Appendix 4
Leasehold Management Jargon Buster
Administration charges
Administration charges are amounts payable by leaseholders but not included in the service
charge, such as for granting approvals for subletting or providing information or documents
upon resale.
Arbitration
Settling a dispute by using a referee. If a dispute goes to arbitration it is settled by an
independent referee. It avoids having to use the courts to settle the dispute.
Assignee
The person acquiring a property right by an assignment.
Assignment
The transfer of a property right from one person to another.
Breach
When an obligation in the lease is broken.
Case law
Law that is based on the results of previous court cases rather than legislation.
Commonhold
The freehold ownership of residential and commercial units by a Commonhold Association
whose members are restricted to the freeholders of the individual units, which owns and
manages the common parts.
Companies House
The office which stores company information such as annual accounts, directors’ names and
addresses and the registered office address. People who are interested in a company can
inspect some of the information stored.
Completion date
The date a property transfers to the person buying it.
Consideration
The price paid for a promise given (need not be money).
Conveyance
A signed document which transfers land from one person to another.
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Counterpart lease
An exact copy of the lease.
Covenants
Legally binding obligations and responsibilities.
Deed
A legal document which commits the person signing it to something.
Demised premises
The definition of the property being leased.
Designated reserve fund
Another name for a sinking fund which has been set up to hold monies collected by way of a
service charge to meet the costs of future major works – it can be for a specific matter or for
major repairs generally.
Determine
To end or decide.
Disbursement
A payment made by a professional person, such as a solicitor or accountant, on behalf of a
client. The money is claimed back by including it on the bill for professional services which is
sent to the client.
Easement
A legal right over someone else’s land.
Enfranchisement
The legal right to buy the freehold of the property being leased.
EU Public Procurement Rules
Public Procurement is the term used in the European Union to describe the purchasing of
works, supplies and services by national, regional and local public bodies, including central
government, local authorities, fire and police authorities, defence, health services, joint
consortia of public bodies, and public and private utilities.
Exchange of contract
Swapping identical contracts between parties when land is sold; the person selling and the
person buying both sign identical copies of the contract and exchange them. The contract is
then binding on both of them.
Foreclosure
A lender repossessing a property because of the borrower’s arrears.
Forfeiture
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Ending of the lease and repossession by the landlord because the lease conditions have not
been met.
Freehold
A form of tenure giving full ownership of land for all time.
Grant
Transferring the ownership of property.
Ground rent
Ground rent is a fee paid by the leaseholder to the freeholder as a condition of the lease. It is
usually a small amount (such as £50 or £100 a year). Some leases don’t specify an amount,
but simply refer to a ‘peppercorn rent’.
HM Land Registry
A registry with offices in towns and cities throughout the UK which keep records of registered
land.
Implied term
A term which is not written into a lease, but is assumed because of the actions of the parties,
or which must be assumed if the contract is to work.
Indemnify
Compensation given by an individual to someone suffering a loss because of their actions.
Initial period
Five year period from the grant of a right to buy leasehold.
Interim charges
Advance payments of service charges.
Itemised repairs/works
Works that are specified in s125 notices.
Joint and several liability
Two or more people responsible for repaying a debt. They are each responsible individually
to repay all the debt as well as being responsible as a group.
Lease
The document which creates the leasehold containing all the rights and obligations of the
landlord and the leaseholder – a contract between the owner of a property and tenant, giving
the tenant sole use of the property for an agreed time.
Leasehold
A form of tenure which gives the owner possession of the property for a substantial period of
time which is clearly defined in the lease agreement (see term of years below).
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Lessee/leaseholder
The person(s) with the lease of the property.
Lessor/landlord
The person/organisation granting the lease.
Life cycle costing
A method by which the cost of maintaining and modernising property can be estimated over
its projected life. This enables long term planning of expenditure to take place, and service
charges to be evenly spread over many years through the use of sinking funds.
Major works
There are many ways to define major works. Generally they relate to works costing more
than the amounts prescribed in s20 of the Landlord and Tenant Act 1985 for consultation
purposes, as amended by the Commonhold and Leasehold Reform Act 2002.
Management audit
In this guide management audit refers to the right given to leaseholders under s76 of the
Leasehold Reform, Housing and Urban Development Act 1993 to undertake a management
audit to satisfy themselves that the landlord is administering service charges effectively and
efficiently. Under the Right to Buy scheme, you can buy your home at a price lower than the
full market value. This is because the length of time you have spent as a tenant entitles you
to a discount.
Management fees
The fee charged by the landlord in accordance with the terms of a lease to cover their costs
of management, as distinct from the costs of particular services such as cleaning, repairs etc.
Marriage value
In enfranchisement, marriage value is the extra value brought about by the freehold and
leasehold interests being under the same control. These interests are often worth more
together than apart.
Mixed tenure estate
An estate with both tenants and owner occupiers, some of whom may be leaseholders
residing on it.
Mortgage
A loan which gives property as security.
Mortgagee
The person/organisation lending money to someone to buy a property.
Mortgagor
The person borrowing money to buy a property.
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Non-itemised repairs
Works that are not explicitly defined in a s125 notice.
Parties to a lease
The landlord and lessee, and sometimes the management company.
Precedent
Lower courts have to follow the decisions of the higher courts. This is called precedent,
binding precedent or judicial precedent.
Provision
Where the lease allows something to be done.
Qualified surveyor
The term used in legislation to describe the person undertaking an examination of the
landlord’s service charging arrangements under s76 of the Leasehold Reform, Housing and
Urban Development Act 1993. It could in fact be a qualified accountant, valuer or surveyor.
Quarter days
In England and Wales the days when payments which are made every quarter should be paid.
The quarter days are the days that the seasons are said to start. The actual dates and their
names are:
25 March – Lady Day;
24 June – Midsummer Day;
29 September – Michaelmas Day; and
25 December.
Quiet enjoyment
Allowing a tenant to use land or property without interference. When a tenancy is created
the landlord is expected to allow the tenant to use the land without any interference, unless
the tenancy agreement allows it.
Recognised Residents’ Association (RRA)
A residents’ association recognised for consultation purposes under s29 of the Landlord and
Tenant Act 1985.
Redemption
Paying off a mortgage/loan.
Reference period
A period of five years running from the date by which the landlord expects that a purchase
under the right to buy will have been completed.
Registered Provider (RP)
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Not for profit organisation, registered with the Homes and Communities Agency (HCA),
providing housing and other services as defined in the Housing Act 1996. Housing
associations still retain their statutory identity under s1 of the Housing Associations Act 1985.
Registered office
The official address where documents can be served on a company.
Repairing obligations
The repairs, which under the terms of a lease, the leaseholder and landlord each agree to
undertake. There are, therefore, leaseholders’ repairing obligations and landlords’ repairing
obligations.
Reservations
Rights which a seller of land keeps.
Reversion
The landlord’s right to possession of a flat when a lease comes to an end.
Right of way
A legal right obliging the owner of land to allow authorised people to cross it.
Section 20 notice
A notice served under s20 of the Landlord and Tenant Act 1985 in respect of proposed major
works.
Section 125 notice
A notice served under s125 of the Housing Act 1985 on a tenant exercising their Right to Buy,
Preserved Right to Buy or Right to Acquire. The notice sets out, amongst other things, an
estimate of annual service charges, all known structural defects and a description of current
and future capital works to be carried out within five years.
Section 146 notice
A notice served under s146 of the Law of Property Act 1925 in order to obtain forfeiture of a
lease.
Service charge
The charge made to the leaseholder for the provision of services under the lease.
Shared ownership
Purchase of a property in instalments. Purchasers buy an initial share from a housing
association and pay rent on the part they do not own. Further shares are purchased
(staircasing) until 100% of equity in the property is owned by the purchaser. Equity levels are
capped in some rural developments and some schemes for the elderly.
Sinking fund
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Collection of advance payments of service charges to fund future major repairs. Sometimes
called a reserve fund – it can be for a specific matter or for major repairs generally.
Sub letting
Where the owner of a leasehold grants a tenancy (or a smaller lease) of the property.
Superior landlord
Where an Registered Provider or local authority is not the freeholder but head leaseholder, or
immediate landlord, the freeholder is known as the superior landlord.
Surrender
To give up a lease or legal interest.
Tenure
How a piece of land is held by the owner (for instance freehold or leasehold).
Term of years
Length of the lease.
Terms of a lease
Individual obligations or rights.
Title
Owning land.
Title deeds
The documents which prove who owns a property and under what terms.
Transferee
The person something is transferred to.
Transferor
The person who transfers something to someone else.
Underlease
The lease of a property granted by the leaseholder of the property to someone else.
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