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Glossary - C
C1 Hotels and Hostels – Use Class: Use as a hotel, boarding or guest house or as a hostel where, in each case, no significant element of care is provided.
C2 Residential Institutions – Use Class: Use for the provision of residential accommodation and care to people in need of care (other than a use within class C3 (dwelling houses)).Use as a hospital or nursing home or use as a residential school, college or training centre.
C3 Dwellinghouses – Use Class: Use as a dwellinghouse (whether or not as a sole or main residence) -
(a)by a single person or by people living together as a family, or
(b)by not more than 6 residents living together as a single household (including a household where care is provided for residents).
Calderbank Offer – An written offer usually used to settle (frequently for rent reviews) made “without prejudice” save as to costs. A Calerbank offer may only be referred to after a court, tribunal or Arbitrator has made their decision.
Capex – Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.
Capital Appreciation – growth or gain in the value of a property or asset over time. Added to income (rent, dividends) this contributes to the overall or total return on a property or financial investment.
Capital Gains Tax – A tax on the gain in value of a property or financial investment – your main private residence is exempt. (see taxation)
Capital Improvement – Work carried out to an investment property which goes beyond maintenance and repair and adds value or improves the property – has implications for taxation and service charges.
Capitalisation – In business accounting terms capitalisation is the addition to the balance sheet as an asset of an amount that could otherwise have been treated as an expense. In Real Estate terms it is the value of an asset (property) calculated in relation to its expected future income stream (cash flow).
Capitalisation Rate – (or Cap Rate) is the ratio between the net operating income produced by an asset and its original capital cost or as an alternative its current market value. Net income / purchase cost x 100 = CR. For exanple, a building earning a net rental income of £10,000pa purchased for £100,000 has a cap rate of 10 or 10%
Caveat Emptor – Latin term – let the buyer beware. Traditional legal stance that the buyer takes the risk regarding defects in items bought – onus on the buyer to discover, not on the seller to disclose.
Case Law – The body of knowledge and precedent established over time by judicial decisions made regarding the interpretation of common law and statute law rules in particular cases.
Cashflow – Cash inflow minus cash outflow over a given period.
Certificate of Fair Rent – Certificate issued by a rent officer stating the fair rent for a dwelling, this being determined by the officer or a rent assessment committee.
Charge – Against a property, taken by lenders to secure the repayment of a loan or mortgage.
Charge Certificate – Issued by the Land Registry as evidence of title to a mortgage who deposits the land certificate for the period of the mortgage.
Change of Use – The ability to change how a building or land is used. A change of use may require planning permission, e.g. changing from one type of shop to another.
Charges Register – All properties providing security for mortgages are registered at the Land Registry on the Charges Register.
Clawback – It’s a right to acquire future payments which are caused by future events e.g. gaining planning permission for change of use or completion of a development.
Completion – of the sale of property. When ownership passes and the keys are handed over to the new owner in exchange for full payment. As a rule completion is about 2/3 weeks after the exchange of contracts.
Commonhold – a relatively new form of land ownership introduced into England & Wales by the Government???
Commonhold and Leasehold Reform Act 2002 – and concerns flats (apartment) blocks. It’s an alternative to long-leasehold ownership the traditional English system of tenure for blocks of flats. Each flat is held freehold and the common parts, such as stairways, gardens, will be held and managed by a Commonhold Association.
Common Law – Judge-made law built-up over centuries from decisions made in courts of law, as opposed to statute law made by Acts of Parliament.
Comparables – A valuation technique in which a recently sold or let property of similar size, location and use is used to determine the value of a property. This is often used in real estate to determine the initial sale price or rental value of a property. It is particularly relevant when doing rent reviews.
Competent Landlord – Competent in this sense means legally empowered to accomplish legal acts such as serve notices. E.G. under the Landlord & Tenant Act 1954 a landlord that is itself a tenant must have 14 months unexpired on its own lease to serve a valid Section 25 notice.
Compulsory Purchase Order – A compulsory purchase order (CPO) allows certain bodies such as the Government which need to obtain land or property to do so without the consent of the owner. Anyone who has land acquired as part of a CPO is usually entitled to some compensation.
Condensation – caused by lack of heating, ventilation or insulation, it occurs when warm air which holds water (steam) contacts colder air or surfaces. Causes material damage over time, mould and fungus growth and can become a health risk.
Conditional Break Clause – To protect themselves, landlords often attached specific and quite strict conditions which must be met for a tenant to legally exercise a break clause.
Contaminated Land – is used in general terms to describe land polluted by: heavy metals, oils, chemical substances, gases, asbestos and radioactive substances. Defined legally as land where substances could cause significant harm to people or protected species or significant pollution of surface waters or groundwater.
Contract – A legally binding agreement requiring offer, acceptance and consideration. Property transactions must be evidenced by deeds being properly executed: signed, sealed and delivered (exchanged) to be legally enforceable.
Contracting Out – Commercial property leases automatically qualify for the protection afforded to tenants at lease expiry by the Landlord & Tenant Act 1954. The parties to a lease may agree to contract out of the Act.
Contractors Test – This method of valuation is employed in the case of hereditaments which are normally never let, which by their nature do not lend themselves to valuation by comparison with other classes where rental evidence does exist and which are not of the type where a valuation by reference to the accounts of the undertaking (Receipts and Expenditure Method) would be appropriate.
Conveyancing – The legal process involved in the transfer of ownership of land and property which is managed by a solicitor or licensed conveyancer.
Counterpart – A duplicate copy of a legal document. The landlord’s copy of a lease, the tenant’s copy being the lease itself.
Covenant – Variously translated as “pact,” “agreement,” “treaty,” “a solemn promise,” “an obligation”. It is used in English Law (particularly property law) to express the idea of a solemn binding agreement and can therefore be interpreted as a binding contract.
CPI – The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as food and fuel. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance.