This glossary of terms has been composed by FIRST STRATA to provide you with an easily accessible and comprehensive description of the many terms frequently used in all aspects of land sales.
We trust you will find it both useful and informative.
In the valuation of land and buildings in accounting for depreciation this is “…the estimated cost of erecting the building or a modern substitute building having the same gross internal area as that existing at prices current at the relevant date. This figure may include fees, finance charges appropriate to the construction period and other associated expenses directly related to the construction of the building” (RICS Guidance Notes on the Valuation of Assets). See DEPRECIABLE AMOUNT; NET REPLACEMENT COST.
The total annual turnover or receipts less purchases (adjusted for stock changes as appropriate).
1. In rating, defined by section 19(6) of the General Rate Act 1967 as “the rent at which a hereditament might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant’s rates and taxes and the landlord undertook to bear the cost of the repairs and insurance and other expenses, if any, necessary to maintain the hereditament in a state to command that rent”. Cf NET ANNUAL VALUE; RATEABLE VALUE.
2. The capital value of a property before making adjustment for acquisition costs.
An annual payment secured on land. It is akin to a rentcharge in England.
Defined under the Ground Game Act 1880 as meaning hares and rabbits. Cf GAME.
A long lease granted at a ground rent, ie a rent disregarding the value of any buildings on the land but reflecting any right to develop the land with buildings. The tenant may:
a. be obliged to erect buildings, or
b. be permitted (but not required) to erect buildings thereon, or
c. be debarred from so doing.
Rent paid for vacant land which is suitable for development. If the property is improved, ground rent is that portion attributable to the land only but may reflect a right to undertake certain building operations. Note: Modern ground leases normally incorporate periodic rent reviews and often the basis of review is an agreed proportion of the rack-rental value (or of rack-rents received) at the date of review. In such circumstances the rent payable on review can be significantly different from the ground rental value of the land for a new development. See MODERN GROUND RENT; SECURED GROUND RENT; UNSECURED GROUND RENT.
An area of planned or spontaneous expansion of population over the years ahead.
The rate at which rents or capital values in a particular market have increased (or declined, “negative growth rate”) in the past or are predicted to change in the future. It may be due either to actual or expected changes in supply and demand, ie real change, or to inflation (or deflation) and is usually expressed as an annual percentage from some given time and, probably, over a stated period of years. See IMPLIED GROWTH RATE.
An agreement to pay a debt or perform the obligation of another in the event of the debt or action not being paid or performed. There must be a failure to pay or perform before the guarantee can be said to take effect. Cf WARRANTY.
A third party to a contractual relationship who guarantees certain undertakings by a party to the contract, eg that rent will be paid and tenant’s covenants performed under the terms of a lease. See SURETY.
A 66-foot chain of 100 links used traditionally by surveyors for measuring land. Invented by Edmund Gunter (1581-1626), the surveyor’s chain is now largely superseded by other measuring devices. See CHAIN.
