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For registered land. In the case of freehold, the registered proprietor has a guaranteed title subject only to the entries on the register. In the case of leasehold, it guarantees that the registered proprietor is the owner of a valid lease. Abstract of Title The history of title to a piece of land. Advance Another name for a mortgage or loan Alterations Alterations to properties which are held on lease are generally controlled by the landlord. i.e. alterations are only allowed if written consent has been obtained from the landlord. Annual Percentage Rate of Loan Interest (APR) Lenders have to quote the Annual Percentage Rate (APR) of a loan so that you can compare different schemes. The calculation of APR takes into account other costs such as the arrangement fee and indemnity premium. It gives a more accurate indication of which mortgage is likely to be most expensive. Annuity Loan A repayment mortgage. Assignor The seller of a Lease, who assigns the Lease to a purchaser Assignee The purchase of a Lease, who accepts the assignment from the seller Assignment/Assigning One way in which a tenant may pass on the lease obligations to a third party, generally by selling the lease and business to a successor (assignee) who has first been approved by the landlord as assignee. Auction A public sale of a property in which prospective purchasers bid against each other. The highest bidder becomes the purchaser and a contract is created at the fall of the hammer. A 10% deposit is usually payable immediately after the auction. A prudent bidder therefore has to have all funds in place to complete the purchase before bidding. AWOPM - Amusement without Prizes Machine i.e. a coin in slot games/ entertainment machine without prizes. AWPM - Amusement with Prizes Machine i.e. "one arm bandit". A cheque signed by a Bank Manager - not the customer. As such, it is treated as being equivalent to cash. Barrel The unit of capacity used in brewing, equal to 36 gallons (approx. 163 litres). Break Clause A break clause is a provision in a lease allowing either the landlord or the tenant to terminate the lease at a specified date without waiting for the term to expire. Bridging Loan Arranged by a buyer who has to complete the purchase of one property before receiving the proceeds of sale of another property which will ultimately provide part of the purchase price. Broker An independent person or company who advises on and arranges a loan or insurance. Broker In the licensed business transfer context Agents are sometimes instructed to find tenants for Brewers or Pub Cos where the Brewer/Pub Co does not pay us a fee. In such circumstances, the Agent acts as a Broker and the applicant / prospective purchaser becomes a client, paying us a fee for introducing them to the pub which they obtain. This scenario is most common where a short term (e.g. 3-5 years) tenancy is offered. Building Insurance An insurance policy to protect against loss or damage to a property. It is usually necessary to arrange building insurance upon exchange of contracts, prior to completing a purchase. Business Plan An appraisal of a business providing an analysis of what it is achieving present and what the prospective purchaser might plan to do with it, including profit and loss and cash flow calculations. Business Plans are invariably required by Pub Cos of potential lessees and Banks of potential borrowers. An indication of the actual cash funds which a purchaser might need without arranging any loan or mortgage. Capped Rate One of the bases on which interest is paid on a loan. This has similar advantages to a fixed rate as the interest rate will not rise above the 'cap'. Such schemes sometimes include a 'collar' or minimum rate. Cash Flow Analysis One of the exercises in the preparation of a business plan. Even though a Projected Profit and Loss Account may show a profit on the first year, heavy start up payments on refurbishment etc. may cause the business to go into the red in the early months. A month by month cash flow analysis demonstrates when the business is likely to be in deficit so that adequate provision can be made in advance for a Bank overdraft. CCJ See County Court Judgement Cesspit Non-mains drainage system where sewage is collected in a large tank which has to be emptied at regular intervals. Children's Certificate (SECTION 168A) A certificate which may be granted in conjunction with a liquor licence, allowing children under the age of 14 in a bar while food provided. Under the licensing acts, no child under 14 years of age (with certain exceptions) is allowed in the bar area of a pub. Client In the property world, the client is the person or company who pays an Agent or Broker a fee for a service usually of selling or letting a property. Sidney Phillips are usually the Agents for the seller who pays us a fee when we introduce a buyer. In such circumstances the seller is our client and the prospective purchaser is an applicant. We help the applicant find a pub but the applicant does not pay us a fee. Conversely: See Broker and Retaining Client. Completion Date The day when the property actually changes hands, with the purchaser taking possession following payment of the full price to the seller - usually arranged by solicitors. Composite Barrelage Used by Brewers and Pub Cos - a method of expressing total wet trade including beers, ciders, wines and spirits. Beers and ciders remain as 36 gallon barrels, wines and spirits are "converted" to barrelage equivalent by various formulae (depending on a Brewer/Pub Co) typically counting 3 gallons of wines and spirits as one composite barrel. Many Pub Cos also include mineral supplies in the composite barrelage. Conditions of Sale The detailed standard terms which govern the rights and duties of the Buyer and Seller of a property as laid down in the contract they sign. Contents Insurance While insurance cover for the contents of a business is not a legal requirement for a freeholder, many leases require the tenant to have this cover. See trade package insurance. Contract A document containing all essential details and agreement between Seller and Buyer i.e. price, names and addresses of parties, details of the properties being bought and sold. When exchanged, both Buyer and Seller are committed to complete the transaction. In contrast, when still "subject to contract" either can decide not to proceed. Contracted Out Means contracted out of protection of the Landlord and Tenant Act 1954. The effect is that, at the end of Lease, the Tenant does not have any right to claim an extension to the Lease and must give possession unless the Landlord chooses to offer another Lease. Conveyance If a property is freehold and has an unregistered titled, the deed by which the owner transfers ownership. If the title is registered, the deed is called a 'transfer'. Conveyancing An general term describing the legal process involved in buying and selling property. County Court Judgement (CCJ) A judgement against a person for non-payment of a debt. Borrowing money becomes difficult as lenders are reluctant to make offers to people who have failed to manage their financial affairs properly. Covenant A legally binding obligation in a Sale or Lease. The amount that the buyer has to pay on exchange of contracts as part of the purchase price. Usually 10%. Dilapidations Deposit A deposit which is often required by a landlord as a condition of the grant of a lease. The deposit is held as protection against the lessee failing to repair the property. Discounted Rate One of the bases on which interest is paid on a loan. A discounted rate gives a reduction of, for example, 2% off the variable rate for a specified period. Although the rate may rise and fall, the borrower will be paying less than the standard variable rate. En-suite - referring to bedrooms which have their own bathrooms or shower rooms with WC. Easement A right which the owner of one property has over an adjoining property, such as a right of way or a right of light. EHO - Environmental Health Officer Liquor and catering businesses are subject to inspection and approval by the environmental health officer to ensure compliance with hygiene and safety regulations. Employment Protection See "TUPE" Encumbrance A burden or liability to which a property is subject even when it is sold. Endowment Assurance Life assurance policy to provide a fixed sum on death or on maturity. Engrossment is a deed prior to its execution. Enquires Before Contract See: Preliminary Enquires. A number of detailed questions about a property which the Seller answers through his solicitors. Equity The net value of a property to the owner after any mortgage has been deducted/paid off. Exchange of Contracts The stage at which a buyer and seller sign and exchange contracts creating a legally enforceable agreement to complete the sale. At this stage, the buyer should arrange building insurance. Execution The signing of a document expressed to be a deed in the presence of a witness. Experience - Trade Experience Although direct experience of the licensed trade is not considered essential, prospective purchasers or lessees are strongly advised to gain some experience working in the pub trade before they acquire a business. It is important to establish that they actually like the pub lifestyle i.e. working when everyone else is relaxing. Extension - Special Order of Exemption An extension to standard licensed trading hours which may be granted by the local justices for special occasions. Where a hotel, guest house or inn has (as a rough guide - limitations vary regionally) more than 4 letting bedrooms for more than 6 guests (or staff), not at ground level, the premises must be approved for use by the fire authority and a fire certificate obtained. This is a fairly bulky document and subject to annual inspection and renewal. Fixed Costs The costs of running a business which do not change relative to the turnover of the business e.g. rent, Rates, Insurance, Accountancy. See also - Variable Costs. Fixed Rate One of the bases on which interest is paid on a loan. The rate is fixed for a specified number of years, so the borrower knows what payments will be over that period. After this period, the rate usually reverts to the lender's standard variable rate. FR & I see: Full Repairing and Insuring Freehold The absolute ownership of property, as opposed to leasehold. The most complete form of ownership of land in the UK. Full Repairing & Insuring Refers to the responsibility/obligation of a lessee. The lessee is fully responsible for all repairs and insurance of the building to be leased. Full on Licence A liquor licence which permits the sale of intoxicating liquor during the prescribed permitted hours normally either on or off the premises. On licences are generally renewed every 3 years.
i.e. a Brewers or Pub Cos assessment of the trade which a good average tenant should be capable of achieving in a particular house. Gross Profit The profit achieved on the sale of goods after paying for their purchase but before deducting wages and other fixed and variable costs of the business. Gross Profit Percentage/Mark Up Percentage The percentage of gross profit is measured relative to the selling price of goods in comparison with "mark up" which is measured relative to the cost price of the goods e.g. (and assuming that VAT is excluded from both cost and selling prices) an item which retails for £1 but costs 50p produces a 50% gross profit and the mark up on cost is 100%. Ground rent A rent which is usually fairly low, being a rent of the land on which a building stands, but excluding the building. See also peppercorn rent. Guarantee If a lease is granted to a limited company, the Directors of that company may be required to personally guarantee the obligations for the term of the lease. If the business fails, the guarantors may have to pay the rent or repair the building from their personal assets. A Part IV licence the conditions of which are varied by the provision of accommodation. No permitted hours apply to a resident or there bona fide guest. Additional insurance cover which some lenders might require if a mortgage is for a high percentage of the value of a property. Indemnity An agreement to pay for any losses, which may arise from a breach of any other obligation. Ingoing Often "estimated ingoing". Specifying the total cash capital requirement for a short (1-3) year tenancy, to cover the cost of buying the trade inventory, stock, security deposit and expenses. This usually has to be cash, as banks are reluctant to assist with the purchase of short tenancies. Inheritance Tax A tax payable by your beneficiaries if you die. if the total value of your property and you assets exceeds around £240,000 then your estate could be liable for inheritance tax. Interest only Mortgage With an Interest Only Mortgage it is usual to use an investment scheme such as an endowment policy or a pension scheme to repay the loan at the end of the mortgage term and in the meantime interest is paid to the lender on the outstanding balance. The debt remains the same while the value of the investment is planned to increase, usually over a specified term, to equal or exceed the original debt. Interim Authority A "fast track" system whereby an existing licensee can obtain a deemed authority to trade at a licensed business almost immediately, subject to Court appearance within 14 days. Internal Repairing Describes the responsibility of the tenant or lessee being limited only to repair, decorate and maintain the interior of the property, plus windows and doors. The lessor/landlord undertakes to maintain the main structure of the building. Commonly applicable in short term/brewers type tenancies. Land Charge Registry A government department which keeps a register of certain charges on land in England and Wales, the title of which is unregistered. The register is open to public search and is quite distinct from the land registry, which deals with properties where title is registered. Land Registry Government department responsible for the registration of all property dealings in the UK. The registration can provide full details of all owners and mortgages, benefits and burdens affecting the property. Not to be confused with the Land Charges Registry which deals with properties having unregistered titles. Landlord and Tenant Act 1954 The main Act setting out the Law relating to business tenancies in England and Wales. Unless "contracted out" the lessee has right to apply for a new Lease at the end of the initial lease term, and the grounds for the Landlord to refuse are limited to three basic reasons:- (a) tenant's non-compliance with the terms of the Lease (b) the Landlord wishes to redevelop the property (c) the Landlord wishes to occupy the property himself Grounds for opposition Failure to repair, rent arrears, breach of othe Lease An agreement under which an Owner (the Landlord or Lessor) of a property grants to another person (the Tenant or Lessee) exclusive possession of the property for an agreed term of years in return for Rent. A lease is a legal document which imposes obligations on the tenant, which can be enforced in court. Leasehold Property A property held under a lease in return for a rent. See lease. Legal Charge Also known as a 'Mortgage' Lessee The person to whom a lease is granted Lessor The person who grants a lease Lien The legal right to retain the property of another as security for the performance of an obligation. Listed, Listed Building An indication that a building is listed as being a of architectural and historical interest. When a building is listed it is subject to fairly strict control as to what changes can be made, with more vigorous planning control. Local Authority Enquires A standard set of questions which a solicitor asks of a local authority about a property and the area in which it is located, including questions about ownership of the roads and drains serving the property. Local Search See local authority enquiries. LPG Liquid petroleum gas (propane) either a tank (rented) supply or cylinders. i.e. a Brewers projection of trade (usually expressed as barrels etc.) for a full year based on the trade for a part year. Mortgage The detailed agreement covering the terms of a loan from a mortgagee to a mortgagor to assist in buying a property. It is registered at the land registry as a charge against the land. The agreement gives the mortgagee (lender) the power to sell the property if the borrower (mortgagor) defaults on the mortgage payments.
Mortgage Arrangement Fee Mortgage Redemption Fee A charge made by a mortgagee if the mortgage is paid off before the agreed time such as e.g. arranging a mortgage for 20 years, but selling the property after 10 years. Mortgage Protection Policy An insurance policy on the life of a borrower to insure in the event of the borrower's death, the repayment of a mortgage loan. Mortgagee The person or company from which a property buyer borrows money to fund a purchase. The company to whom the property is mortgaged. Mortgagor The buyer of the property who borrows money from a mortgagee, and offers the property as security for the loan. The situation which arises when the value of a property has dropped to less than the amount borrowed against it. An indication that the agents are inviting offers around the quoted price, in anticipation that offers might be received either above or below the quoted price. Occasional Licence A licence granted to a licensee providing authority to sell intoxicating liquor away from the premises but only at an approved location at a specified date and time. This licence is granted effectively as an additional facility to an existing licence. Off Licence A licence for the sale of intoxicating liquor for consumption off the premises. Permitted hours for off licence sales are substantially longer than standard on licences. Offers Similar to offers around - but perhaps implying that offers below/near the quoted price will be considered. A very low or nominal rent, usually a token payment for a very long lease. PPL - Phonographic Performance Limited A body which collects licence fees for music publishers from publicans who play music for their customers. Prescriptive rights Rights over a property acquired as a result only of long occupation or use of it. Principal The amount of the loan on which interest is calculated. Private Treaty A "normal" sale of a property for a price agreed privately between a buyer and seller in contrast with auction or tender. Privity of Contract In the context of leases, makes the original tenancy responsible if a subsequent tenant (assignee) fails to meet the obligations of the lease. Proprietary Club A business which is operated with an on licence and is a profit making body but has conditions as to membership, with club rules set before the licensing justices. Protection Order A protection order enables a new licensee to trade under an existing licence. 7 days notice of the applications to the Court is required and the new licensee can not trade until after the Court appearance. PRS - Performing Rights Society A body which collects royalties for artists and performers from publicans who play recorded music. Public Entertainment Licence Where entertainment is provided for the public on general omission i.e. not pre booked private events. A Public Entertainment Licence is required. A licence is not required for solo or duo live entertainers, provided they also do not use any pre recorded backing tape/CD. Purchaser Is the buyer of the property. Put and keep in good repair A very important condition in a lease which makes the new lessee responsible for not only keeping the property in good repair as per its existing condition, but also putting into good condition any current defects. The repayment of a mortgage. Register at Land Registry The register of title kept by the Land Registry, subdivided into: (a)Property Register (describing property and the estate for which it is held (b)Proprietorship Register (stating class of title, e.g. absolute, qualified); (c)Charges Register (containing notices of charges or incumbrances). Registered Title Title or ownership of freehold or leasehold property which has been registered at the Land Registry with the result that ownership is guaranteed by the State. Registered Club Not a licence as such. A club operated by not less than 25 members who share a common interest and run a non profit making enterprise by for and on behalf of its members. The members are owners and permitted to purchase and consume liquor on the premises while guests are not allowed to purchase. Re-mortgage Negotiate a new mortgage or loan to pay off an existing mortgage (and perhaps increase the amount borrowed) - usually done either to reduce the rate of interest being paid or to transfer a loan from a Brewer to a Bank in order to obtain best Brewers discounts. Repayment Mortgage A system of paying off a mortgage in which the monthly payments are part interest and part capital, usually at a fixed payment rate whereby the balance of interest payment and capital repayment changes to become predominately capital as the mortgage reaches the end of the repayment period. Reserve Price A minimum price below which a property will not be sold when offered at auction. Restaurant Licence A "Part IV" licence which applies conditions to a justices on licence as to when liquor maybe served and under what circumstances e.g. only as ancillary to a meal served at table. Restrictive convenant An obligation restricting the use of land, which is binding on subsequent owners. Retaining Client A person or company which wishes to buy a business and agrees to pay an Agent a fee for successfully finding a business for him is a retaining client. An Agent acting for a retaining client does not expect to receive a fee from the seller of a property or business when a sale is arranged with that Agents' retaining client. Review / Rent Review Occasion when the rent paid by the tenant/lessee to the landlord/lessor is reviewed (usually upward only) to the full market rent. Rent Reviews are usually at 3 or 5 year intervals. Standard exclusions from the rent assessment are any: (a) effect on rent of the tenants occupancy (b) personal goodwill of the tenant (c) effect on rent of any voluntary improvements by tenant (d) improvement in value relating to the licence if the Court considers any benefit of the enhanced licence belongs to the tenant. Right of Way The right of a owner of a property (and visitors etc.) to walk or drive over property owned by someone else who's land might be described as "subject to rehicular right of way". RV - Rateable Value The notional annual rental value as assessed for the calculation and charge of business rates. Where a business also has living accommodation, the living accommodation is allocated a band for council tax payment - a personal expense. An indication that the trading stocks at a business are to be sold at valuation in addition to the agreed purchase price. SEARCH - Searches Enquiries made of the Land Registry to ensure that the sellers' title to a property is good. See also Local Search, Land Registry SECTION 34 Gaming Permit A permit obtained from the licensing justices in conjunction with an on licence. This is required for amusement with prizes machines (one arm bandits) and the number and location of machines are approved by the Court. Security Deposit A cash deposit sometimes required on a lease, to be lodged with the landlord/lessor as security against the tenant/lessee failing to meet any obligations under the lease - mainly non-payment of rent. Septic Tank Non-mains drainage system which uses bacterial action to break down sewage and the outflow is piped to disperse underground. Might need emptying occasionally. Special Hours Certificate (Section 77) Allows a fully licensed business which has a Public Entertainments Licence to trade for extended hours provided provision is made for the service of food. The sale of intoxicating liquor is regarded as ancillary to the food. The S77 can only provide extra hours up to those approved within the PEL. Stamp Duty A government tax on all property purchases over £60,000 excluding goodwill and fixtures and fittings. See: www.inlandrevenue.gov.uk/rates/stamprates.htm for current rates of stamp duty. Structural Survey A survey or inspection of a property to check on the building structure and its general condition. Usually recommended for older properties. Not to be confused with a Valuation Report which might be required by a Bank or lender which is required only to asses the value of the property, not its condition. Sub Let / Sub Letting A way in which a tenant passes on the lease obligations to a third party, in which the tenant remains as head tenant of the lease, still subject to the lease obligations but grants a sub lease to another tenant who undertakes the same or similar obligations. The head lessee continues to pay rent to the landlord and the sub tenant pays the head lessee. Subject to Contract An indication that the sale of a property has been agreed, but not so as to constitute a binding legal agreement. Either buyer or seller can still back out without giving any reason until exchange of contracts. Supper Hour Extension (Section 68) Is an extension to an ordinary on licence which allows the sale of intoxicating liquor as an ancillary to a bona fide meal for 1 hour more than normal permitted hours. Survey SEE STRUCTURAL SURVEY SWOT Analysis A brief analysis which forms part of a business appraisal covering the main strengths, weaknesses, opportunities and threats to the maintenance or development of a business. A process by which solicitors arrange for the balance of the purchase price to be transferred into the sellers solicitors bank account using cleared funds, usually by a specified time on the completion date. Tenancy/Brewers Tenancy A term commonly used to describe a short term letting or lease which is probably for 3 years initially and then continues from year to year. See also "internal repairing". The tenancy is not transferrable/assignable, and the tenant is usually only responsible for internal repairs and decorations. Tender A method of offering property for sale. This usually involves inviting prospective purchasers to submit binding offers to purchase a property, which the seller can choose to accept or decline. The process is not public unlike auction. See also Private Treaty. An informal tender indicates that any offer - when accepted - is still subject to contract. Title Deeds The legal documents which prove ownership of a property. TOGC See Transfer of a business as a going concern Trade Package Insurance An insurance policy customised for a particular business sector. For example a licensed trade package insurance will usually cover the building, trade furnishings and equipment, public liability, employees liability, loss of profits following business interruption, theft, etc. Transfer/Full Transfer The full transfer of a justices licence from the outgoing licensee (seller of a business) to the ingoing licensee. As full transfers can only be arranged at specified transfer sessions and are subject to 28 days notice, they are mostly preceded by an application for a protection order or interim authority. Transfer of a Business as a Going Concern (TOGC) When a business such as a trading Public House is sold or transferred as a going concern, whether freehold, leasehold or tenancy, by a VAT registered seller to a VAT registered buyer, provided some basic conditions are fulfilled, VAT is not chargeable on the sale of the assets. See www.hmce.gov.uk/notices/700-09.htm TUPE - Transfer of undertakings (Protection of Employment) Regulations The regulations giving employees protection against dismissal when a business changes ownership. An indication that a property has been sold subject to contract. UON An expression used by Estate Agents indicating that a property has been sold subject to contract and that no viewings are being invited, as the purchaser has confirmed the ability to proceed i.e. the sale is fairly certain. UOV An expression used by Estate Agents to indicate that a property is under offer but other viewings will still be permitted as the prospective purchaser has not confirmed a definite ability to proceed. A report usually prepared for a Bank or other lender to confirm that a property has a value which is sufficient to provide security for a loan or mortgage. Not to be confused with a survey. Variable Costs The costs of running a business which change dependent on the turnover of the business e.g. wages, power, repairs, hire costs, bank charges etc. See also - Fixed Costs. Variable Rate One of the bases on which interest is paid on a loan - the most common type . The interest rate that you pay goes up and down in line with interest rates in the economy as a whole. When the interest rate goes up, the amount that you have to pay also rises, and it falls when interest rates come down. VAT on Property VAT is not usually chargeable on a Pub being sold by an individual sole trader where the business is a going concern. Where a property is being sold by a property investment company (such as a Brewer or Pub Co) VAT will probably be chargeable, on between 80-90% of the purchase price (excluding the private accommodation). The VAT paid is usually reclaimable by a VAT registered trading purchaser, but having to pay the VAT can cause cash flow difficulties for the first few months (See TOGC) VAT on Rent Most pub leases are from Pub Cos which elect to waive the building's exemption from VAT. VAT is therefore chargeable on the trade proportion of the rent (i.e. excluding the proportion attributable to the private accommodation - commonly apportioned as 10-20%. Tenants who are registered for VAT will be entitled to recover the VAT through their business VAT returns. Vendor is the seller of the property. |
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