How To Sell Your Inherited Property

Have you experienced the death of a loved one? This is devastating enough without the hassles of settling the estate. Once you have inherited, any taxes that have accumulated must be paid before you can sell any of the estate property. Laws on estate sales vary from state to state. This makes selling inherited property difficult at best. If you need help with the sale of inherited property look to DJA properties LLC.

DJA properties LLC pays cash for your inherited home. They are licensed in Pennsylvania and New Jersey. Do you have lien or title problems because it was not put in the will? Are you strapped for cash and need help? Contact them at http://866cashpaid.com/.

Selling inherited property can cause headaches for family members. Sometimes it feels like a white elephant just waiting to crush you. Are you having trouble selling because of no equity? They will buy no matter what shape your property is in and charge no commission fees.

They will come and clean out the property. Dealing with the emotional upheaval of a death in the family is hard enough. There is no need to bang your head against a wall over selling inherited property. Go to http://866cashpaid.com/. They will take your headache away. You will have a quote in as little as twenty-four hours. No need to worry over those tax bills.

Estate laws complicate the sale of inherited property. You do not need to worry about this. You have enough to do to put yourself back together. The rest of your family needs you to be there for them also. After the funeral is over, life goes on. You have to deal with bankbooks and personal property your loved one left behind. When there is not enough cash to keep up with the bills and you have to find money fast, let DJA properties LLC help. They make selling inherited property problem free.

They handle all the paperwork so there is no hassle for you. You do not have any closing costs to pay. Selling inherited property is time consuming and problematic. Start putting your life back together. Don’t let the sale of inherited property give you a headache.
When you need to settle an estate but do not know how, DJA Properties LLC can help you. Give them a visit today and be worry free by tomorrow. Visit http://866cashpaid.com/ today to solve these problems.

<!– START finance update BITS TO CHANGE–> Whilst it is famous that there are more pages to the German Tax Code than most other countries put together, it is possible to simplify the issues somewhat and make the viability of investments that much easier to understand. This brief has been put together to assist with the early questions regarding tax. The intent of this brief is not to replace the work of a local tax consultant, more to focus your questions that you will ask.

Types of Tax:

Broadly, tax will fall in the following areas:

>Purchase tax
Local Ground or Property Tax
Income or Corporation tax
Capital Gain Tax

In turn then:

Purchase Tax

This is set as a flat levy, regardless of purchase price. Across the whole of Germany the fee is set at 3,5% apart from Berlin and Hamburg who charge 4,5%, clearly a good way of bolstering the city coffers! The purchase tax, or stamp duty is free of VAT, it would be a little harsh otherwise, and is payable prior to completion of the transaction. It is common for the Notary overseeing a contract to make this charge 14 days post contract, so all is in place before completion and there are no hold-ups.

Local Ground or Property Tax

This charge is usually made each quarter by the city, and is based on the land value of the unit [typical examples]. The tax is levied on the assessed value of the property using the basic federal rate of 0.35%. The amount is further multiplied by municipal coefficients to calculate for the final tax due. The municipal coefficient varies by municipality but the average rate is 1.9%. It is common for this tax to be included within the ancillary costs of the rent paid, so effectively paid by the tenant and not being drawn from the net rent as long as the property is occupied. If the property is unoccupied, the fee becomes liable to the landlord. As an example, for a property with an assessed value of 100,000 Eur:

Value = 100,000 Euro
Basic Annual Levy = 0.35%
Basic Tax = 350 Eur per year, or 87,50 Eur per quarter

The thing to remember is that, whilst the unit is tenanted, this is effectively paid from the tenant’s ancillary costs, so not a cost direct to the landlord from the quoted yield of an investment.

Income Tax or Company Tax

Depending on how an investment is structured, you will be liable for individual or company tax on the net income produced. In both cases, there are a number of allowances made against income which include:

Interest from any finance against the investment [but not the capital repayment element]
Costs associated with running of the property including maintenance and other items.
Expenses incurred in running the investment such as trips to view the property and sort management issues etc

Depreciation – here a big allowance is made for the notional depreciation in value of a property due to its age. Depreciation is allowable on the building only, for buildings with land an amount of 70% is attributable to the cost of the property. 2% depreciation is allowed per year for property built 1925 onwards and 2.5% for property before 1925.

Example:

For a 1910 property of 100,000 Eur value again, the calculation for net income liable to taxation might be:

Income

Net Rent [cold rent] – 10,000 Eur [10% net yield]

Expenses

Interest – 4,000 Eur
Maintenance – 500 Eur
Expenses – 500 Eur
Depreciation – 1750 Eur

So, total income liable for tax would be 3250 Eur.

This is a very simple case, other factors will perhaps bring the income liable for tax downwards. Income tax rates for individuals are below for 2010:

Taxable Income

Tax Rate

Upto €8,004

0.00%

€8005 – €13469

14%-23.97%

€13470 – €52881

23.97% – 42%

€52882 – €250730

42.00%

Over €250,730

45%

 

Corporation tax is an issue which is best to seek advice upon, but in most cases 25% is the level set for income, after all allowances.

Tax Structures

A common question for a new investor is how should they structure the investment vehicle to ensure it is efficient for tax purposes. The choices centre around purchasing the property in private individual names or as a company structure. First off, it is important to note that the financing of property makes little distinction to the structure used. Security will be taken against the property and income and capital positions analysed of individuals or the individuals standing behind a company. So there are little restrictions on this side. On from this, the aspects to consider are:

What level of income do you expect to receive in Germany Is it worth setting up a company, or are individual tax rates more favourable?

What are the costs in setting up a company, and the annual running costs of filing accounts?

What liability differences are there with holding property under a company as opposed to an individual?

Are there any aspects with capital gain or inheritance that affect your plans?

It really is advisable to take professional advice on these points. We have a number of tax consultants who are established to help international investors, so please just call when you need this service.

enquiry@proventureproperty.com<!– END finance update BITS TO CHANGE–>

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Home is human prime need. Home is a human habitat and shelter from rain, sunlight and bad weather. We put our belonging at home. We do so much activity at home. We share sadness and happiness with our family at home. Home is a place to coming back to. Basically home is a building with wall, roof and floor. And home use to separate to rooms. Each room has different function. There is guess room to meet with any guess at home. There is living room where family member gathered and share life together. There is kitchen to cook dishes. There is bath room to take a bath. And the most important is bed room, a personal room for each family member.

Home shape and design is different in many countries, but as the technology development and information spread out home design can apply in every country. American home is one example of variety design. American citizens come from various cultures all over the world. There are European, Asian and Afro offspring. USA property is influence by people heredity.

Not only heredity but people taste can also influence the home design. The global information makes people easily know various style and design for the house. And USA real estate always follows people demand.

In Southern California, especially Orange County property management is an important aspect of investing in real estate.

The profitability of your property is dependent on hiring a qualified helpful and professional property management company. Hiring the wrong management company can mean losing thousand of dollars, or more. Property owners who hire the right OC property management company however, can enjoy the benefits of a lucrative property investment. Some of the most common, and often, detrimental mistakes a property owner makes is not doing enough research. The more research you do, the more you can avoid hiring a bad management company.

Property management companies that also sell properties, often nation wide corporations like Century 21, etc. are often a bad idea. They usually are primarily real estate agents, who also do property management because they want to manage when you choose the sell the property. A property management company like this is not a good idea because they make more money selling than managing. You would benefit more from a smaller, specialized company that deals only with property management in your area and nothing else.

For example, if your property is in Huntington Beach, you should try to find a local expert Orange County property management company that has a much experience in the local area only. Make sure you check the references of your management company’s other clients. Don’t be afraid to make a few phone calls, and get a good track record. You shouldn’t sign anything before you have a good idea that the company you’re hiring is the best at property management in Orange County and one that you can trust. On the other hand, as an owner, you shouldn’t be too demanding of references either. A good property management company will not release all of their clients’ information to you,

because it is private and confidential information. The management company won’t be making an obscene amount of money managing your property, so they can always tell you to take your business elsewhere if you are being too much of a pain. You will do well with around 3 references to talk to, and get an idea of how they work with their clients. Some other things to keep in mind: Is the company licensed in the state of California? Is the company insured? Do they have a fidelity bond to protect you in case an employee mishandles your money? Will they provide you with reports? Will they market your property? How do they deal with late charges? How do they handle tenant complaints? And so on. These are some tips for making sure you hire a good property management company that will professionally and efficiently manage your property, helping you turn your home/apartment/condo/commercial property into a steady investment.

Buying an investment property is an important decision and should be made in a very careful way. It is a venture where a large amount of money is involved and a miscalculation can be fatal to the investor. It is surely a promising field to invest in, in today’s economy, but the competition and legal procedures involved in it necessitates lots of research. Trying one’s hand in the market without enough knowledge is just not advisable. This article highlights some key factors that one should seriously consider when they think of property investment.

First, have your investment objectives clearly set out and precisely stated. Many people who buy investment property basically have three objectives. You may want to buy a property that you will quickly sell to make profits without having to wait for so long. Other investors buy property as a long term investment. That means, they are ready and will have to wait for a considerably long period of time before they can start reaping from the investment. The other kind of property investment is where the investor buy’s property for rental.

Depending on your investment objective, various strategies can then be employed. It is most challenging when you want to buy property that you intend to flip quickly. Here, you need to get yourself a property in a prime location, where many buyers will be willing to buy, and that is the challenge. The fact that the property will be having many willing buyers means that it is definitely going to be expensive. You need to be very timely and in good knowledge of the property value in the area. You should then be able to get yourself the best bargains lest you end up with a property you won’t be able to sell.

Long term property investment is less challenging to buy. What the investor needs to know is the development trends so as to buy the property in a potential area. This is not very difficult to establish as developing areas can easily be identified. In long term investment, one should go for the lowest priced property as they will have to wait long before they can be able to resell the property. However, that will depend on the amount of time you are willing to wait.

Many factors need to be put to consideration when buying residential investment property. First, keep in mind that security is a priority for many people and your tenants will not be an exception. Residential property should also be easily accessible. The infrastructure should be good but not too complex. The area should have social amenities such as schools, medical facilities and shopping malls. When considering residential investment property, always remember that apartment units are easier to rent out compared to whole house units.

Despite the investment objective you may be having, the condition of the property at the time of buying should be seriously considered. You should take time to thoroughly examine the property before buying it. This will save you unnecessary costs that may arise from doing repairs. Some property may also be in such a state that they will need constant maintenance which can be quite costly.

Check out this list of things to do and look out for before you purchase a property in Spain.  The list is easy to understand and should be followed with your lawer.  He is the one who will know where to do the digging for information.  We wish you well and good luck in finding your spanish dream home.

The Escritura Publica and Nota Simple

The Escritura Publica is the registered title deed of the property. It is entered in the ‘Registro de la Propiedad’, the Property Registry, and is the only guarantee of title in Spain. It contains a description of the property, the details of the owner and any mortgages or legal claims that exist against the property. This document is important because it tells you if the seller is the owner of the property being sold. A nota simple contains further details of any mortgages or charges against the property and is also available from the Registry.

The IBI receipt

Before purchasing a resale (not new) Spanish property check out the ‘lmpuesto sobre Bienes lnmuebles’, or lBI, which is the municipal property tax. Ideally, you’ll be able to see the IBI receipts for the last five years because that is the limit of liablity for unpaid back taxes and is attached to the property, not the owner. A new property bought from a developer will not have an IBI receipt (because it has never been ‘owned’) so it will be your responsibility to register the property for this tax.

The Referencia Catastral

Every property sale must quote the ‘Referencia Catastral’ of the property in question. The Catastro is another system of property registration in Spain, concentrating on the location, physical description and boundaries of the property. While the Property Registry focuses almost exclusively on ownership and title, the Catastro is concerned with property valuation.

These two systems do not communicate with each other, and it is common to find that the catastral description of a property differs greatly from the one in the Property Registry. It is a good idea to request the actual certificate from the Catastro with a full description of the property. The certificate is in two parts, one being a description of the property and the other being either a plan or an aerial photograph.

Community fees, statutes and minutes of the AGM

This only applies if you are buying a property in an urbanisation or where there are some ‘communal’ resources, shared amongst a number of properties. These are the fees charged by the ‘Comunidad de Propietarios’, the Community of Property Owners, a legal body that controls all the elements held in common; the lift, gardens and pool for example. Each owner is assigned a quota, or percentage of the expenses which, by law, must be paid.

Utility bills

These assure you that the bills are paid and also provide an idea of what the running costs of the property will be.

Misc

If you are buying a property in an urbanisation, make sure that it is legal and registered by asking to see the approved ‘plan parcial’ at the town hall. If the property is on the beach, make sure the development is also approved by the Jefatura de Costas. For a new property, make sure that it has been declared for IBI and that the developer has made the ‘declaracion de obra nueva’. Also ensure that the escritura mentions the house you are purchasing as well as the plot of land on which it stands. As an additional safeguard, it is wise to examine the town planning maps for the area around the property, called the Plan General de Ordenacion Urbana, or PGOU.

Certainly it appears the global economy has moved on in the last two months and we appear to be seeing some early signs of improvements signalling that the recession is starting to ease. The Organisation for Economic Co-operation and Development (OECD) has suggested that there are “tentative signs of, at least, a pause in the economic slowdown” in some countries – namely the UK, France, Italy, and China. Jean-Claude Trichet, the president of the European Central Bank, said recently that there has been a “slowing down in the decrease in GDP” and went on to note that certain countries were already reporting a pick-up.

There are also signs that housing market activity in the UK is picking up slightly, with mortgage approvals up slightly and surveyors reporting increased interest in house purchases. World stock markets too have recovered significantly from their low points in March.

All of this is good news, but our view remains largely unchanged as regards the overall state of the world economy and also the property market in Mallorca. That is, that there is indeed a slowdown in the rate of fall of the key economic indicators in some countries. And this could be a sign that the recession is gradually finding a its lowest point. We do not feel however that there will be a quick or significant rebound except for perhaps in the stock markets driven by traders who appear in the main to be flying in the face of what continues to be pretty dire economic and company performance data.

Furthermore some of the key actual economic indicators, and things the UK and other counties still have to contend with, look far from cheery. Unemployment could reach 9% in the UK, 10% in the US and 20% in Spain by the end of the year. This will undoubtedly have a negative effect on consumption and the housing market in these countries.

Added to this, these signals of recovery are not yet apparent in a small number of the biggest economies in the world such as the US, Germany and Japan. In many developing countries too conditions are still getting worse.

With all this in mind, we think it far too early to be heralding the end of the recession, or even that it has reached its ultimate low. It may be that we will see a modest return to growth in some countries in 2010, but it will take longer, possibly much longer, to return to the levels of activity seen prior to 2007.

On top of this there are still great concerns over the financial health of some of the worlds biggest economies. And the overall effects of the massive amounts of money pumped in to stimulate these economies is not yet clear. The IMF has warned that there could still be another trillion in losses for the financial sector as a whole before the crisis is over.

Our prognosis for the Mallorca property market

As above, there are plenty of solid reasons to believe there will be no significant uplift in property markets in any country, even the strongest such as mallorca, during the course of this year and most likely the first half of 2010 too.

On top of the global macro economic considerations there are factors specific to the Spanish property market that also put pressure on prices across the region. These are highlighted in the article mentioned above.

However, it is also very clear that activity has picked up for and that sales are being made, albeit at a relatively low level. There are a number of more positive factors that are contributing to this.

Euro interest rates are lower now than they have even been

The latest European Central Bank’s interest rate cut to 1.00% is the lowest level since the single currency’s creation. It is possible that the rate will be cut still further later in the year. Whilst it is likely that not all of this will be passed on to lenders, any lowering of consumer rates is positive and will help stimulate the markets to some extent.

In Mallorca we are seeing buyers are taking 50% loans so they have a hedge against any further significant currency fluctuations. Braver investors are seeking higher percentage Euro loans on the basis that Sterling will improve against the Euro and therefore, paying off the loan and converting the bulk of their Sterling at a later date will be to their advantage.

Reflecting this there was a small increase in the number of new mortgages granted in March although the number is still significantly down on last year.

Continue opportunities for property purchases at very low asking prices for Mallorca

This is the most important factor. Buyers in the Mallorca property market at present tend to be either professional investors, or private individuals who realise a) that there are some very good deals to be had in the current market and, b) that to delay looking for a property in the hope that conditions will move even more in their favour might mean missing out on a great opportunity that is available in the market right now.

We have written several times on this subject and you can read previous articles ono the subject via the links listed on this page of the Mallorca Property Partners website.

Overall our prediction remains that average property prices in Mallorca will drop further through to the end of this year, possibly continuing into the first half of 2010. We do not however think this drop will be as high as in other parts of Spain (predicted to be 10% overall this year and 12% next year by analysts at BBVA – one of Spain’s leading banks). The fact that there are active buyers in the market in Mallorca sets the region apart from most. And there are plenty of other solid reasons to set Mallorca apart from other parts of mainland Spain, the other Spanish islands, and most other international property markets too (see the “Green shoots” article referenced above).

But once again the over-riding observation is to not rely too much on market data and statistical analyses. This is because of the considerable variance in actual selling prices above and below the average prices in this unusual market environment. The reason for this is that the seller’s circumstance is a more powerful factor than in a “normal” market environment and this is not directly related to the usual determinants of the value of a property.

There are, therefore, some exceptional deals being done at price levels that are unlikely to be improved upon regardless of where average prices go to. To illustrate, see this selection of properties in Mallorca that have  either been reduced in price or listed at very low asking prices.

If you are reading this because you might be interested in buying a property in Mallorca, our advice is to monitor opportunities on an ongoing basis. You might see the ideal property right now and be able to get it at an unbeatable price. It is not easy though to identify the best opportunities, as not all owners are dropping the asking price but still may negotiate significantly when it comes to an offer.

Your best approach would be to brief us at MPP to use our experience and unrivalled contact base to look out for the best Mallorca property opportunities for you. Read more about what Mallorca Property Partners offer.

With the property markets now under-going correction from their highs in 2006-2007 across most of the developed world, and savings rates at an all-time low, cash-rich investors are seeking returns on their capital like never before. Gone are the days of investments baked with the expectation of capital growth, investments now need to “stack up” in terms of cashflow from day 1. That’s not to say capital values are being ignored, far from it. Investors increasingly seek stable investments that provide a measurable and regular return. So markets should be in some sort of equilibrium in terms of supply versus demand, and capital values holding steady. In many ways then, conditions are back to normal in many respects for serious portfolio landlords.

So where are yield investors looking today? Working on the ProVenture team, we get to talk to yield investors every day from across the world and it is interesting to pick up on trends in their strategies. We hear about where investors have placed their hard-earned cash in the past, and where and why they are looking to invest in the coming years. Inevitably, many of the investors we speak to are focused on Germany as a place to invest for the coming years as this is our main area of operation as property consultants. But increasingly, we discuss investments in eastern Europe, other parts of western Europe and the USA as viable investment locations.

Let’s look at some different markets and find out what is drawing investors to them at this stage of the economic cycle.

USA

What an interesting market to look at, as we write this piece in August 2010. The USA is the home of raw capitalism, and this harsh approach applies to the property market in much the same way as the money and equity markets. Despite the assets in question being people’s homes and security, they seem exposed to harsh write-downs more than other countries, and this brings sorrow and hardship for those shielding loses and inevitable opportunities for investors.

Taking a historical perspective on the market, we see that the USA has typically had an average level of owner-occupation between 1960-1990 of around 60%. Home ownership was a realistic aspiration for many, but not an imperative like in other markets such as UK or Spain where owner-occupation rates have been as high as 85-90%. This led to, in most locations, a stable market to invest within and a ready supply of short to longer term tenants. The credit bubble of 1996-2006 changed all this.

During the period of low interest rates, sectors of the population who up until then could not aspire to home ownership at their stage of life, if at all, entered the market on “teaser” loans, affordable for the first few years of the loan but become crippling as the loan rates reverted to usual market rates or higher. This greed on lenders parts, and their shocking lack of due diligence into individual’s ability to pay, had a now famous global effect. Currently, 14% of the population are behind on mortgage payments or are in foreclosure. This is an average, and some markets have double this rate. That’s 9 million homes in trouble, double that are households sitting on negative-equity. So where are we now, and is the USA a place worthy of investment research? It is safe to say, the market is still largely bereft of confidence and sharp declines have been felt pretty much across the board. But are there areas that have suffered steeper declines than are justified?

Well, the USA is a huge market. Let’s focus on one city, Orlando [Florida] as a case study.

The Orlando region derives much of its economic power from tourism, business conventions, medial and hi-tech research and the “grey dollar” or those retiring to the warm climes from more northern states or from abroad. The property market has grown with the huge rise in population, up 30% in the last decade alone. Typical in this region have been gated developments and condominiums growing mainly to the south of the city and spreading at an alarming pace in the empty land. The city or downtown area is well-established with some property dating back 100 years or more, broken up only by the high-rise developments which seemed viable during the credit bubble.

Construction of property can be standard construction, or more rapidly built units from pre-fabrication section. Use of wood in structural elements is often seen.

During the credit binge, Orlando was front and centre, financing and constructing homes to service both the local and tourist market. Depending on location and subdivision, property soared 200-300% from 1995-2005, unheard of growth rates in this market which has no scarcity value and seemingly limitless land in which to develop. Commercial development went just as mad. Business plans for “strip malls”, small malls by the road side took off. Some areas of the city boast 10 Taco Bell franchised outlets in a 1km radius. All sectors of the property market, even in downtown locations, could be said to be very over supplied.

In terms of pricing, let’s look at the price history of a high-end 2-bedroom apartment in the downtown district using the excellent zillo.com tool:

The graph shows that such a unit was being sold off plan in excess of 0k, now priced around 0k [or even cheaper navigating the foreclosure route].

In terms of rental potential, the downtown area enjoys solid demand. Around 00-2000 should be expected per month, bringing a healthly 12% or so yield.

Why would you buy this? Well, the current low capital value is compelling, as is the location of the unit in the downtown area which enjoys some degree of scarcity value. It is an interesting proposition.

Why wouldn’t you buy? Well, considering the lack of confidence in the marketplace, finance will be very difficult for the first few years of the hold. It should be best considered a cash purchase, so the power of leverage is not as easy here. Additionally, it really is not clear where capital values will go, but for a cash investor looking for a sustainable yield, this is a strong option.

The German Market

Over the last 10 years or so, property markets around the world have experienced rates of capital growth typically between 200-300%, fuelled by cheap and plentiful credit. There are few exceptions to this trend, one of them being Germany. Due to re-unification some 20 years ago, the property market in Germany, particularly in the old east, has been operating out of sync with other markets. Speculation by mainly western German buyers fuelled a boom which ended around 1996. As investors were chasing rents that were not achievable, the German market gave way and went into decline from around 1996 – 2001. This was the same time that most markets around the world experienced their greatest growth rates. Prices have stabilised in most areas from 2001 and shown some capital appreciation in certain areas, particularly the good locations in the bigger cities such as Munich, Hamburg, Frankfurt and Berlin.

Market Features:

The residential market differs considerably from other locations, with more robust tenant laws and longer typical residence times. Typically, a residential unit will be offered for letting totally unfurnished, without kitchen units, light fittings or even flooring. The incoming tenant will provide all their own furnishings and stay for a longer period, typically on average about 7 years. Tenants sign contracts of a defined period but are effectively on a lifetime lease thereafter, only needing to move out if they are not regular with their payments or the landlord (or close family) which to occupy the unit. Tenants must give 3 month’s notice to quit and will repair and decorate the unit to a good condition when vacating.

Finance for Nationals and international buyers is usually set around 60-80% loan to value. The level of finance depending on the client’s income and the rental value of the property. Typical interest rates are fixed for 5 or 10 years and around 1.3% above the Euro 5 or 10 year swap rate. So at present rates are around 3% for a 5 year fix and 3.8% for a 10 year fix.

Typical Prices:

Property, both commercial and residential tends to be priced per sqm and not by room or bedroom number. Therefore, investments can be easily compared by size, price and location. Residential property can be purchased either on a single basis or by purchasing a complete block of apartments. Purchasing a complete block tends to reduce the price per sqm paid. Some typical prices per sqm in the major cities, depending on size and location:

Berlin – 1.000 – 2.000 Eur psm
Frankfurt – 2.500 – 4.000 Eur psm
Munich – 3.500 – 5.000 Eur psm

Locations to the east of Germany (Dresden, Leipzig, Chemnitz for example) have properties in a good refurbished condition from 500 Eur psm. Remarkable value and the most undervalues market in the world according to the OECD. Location in terms of sustainability of rent is crucial in these locations.

As an example apartment block, below is a unit in Leipzig with 19 apartments. The purchase price is 420k euro and a yield of around 12% net is achieved.

Typical Yields:

In the same way that property is marketed for sale, rental property is priced per sqm. The rental is often broken down in to “cold” and “warm” rent, with the cold rent being the income to the investor and the warm rent covering all bills including ground tax and routine property maintenance. Cold rents start at around 4 Eur psm in the very cheapest parts of cities to the east of Germany with cold rents in cities such as Munich reaching 12 Eur psm and above in many cases. Yields range between around 5% for single apartments in Munich, Frankfurt and Hamburg to around 10-12% when bought as a block in cities such as Dresden, Leipzig and Chemnitz. Berlin offers the complete range of yields and is a very diverse market.

Running Costs:

Costs during ownership are transparent and are comparatively low. The majority of deductions to run the property are taken from the “warm rent” or ancillary cost and should not be included in yield calculations. This includes basic building maintenance, communal area cleaning, buildings insurance and property tax. From the net rent, apart from unplanned maintenance, the cost of letting management is the primary deduction. There are a variety of fee structures for letting management including a flat fee per apartment or a percentage of the rent collected. Letting management typically costs between 5-10% of net rents, depending on area and fee structure chosen.

Positive Investment Aspects:

Hands-off investment – long-term tenants, unfurnished propertyletting
Well regulated and robust tenant and property management practices
High rental yields possible, to fit all investor types
Good finance available, at competitive levels of interest
Reliable legal and land registry system
Transparent running costs

Negative Investment Aspects:

Robust tenant laws – a tenant cannot just be removed unless they do not pay rent
High purchase costs (between 10-12%)
High yielding properties can be subject to a forced sell and can be problematic to deliver

View on Market:

Very good yields, underpinned by strong legal system and high levels of finance. Capital values very low in comparison with anywhere in the developed world. Truly unfurnished property allows for significant holdings to be built up in a relatively “hands-off” manner.

Where Next??

In terms of property in Europe, beyond Germany, yield investors have very few options. Markets are either stable but producing yields in the 3-6% range, or falling in capital value and difficult to predict the floor. Markets across the Eurozone and UK have a few years to run you would say before re-entering the market for yield and stability in capital value. Places that have experienced huge capital falls, but stabilise well in the coming years [with increasing wages as a key index] should be kept in mind. The following locations could be worth noting in years to come, with capital falls experienced in last 3 years:

Lithuania [Vilinus, Kaunas] – 55% price fall
Latvia [Riga] – 70% price fall
Ukraine, Kiev – 55% price fall
Further afield, yields on 8%+ can be found in: Sao Paolo, Brazil 8.1%
Santiago, Chile 8.7%
Jakarta, Indonesia 11.1%
Kuala Lumpur, Malaysia 8.7%

The diligence here should include analysis of finance availability, interest rates payable and currency stability. No good getting a 10% yield when the interest rate is 12%, or if the currency weakens significantly during the period of your hold.

Good luck in your hunt for yield.

Can I see the Title Deeds?
What will be my undivided share in the property?
Are you building within the permissible FSI?
Will you give me an Allotment Letter?
Will you give me a comprehensive Agreement of Construction?
Can I have a copy of PDA’s approved plan and planning permit, before commencement of construction?
What are your commitments after you complete and deliver the flat?

 

 

1. Can I see the Title Deeds?

1. In order to own a flat that is yet to be constructed. You will have to first buy an undivided share in the property on which the flat is going to be built. Before buying this, you must make sure that the title deeds of the property are in order. The title deeds are the set of documents that would unequivocally establish the seller’s ownership of the property and his right to sell it.

2. Therefore get a written opinion on the title from the Builder’s advocate along with photocopies of the title deeds. Certified by an advocate. If this is not available, get an opinion from your own advocate. You must also see the Agreement of Sale between the Owner and the Builder.

3. The manner by which the Owner acquired the property decides the key documents that must be seen:
A. Property was purchased by the Owner:
See the Registered Deed by which he purchased it.
B. Property came to them by a will (i.e. Bequest):
This is known as Testamentary Succession. See the Probated Will. If no Executor / Executrix has been appointed, see the letters of Administration granted by District / High Court according to law.
C. Property devolved through succession:
If the earlier Owner died without leaving a Will, the legal heirs and successors obtain a Deed of Succession issued by the Sub-Registrar or an Inventry of the assets from the District Court, which must be seen (obtain a noterised copy).
D. Property developed through a Gift / Partition / Settlement / Exchange:
The Deed relating to such transfer of Title – Gift Deed / Settlement Deed / Deed of Relenquishment / Exchange Deed – must be seen.

4. The other ancillary / supporting documents that must be seen are :
A. Form I&IV in the name of the Owners, issued under the Seal of the Mamlatdar.
B. Nil-Encumbrance Certificate (EC) for the preceding 31 years, preferably showing no mortgage or other encumbrance that are still existing on the date of purchase. Exercise caution if an uncleared mortgage or other lien on the property is shown in the Encumbrance Certificate.
C. The property being sold must be free of restrictions for sale under the Urban Land Ceiling Act (U.L.C. Act). If a Clearance Certificate for the Property issued by the U.L.C. Authorities is not available, then it has to be ensured that with reference to the land held by the Owner(s), and the nature of their family membership, the built-up area of the construction thereon and the appurtenant / contiguous land around the built-up area fall within the ceiling of Ownership and therefore can be freely said.

5. If the property is not being transferred by the Owner(s) directly but through an Agent, acting as Power of Attorney Agent (POA) of such owner(s), ask for the original or attested copy and scrutinise it. Such a Power can be given either through a Notarised Document or Registered Document. However, a notarised power may not be accepted for property transfer by all governmental/financial agencies.

6. Besides the above, it is advisable to check the following:
A. Property Tax Demand Notices and Receipts for payments to the Corporation.
B. Water and Sewerage Tax Demand Notices and Receipts for Payments to the Panchayat or Municipal Authority.
C. Electricity Bill and Receipts for Security Deposits and Additional Deposits. The latest electricity bill is the best source of proof for payment of dues by the Owners to the Panchayat or Municipality.

 

2. What will be my undivided share in the property?

Your Undivided Share of land must be equal to:
The built-up area of your flat as in the approved plan/ Total built-up area of the project as in the approved plan This is usually expressed as a percentage of the total land. Therefore, the percentage undivided shares of land of all the flat owners in a complex must be equal to 100. This ensures that the title to the entire land as well as the entire building rests with the group of flat-owners of the complex.
The Sale Deed transferring the Undivided Share in your favour must be duly registered before the commencement of construction of the flat.

 

3. Are you building within the permissible FSI?

1. The Floor Space Index (FSI) is an important parameter you should know about.

F S I = Total buildt-up area of your complex plan/Total area of the plot on which it is to be built.

2. The permissible FSI for all residential complexes other than multistoreyed buildings in all the end-use zones listed below is 1.5: Primary Residential, Mixed Residential, Institutional and Commercial zones

3. The total construction as declared in the plans of- fered by the promoter should not exceed the FSI permissible.

4. This FSI is fixed by the Planing and Development Authority (PDA) which is the regulatory body governing architectural, structural and environmental parameters pertaining to development within the State of Goa.

5. The rules and regulations governing the above parameters are spelt out in the Development Control Rules (DCR), a copy of which can be purchased from the PDA.

If the permissible FSI is exceeded, you as a flat-owner run the risk of demolition of the construction.

 

4. Will you give me an Allotment Letter?

Insist on an Allotment Letter at the time of booking, which must clearly indicate:
>> All-inclusive firm and fixed price (clearly indicating the various components such as land cost, registration and stamp duty for the transfer of undivided share of the property, and construction cost) and the schedule of payments.
>> Plan of the flat (as per sketch scheme), built-up-area and the features offered.
>> Committed commencement and delivery period and commitment for liquidated damages for any delay.
>> Post-delivery product warranty by the builder.
If your builder does not provide you with an Allotment Letter, you face the uncertainty of not knowing
>> The exact amount you will end up paying for your flat.
>> When you will get possession of your flat.
>> Whether you will get all the features promised.

 

5. Will you give me a comprehensive Agreement of Construction?

1. The Agreement of Construction substantiates the commitments relating to land cost (your share), stamp duty and registration fee, construction cost, schedule of payment, list of features, time of delivery, post- delivery warranty etc.
2. If defines the responsibilities and obligations of both the Contractor (or Builder) and the Contractee (or Buyer) and is normally put down on a Rs.10.00 stamp paper and signed by the Builder and the Buyer in the presence of witnesses.
3. The Agreement of Construction is the only source of your title to the flat, read in conjunction with the Property Tax Assessment and Demand Bill in your name. Since it is the document of ownership, funding agencies would demand it, when you apply to them for a loan.

 

6. Can I have a copy of PDA’s approved plan and planning permit, before commencement of construction?

1. The plan given to you at the time of booking may not be fully conforming to the Development Control Rules and the plan actually approved by the PDA may consequently be different. Therefore insist that you are given a copy of the approved plan and the planning permit before the construction of the complex commences. Check whether the area of your flat in the approved plan is as per the allotment letter.

2. If you have a copy of the approved plan and the planning permit, you can monitor the actual construction and ensure that it is as per the approved plan. If the building is not constructed as per the approved plan, you as a flat-owner, could face the threat of its demolition.

 

7. What are your commitments after you complete and deliver the flat?

1. Ensure that the builder gives you the Completion Certificate issued by the PDA, which confirms that the construction is as per the approved plan.

2. Ensure that the builder gives the Association of Flat Owners (of which you would be a member) with a set of detailed drawings covering structural, plumbing, electrical wiring, drainage and water supply details.

3. Ensure that the builder commits to rectify defects in your flat and the complex in materials or workmanship.

4. The Completion Certificate confirms the adherence of the completed complex including your flat to PDA’s approved plan, and eliminates all chances of demolition of the construction.

5. In the obsence of the drawings, maintenance of your flat (and the building) will be difficult.

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Abatement notice:
A notice served on the owner(s) or occupier(s) of a property from which a private nuisance arises, warning them of the intention to enter on the land in order to abate the nuisance.
Absolute title:
1. The right of ownership of a mortgage deed, which gives the right, in certain specified circumstances, to demand repayment in full, of the outstanding debt than the due date.
2. A clause in a deed or contract, which provides for the early termination of an exciting interest in land, in certain specified circumstances, thereby advancing the future interest.
Agreement for lease/sale:
A contract to enter into a lease (or sale), which in order to be enforceable either must be evidenced in writing and signed by the person against whom action is taken for the breach of the alleged contract and there must be a sufficient act of part performance.
Alternative user value:
The value of land and buildings, which reflects a prospective use, which is different from that of the current use.
Amortisation:
1. (UK) The concept of writing off the capital cost of a wasting physical asset by means of a sinking fund.
2. (USA) Payment of a debt in equal installments of principal interest, as opposed to interest -only payments. Anchor tenant: One or more department or variety chainstores, or supermarkets, introduced into a shopping center in key positions to attract the shopping public into the center for the purpose of encouraging other retailers to lease shops n route. The larger the developments the more anchors required.
Annuity:
A sum of money paid each year during the life of the recipient. An annuity is usually paid as a legal obligation under a contract or undertaking, as through a pension scheme, and may be paid in installments more frequently than once every twelve months.
Asset valuation in the property market:
This expression is applied to the valuation if land and buildings or plant and machinery. The term is often used to describe an expert opinion of the worth of a property, which may be incorporated into company accounts, where the ownership of the asset is not necessarily to be transferred but the valuation is required for the company takeovers, share flotation or mortgages.
Assignment:
The transfer of a property interest, especially a lease, from one party to another.
Atrium:
An entrance hall of a building, often rising through a number of storeys and containing lifts, reception areas and plants. Originally the hall or chief apartment of a Roman house.

B

Balloon payment:
A repayment of a loan bond, usually but not necessarily the final repayment, which is larger in amount than other installments.
Bare shell :
This Depicts the condition of any property after completion of construction activity and installations of basic building services. A bare shell includes basic flooring – tiled, mosaic, cement or granite and plastered walls. Apart from this, pantry and toilet facilities may also be operational in such condition.
Basic rent:
A monthly rental net of maintenance and interest costs charged or quoted by landlords for any property. The base rent comprises of only the payment made for Usage of the subject property under a lease agreement. Imputed costs such as holding costs fit out costs and building service charges are not usually included in the base rent.
Bayana:
An Indian term used to denote the token money given to the landlord to informally freeze negotiations on a particular property, after the initial terms and conditions have been formalised.
Breach of contract:
An act, or omission, contrary to enforce specific performance to rescind the contract and / or to claim damages, the remedy available depending upon the nature of the breach.
Broker/dealer:
A person or company who acts as a medium of bringing owners and proposed buyers together with a view to complete a real estate transaction.
Brokerage:
1. Commission paid to a broker.
2. The activity of a broker in bringing together two parties in a transaction.
Building byelaws:
Local authority control of building standards promulgated to regulate and control the usage of land, property and areas in cities and towns.
Building contract:
A contract between an owner or occupier of land and a building contractor, setting forth the terms under which construction is to be carried out, basis of remuneration, time scale, and penalties, if any, for failure to comply with terms of the contract.
Business center:
Commercial premises usable by the occupiers for a short period on a membership basis of the center. Usually, a business center charges for the full service accommodation, which is generally substantially higher than the rental of a standard office space, and higher than the rental of a standard office space, and usually includes cost of HVAC, housekeeping, electricity, and security systems.
Business park:
A landscaped area containing high tech, other amenities for business purposes, as a distinct from high-tech park or a science park. Building density is lower than would be usual in a traditional industrial estate. Business parks are preferentially located where motorway, rail and airport communications are within a short distance.
Buy-out rate:
In a funding agreement between a developer and a prospective purchaser, the pre-determined investment yield which will be used to capitalize the annual income receivable at the time of sale to determine the buy out price.

C

Capitalisation:
1. At a given date the conversion into the equivalent capital worth of a series of net receipts, actual or estimated, over a period.
2. A method of calculating a final purchase price for a development using an agreed formula to convert actual, or assumed, income from initial lettings into a capitalism. Such capitalised sums may be offset against a purchasing fund’s interim finance payments, any excess being paid to the developer.
3. In relation to a company’s reserves, the conversion into capital of money, which is then distributed as a capitalisation issue.
Catchment area:
1. The area of land from which finds its way into a particular watercourse, lake or reservoir.
2. By analogy, the area which contains those people who can be expected to obtain goods, services, employment or other benefits from a particularly property. More especially related to retail premises, where the success of forecasting depends on the accuracy of estimating the number of purchasers (catchment population) likely to be attracted from the different parts of the area and the average expenditure, which might be expected, from them.
Central business district:
The functional center around which the rest of a city is comparison shopping, office accommodation, leisure facilities, buildings for recreational use, public museums, art galleries and governmental functions. Generally the area of highest land values within a city.
Clearance area:
An area, which is to be cleared of all buildings. Generally promulgated by way of a government declaration, which is normally followed by the acquisition of the land and the clearance of the area. Completion certificate/statement:
1. (UK) statement prepared by solicitors, usually those acting for a purchaser and a vendor respectively, following the conveyance of an interest in property, giving a schedule of sums received leading to a balance being the final amount due to the vendor. In some case the statement is prepared at a later date and may show a figure recoverable by the purchaser from the vendor.
2. A certificate issued by the local development authority certifying that all necessary works have been completed and that the property is fit for occupation.
Condominium (USA):
A building or a structure of two or more units, the interior space of the individually owned and the balance of the property (both land and building) being owned in common by the owners of the individual units.
Conveyance:
A document transferring title to land from one person to another.
Current yield:
The remunerative rate of interest, which is, or would be, an appropriate at the date of valuation, assuming the property to be let at its full rental value. It will be the same as the reversion yield where the reversion is to full rental value, and the same as the term yield where the rent receivable under the lease is full rental value.

D

Developer:
An entrepreneur who has an interest in a property, initiates its development and ensures, that this is carried out (for occupation, investment or dealing) and from the outset accepts the responsibility for providing or procures the requisite funds needed to finance the whole project.
Development control:
The powers of a local planning authority to control the development and use of land, which includes inter alia,
a) the refusal or grant (with or without conditions ) of planning permission;
b) the issue of enforcement notices;
c) the making of revocation, modification or discontinuance orders;
d) the grant or refusal of listed building consents;
e) the designations of conversion areas;
Development yield:
In a valuation to ascertain a ground rent, the rate at which costs are decapitalised to find the annual deduction from the occupation rents; it comprises:
a) an investment yield
b) an annual allowance for developers risk and profit and, in some instances
c) an annual sinking fund element
Discounted cash flow analysis:
Techniques used in investment and development appraisal whereby future inflows and outflows of cash associated with a particular project are expressed in present -day terms by discounting. The most widely used forms of DCF are the internal rate of return (IRR) and net present value (NPV). The techniques may be used for such purposes as the valuation of land and investment, the ranking of projects or their components.

E

Easement (UK):
A right appurtenant to a parcel of land entitling a dominant owner to use the land of the servient owner in a particular manner, or constraining the legal rights otherwise enjoyed by the servient owner, e.g. A right of way, right to light, right to support. Strictly speaking, easements cannot exist “in gross”, i.e. personal and unattached to the ownership of land, but rights similar to easements can be created by statute, usually for the benefit of public utility undertakings, and these are commonly referred to as “statutory easements”.
Effective rent:
The gross rent payable per month by the occupiers which includes the base rent, maintenance charges, imputed costs of loss of interest on security deposit and rental advance. The effective rent indicates the total cash outflow of an occupier every month on account of leasing any property.
Equity linked mortgage:
A mortgage whereby the interest on the principal in part or in whole is calculated, usually yearly, by reference on the security, e.g. It may reflect annual increase or possible decreases, in the annual return on, or the value of, the property in which the mortgage is secured.
Escalation clause specified in lease agreements wherein renewals of lease period are built in:
It involves an increment in the base rent at every renewal of a lease agreement in the base rent at every renewal of a lease agreement and is generally a percentage rate that is either pre agreed or negotiated before the renewal of the lease agreement.

F

Facilities management:
The coordination of many specialist disciplines to create the optimum working environment for staff.
Fail rent:
The rent determined by a rent officer (or, on appeal, by a rent assessment committee) under a regulated tenancy and registered.
FERA:
An act to regulate certain payments dealing in foreign exchange, securities, the import & export of currency and acquisition of immovable property by foreigners. Under Section 31 (1) of the Foreign Exchange Regulation Act ( FERA) of 1973, It is mandatory for foreign corporations, which are not incorporated in India to obtain permission from the Reserve Bank Of India (RBI) to acquire, hold, transfer or dispose off in any manner (expect by way of lease for a period not exceeding five years) any immovable property in India.
Fire certificate:
A certificate covering matters of safety required under the legislation for hotels, boarding houses, factories, offices shops and railway premises, excluding those buildings containing less than a minimum number of employees. In order to obtain a fire certificate, one must apply to a fire certificate, one must apply to a fire officer, who then inspects the building and issues a list of requirements (e.g. Fire doors). Once the fire officer is satisfied that those requirements have been met he will issue the fire certificate. It enables fire officers, in the event of an emergency, to have prior knowledge inter alia of the permitted number of people on each floor; it also informs officials if any authorised inflammables /explosives materials on the premises.
Fitouts:
Relate to the interior permanent furnishings required in a property including HVAC ducting, fire protection system implementation, establishment of workstations and telephone/computer cabling among other, in order to make the property fit for usage.
Flatted factory:
An industrial building of more than one storey, usually with two or more goods lifts, and constructed or converted for multiple occupation. The building is subdivided into small, separately occupied units, which are used for manufacturing, assembly and associated storage.
Force majeure:
A force, which cannot be resisted, in other words, something beyond the control of the parties involved. It includes acts of God and acts of man, e.g. Riots, strikes, arson. In many contracts and insurance policies, specific provision is made for damage or injury arising from force majeure. For example, the financial liability of a building contractor for failure to complete by a specific date may be relieved to the extent it was caused be force majeure. This is a common clause in most property contracts.
Foreclosure:
1. (UK) The mortgagees restricted power to extinguish the mortgagor’s right of redemption by transferring the mortgagor’s interest in the property to himself, if the mortgagors defaults in paying his dues or in complying with any other terms of the mortgage deeds.
2. (USA) The legal process by which a mortgagee can sell the mortgagors interest in the property to satisfy debt: also called “foreclosure sale”. Also applied to the extinguishment of a mortgagors right of redemption. Freehold:
In general parlance this is used as shorthand for the tenure of an estate in fee simple absolute in possession. Strictly speaking, however, freehold includes fee simple, entailed interests and tenancies for life. Frontage (line): The full length of a plot of land or a building measured alongside the road on to which the plot or building fronts. In the case of contiguous buildings individual frontages are usually measured to the middle of any party wall.

G

Greased:
Lease back The disposal by a freehold or leasehold owner of his interest on a property or leasehold interest where the rent payable is geared to a fixed percentage of some variables, often rack-rental value.
Gold cause (UK):
A clause in a lease, which provides for the rent to be reviewed by reference to the price of gold.
Green field site:
An area of land, usually in the edge of a town or city or away from substantial urban areas, hitherto undeveloped but for which development is now proposed.
Gross External Area (GEA):
The aggregate superficial area of a building taking each floor into account. As described in the RICS/ISVA Code of Measuring Practice (UK), this includes: external walls and projections, internal walls and partitions; columns; piers, chimney-breasts, stairwells, and lift wells; tank and plant rooms, fuel stores whether or not above main roof level and open-sided covered areas and enclosed car-parking areas, terraces etc.

H

Hi-tech building (high technology building):
Primarily a modern industrial building which is particularly suited to the flexible uses and space needs of business organisations engaged in modern technologies. Such activities usually require more office or laboratory space than a traditional factory and also more sophisticated and adaptable installations for services and communications.
High point loading:
A concentration of abnormally heavy floor loading at one point or more particular places in a building or other structure where extra support may be required.
HVAC:
Refers to the heating, ventilation, and air conditioning system installed in a building to regulate temperature. This includes air conditioning plants, chillers and ducting systems, which ensure the uniform transfer of the cold or hot air, as the case may be throughout the building.

I

Indian Stamp Act, 1899:
A legal statute, which provides for the payment of stamp duty in case of all real estate transactions to duty to the local government. The value of the stamp duty depends on the rental payable and the lease term or the sale value as the case may be. This duty is paid by purchasing non-judicial Indian Stamp Paper, on which the lease/sale agreements are documented.
Improvements:
Generally, physical changes which enhance the capital value of land or buildings. These may include additional buildings, extensions to existing buildings, installation of new services, e.g. Central heating and air conditioning and infrastructure works. On the other hand, mere replacement by a modern equivalent if something worn out would normally be regarded as a repair rather than an improvement. The distinction has legal and taxation consequences.
Indenture:
A deed between two or more parties, each party having his own copy. Originally copies were all included in a single document from which each was torn or cut along a wavy (intended) line. Institutional investors: These are generally taken to include banks, pension funds, insurance companies, unit trusts and investment trusts, which are together commonly referred to in the investment field as the “institutions”. Investment yield: The annual percentage return which is considered to be for a specific valuation in an investment being expressed as the ratio of annual net income (actual or estimated) to the capital value. It is therefore a measure of an investor’s opinion about the prospects and risks attached to that investment. The better the prospects and lower the risks, the lower the expected yield and thus the greater the capital value. The required yield from an investment is estimated in the light of such factors as:
a) the security in real terms of the capital invested;
b) the security in real terms and regularity of income;
c) the ability to adjust the income to reflect market conditions;
d) the complexity and cost of management;
e) the ease and likely cost of realizing the capital;
f) the tax position
Internal rate of return (IRR):
1. The rate of interest (expressed as a percentage) at which all-future cash flows (positive and negative) must be discounted in order that the net present value of those cash flows should be equal to zero. It is found by trial and error by applying present values at different rates of interest in turn to the net cash flow. It is something called the discounted cash flow rate of return.
2. An alternative explanation might be: the highest rate of interest (expressed as a percentage) at which funded f cash flow generated is to be sufficient to repay the original outlay at the end of the project life.

J

Joint agent:
One or two or more agents jointly instructed by a principal to act on his behalf. In the case of estate agents this is normally on the basis that if any one of the agents effect the sale, letting or other joint agent(s) will share the remuneration in agreed proportions. None of these agents would be entitled to a commission if the transaction is concluded as a result of someone else’s introduction.
Joint sole agent:
One of two or more agents jointly instructed as the only agents entitled to represent the principal. It is customary for the joint agents to share any commission earned on an agreed basis, irrespective of which agent effects the sale or letting.

K

Kiosk:
A small enclosed retailed outlet, normally without toilet facilities and in the retail area, frequently located in a public concourse or other place where it may remain open place where it may remain open only during peak times and be closed securely when there are no customers. Kiosks are now sometimes included in managed shopping schemes.

L

Land assembly:
The process of forming a single site from a number of land, usually for eventual development or redevelopment. This will include acquisition of individual interest the eventual development or redevelopment. This will include acquisition of the individual interests, removal or discharge of any restrictive covenants or other encumbrances and obtaining physical possession, when required, from occupiers.
Landlord:
The owner of an interest in land who, in consideration of a rent or other payment (e.g. A premium), grants the right to exclusive possession of the whole or part of their land to another person for a specific or determinable period by way of a lease or tenancy.
Lease agreement:
An agreement, usually written, between the lessor and the lessee, which allows for the conveyance of property to the tenant under a contract, and confers usage and control rights to the tenant for the duration of lease. Apart from financial terms and conditions, several clauses describing the other binding terms and conditions of the agreement are also documented.
License:
The lawful grant of a right to do something, which would otherwise be illegal or wrongful. It may be gratuitous, contractual or coupled with an interest in land. The grantor of license is the licensor and the grantee is the licensee. A gratuitous (“Mere” or “bare”) license can always be revoked (i.e.. Cancelled), but revocability of a contractual license depends on the terms of the contract. A license coupled with an interest in land may be irrevocable and unlike the other two categories, may be binding on successors in title of the licensor. One example of license is permission, usually required in writing, given specifically by an owner to a tenant, enabling something to be done which otherwise would be in breach of a term of the lease. A license does not itself transfer any interest in the land but may authorise the licensee to enter the licensor’s land for some specific purposes of the license; the licensor may enter the land and use it in any way not inconsistent with the rights of the licensee. However, a landlord may authorise by license some act or omission by a tenant, which would otherwise be a breach of the terms of the lease.
Load bearing:
The capacity of an element in a building structure to support a weight in addition to its own, whether vertically or laterally. Thus a load-bearing wall is one, which supports part of the structure in addition to its own weight.

M

Maintenance in property parlance:
The keeping of a building, structure or other physical feature in a specified e.g. Wind and weather tight, condition. The approved cost of maintenance may be deductible for income taxation.
Mattha:
Frontage of a building with the main road.
Mortgage:
The conveyance of a legal or equitable interest in freehold or leasehold property as security for a loan and with provision for redemption on repayment of the loan. The lender (mortgagee) has powers of recovery in the event of default by the borrower (mortgagor). A mortgage is a form of land charge and can be either legal or equitable.

N

Negotiation:
Discussion, written or otherwise, between two or more parties no different sides, the aim being to reach a common agreement.
Non-confirming use:
The use of a property, which does not conform to the allocation of the area for planning purposes. Such a property may have been built in conformity with the planning requirement at the time and a policy change ensued; more usually, the property was constructed before planning control was introduced.
Net present value method (NPV):
A method used in discounted cash flow analysis to find the sum of money representing the difference between the present value of all inflows and outflows of cash associated with the project by discounting each at a target yield.

O

Open market value:
1. The best price which might reasonably be expected to be obtained at arms’ length for an interest in a property at the date of valuation, subject to any statutory assumptions which may be required.
2. For the purpose of asset valuations this is defined by the Royal Institute of Chartered Surveyors (UK) as the best price which might reasonably be expected to be obtained for an interest in a property at the date of valuation assuming:
-a willing seller
-a reasonable period in which to negotiate the sale
-that values will remain static during that period
-that the property will be freely exposed to the market; and
-that no account will be taken of any higher price that might be paid by a person with a special interest.
-Outgoings Costs incurred by the owner of an interest in property, usually calculated on a yearly basis. e.g. management, repairs, rates, insurance and rent payable to the holder of a superior interest, as appropriate to his contractual or other liabilities. It is prudent to make annual provision for future items involving expenditure at intervals of more than one year.

 

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