal opportunity for tenants to raise any issues. Professional third-party inspections are always favoured by deposit dispute adjudicators, but landlords can do it themselves if they prefer.
Notice Period
A notice period refers to the amount of notice that a landlord must give their tenant to end the tenancy and vice versa.
Occupancy Rights
Occupancy rights are contained within the tenancy agreement and give the tenant the right to occupy the property.
Open banking
Open banking is a secure online payment method. It uses rigorously tested software to make efficient payments and provide secure banking authentication. In the lettings process, tenants may use open banking to verify their bank statements and income during referencing. It could also be used to make payments, such as rent or deposits. Specific consent must be given for open banking and no money is taken without the person’s permission. Only apps and websites regulated by the FCA or European equivalent can enrol in the open banking Directory.
PCM Rent
This abbreviation means Per Calendar Month Rent and is commonly found in adverts for rental properties.
Periodic Lease
Unlike a fixed-term lease, a periodic lease lasts indefinitely until the landlord or tenant decides to end it. It’s also called a rolling period tenancy.
Permitted Occupier
A permitted occupier is a person permitted to live in a rental property that is not listed on the tenancy agreement. They are not required to pay rent and have no legal rights to the property. Typical permitted occupiers include a partner who stays on a regular basis, an older child that lives at University and returns during the holidays, or an older relative that must be cared for.
Portable Appliance Testing (PAT)
An examination of electrical equipment, performed by a registered electrician, to ensure its safe to use. Landlords should have electrical equipment PAT tested annually or before a change of tenancy.
Reference Check
This is a check made by landlords or agents, before agreeing to let, to ensure tenants can afford the property and have been good tenants in the past. Typically, reference checks are made with employers, credit agencies and previous landlords
Rent Arrears
Rent arrears are the total amount of unpaid rent on a current tenancy agreement. If a tenant has rent arrears at the end of the tenancy, the owed amount can be deducted from the tenancy deposit. If the arrears are more than this amount, the landlord can take the tenant to court to get these funds back.
Rent Protection
Rent protection – you guessed it – protects a landlord’s rental income. Rent protection gives landlords an added reassurance, knowing their rent will be paid. See our Complete Plan for details of our rent protection service.
Right to Rent
Before landlords can legally rent to a prospective tenant, they must check they can legally rent in England. This involves a Right to Rent check in which the landlord checks the tenant’s documents, such as a passport or photo ID.
Section 8 Notice
This is a legal notice used by landlords to end a tenancy early, in circumstances where the stipulations of a tenancy agreement have been broken.
Section 21 Notice
This is a notice served by a landlord to the tenant, to begin the process of eviction or repossession of a rental property. Find out when you can or cannot issue a Section 21 Notice.
Short Let
A short let generally refers to a tenancy term that lasts six months or less. Short lets are ideal for tenants who are hoping to buy a house, or for short-term relocations for work.
Stamp Duty
Stamp Duty is a tax paid on property transactions. In England and Northern Ireland, you must pay Stamp Duty Land Tax if you buy a property over a certain price. Buy a freehold property, buy a new or existing leasehold property, buy a property in a shared-ownership scheme, or are transferred land or property in exchange for payment.
Tenancy Agreement
The tenancy agreement is a legally binding document that details the terms of the rental. This should be agreed upon and signed before any tenancy begins. It may also be referred to as a rental agreement.
Tenancy Void
This refers to the time in between tenancies where the property is left vacant. Ideally, landlords want to reduce their void periods to a minimum to maximise their rental income.
Tenant Fee Ban
The Tenant Fee Act, or Tenant Fee Ban, came into force in 2019. This law limits the fees that can be charged to tenants and capped tenancy deposits at five week’s rent.
Valuation
A valuation is a survey or inspection of a property that provides an estimate of rental value. A valuation takes into account the condition of the property, as well as the current market, surrounding area and local amenities.
Viewings
Viewings are the tenant’s opportunity to examine the rental property before deciding whether or not to rent it. They can get a feel for the place, ask questions and introduce themselves to the landlord. Some landlords prefer to conduct their own viewings, whereas others opt for a professional viewing clerk.
Virtual tour
A virtual tour is an online interactive video of a property that can be added to the advert. They became extremely popular during the COVID-19 pandemic, as tenants were able to view a property without having to visit it in person. Tenant’s like virtual tours because it gives them an additional ‘feel’ for the property before they book a viewing.
Wear and Tear
Damage to the property caused by day-to-day living is referred to as ‘wear and tear’. This includes things like worn carpets or minor scuffs on the wall that haven’t been caused by negligence. General wear and tear is not allowed to be deducted from deposits.
Make sense?
Are there any lettings definitions you would add to this list? If you are struggling with any other technical terms or industry acronyms, please leave a comment below.
