Our A-Z Guide to Rental Terminology
Here at the Relocation Bureau, we know that renting a property can be a stressful experience and can be made even more confusing when faced with tricky terms and phrases. To help you on your way, we have put together an A-Z list of rental terminology to make the process simpler and easier to understand!
An agent can be a company or individual who will act on behalf of the landlord. They may be involved in marketing the property, rent collection, property management and the letting.
A break clause (or sometimes referred to as a Release Clause), will usually allow the tenant or landlord to terminate the agreement earlier than the original fixed term without financial penalty. For example, in a 2 year tenancy, a landlord or tenant may have a 12 month break clause, meaning they are able to serve 2 months’ notice at any time after the first 10 months to end the tenancy.
Council Tax is a local tax system used in England, Scotland and Wales for domestic properties and is usually the responsibility of the tenant to pay. Each property is assigned one of 8 bands (A –H) based on the property value according to its open market value on 1st April 1991 and the tax is set at a fixed amount for each band. This tax is then used towards local services such as the police, fire services, refuse collection, public transport, social care etc.
Dilapidations can be claimed by a landlord for damage caused to a property or contents that exceeds fair wear and tear. A landlord is also able to claim for items which are missing – a common cause for this is when something belonging to the landlord (a small item of furniture for example) has been accidentally packed by the removal company.
Execute a Tenancy
This is the procedure to finalise and legally validate a tenancy. The original ink signed tenancy agreements are dated and then exchanged. The date is legally considered to be the date on which the agreement was made.
Fixtures and Fittings
These are the items that make up a property; curtains, carpets, light fittings, furniture, kitchen units, bathrooms, appliances etc. Fixtures and Fittings vary from property to property so it is advisable to check what will or won’t be provided.
Ground rent is paid by the owner of a building or property to the owner of the land on which it is built. Ground Rent is usually an annual fee, normally paid by the landlord.
A Holding Deposit (or sometimes referred to as a Reservation Fee) is a monetary amount, usually the equivalent of 2 weeks rent that will be asked for by an agent or landlord when a tenant applies for a tenancy of a property. The holding deposit shows the prospective tenants willingness to proceed with the deal and once paid, the landlord or agent will normally remove the property from the market. Should a prospective tenant then pull out of the deal or fail referencing, they will lose the holding deposit.
Inventory and Schedule of Condition
This is a document that is created at the start of a tenancy which lists all of the Fixtures and Fittings in a property and the condition of that item e.g. walls, floors, curtains etc. This same document is then checked at the end of the tenancy to determine if any damage has been caused which is beyond fair wear and tear. The Inventory and Schedule of Condition is normally made and checked by an independent third party, usually an inventory clerk.
Joint and Several Liability
Where there is more than one adult living in a rental property, they will be “jointly and severally” responsible. This means individually each tenant is responsible for payment of all rent and all liabilities, as well as any breach of the agreement. For example, where two tenants split the rent 50/50 and one of the tenants fails to pay their share, both of them will be in breach of the agreement, even if one tenant paid their share.
Often confused with Tenancy Agreement, a Lease normally refers to owning property (usually an apartment) for a fixed term but not the land on which it sits. For example, a landlord may own an apartment which has 90 years remaining on the Lease. Once expired, the Landlord must renew the Lease or ownership of the property goes back to the Freeholder.
A Managing Agent can be an individual or company who acts on behalf of the landlord and is responsible for the maintenance and management of the property.
A Non-resident Landlord (NRL) is a landlord who lives abroad for more than 6 months of the year. They are required to pay tax on any income they receive from renting out property in the UK. If you are renting a property and your landlord lives abroad, you must ensure your landlord has NRL status, meaning they can receive rent without tax deducted. If they don’t, you must withhold part of the rent to cover the tax due.
The occupier is the person who physically lives in the property during a tenancy. The occupier may not necessarily also be the Tenant e.g. If it is a Company Let and the company is the Tenant.
Per Calendar Month refers to the frequency in which rental payments should be made and is the most common. For example, you may choose to rent a property which is marketed at a weekly rental figure, but the actual rent payment will normally be paid on a monthly basis.
This is the process in which a Landlord is able to check if a prospective tenant will be able to pay the rent and also check their track record on previous rentals. Referencing is usually carried out “in-house” by an estate agent or by a third party, such as a referencing company. Common documentation required is copies of passports, employer references, proof of salary, previous landlord reference.
Stamp Duty Land Tax (SDLT) is a local tax that is normally the responsibility of the tenant to pay. The threshold is currently £125,000 and is calculated based on the entire rent over the term of the tenancy. For example, on a 2 year tenancy at rental of £5,500 per calendar month, the rent due for the term would be £132,000 meaning SDLT would be due.
Tenancy Deposit Scheme
A deposit (or sometimes referred to as a Security Deposit) is a monetary amount, usually the equivalent of 6 weeks rent, which is held by the landlord or agent for the duration of the tenancy as security against possible damage to a property. New regulations mean landlords or agents must register the tenancy details and deposit within 14 days of the tenancy start date. Any deposit that is held by the landlord, agent or other party as security for the performance of the tenant throughout the tenancy must be registered with a deposit scheme, such as the Tenancy Deposit Scheme (TDS). The TDS ensures that the security deposit is safeguarded and deals with the resolution of disputes between landlords, agents and tenants concerning the return of the deposit at the end of the tenancy.
Utilities (or sometimes referred to as Services) are normally the gas, electric and water supplies that service the property. These are normally the responsibility of the tenant to pay for.