Confused by property jargon?

  • Building Consent

    By issuing a building consent the council confirms that the proposed building work complies with the building code.

  • Cabin

    Removable room – usually maximum size of 10m2.

    Not usually included as a building in a registered valuation because it is not permanent (must be removable).

    May be included as a chattel.

  • Capital Expense (CAPEX)

    A major expense (i.e. new roof) (usually budgeted for as deferred maintenance).

  • Capital Value (CV) + Ratings Value (RV)

    Used by the council to assess rates for each property.

  • Certificate of Acceptance (CoA)

    Provides a limited assurance in certain circumstances that the Council has inspected un-consented building works or building works undertaken urgently, and is satisfied on reasonable grounds to the best of its knowledge that the building work complies with the New Zealand Building Regulations 1992 (Building Code).

  • Certificate of Title

    Formal document held by LINZ that shows the unique identifier and legal description for each and every piece of land.

    Also shows type of Title, area, owners, and interest (such as easements, mortgages, covenants etc).

  • Code of Compliance Certificate (CCC)

    At the end of a building project Council issue a CCC if they are satisfied the completed building work complies with the original building consent.

  • Contemporaneous Settlement

    Where a property settles at the same time as another transaction or property.

  • Cross Lease Title

    Where a number of people own an undivided share in a piece of land.

    There are often issues when buying and selling cross lease properties due to discrepancies with the flats plan creating a defective title.

    Need neighbours consent to do most things.

    May be a Residual Title if vacant land (extra cost to develop – needs to be surveyed, new title issued including flats plan (building consent) co-lessors consent etc).

  • Debt to Income (DTI) Ratio

    In New Zealand, about 40 per cent of mortgages are issued at more than five times the borrower’s gross income according to the Reserve Bank.

    Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed.

  • Deed of Nomination

    A document used to nominate a different purchaser/entity to settle the property transaction.

  • Deposit

    Money required as consideration to form a contract.

  • Flats Plan

    Document that forms part of the Certificate of Title that shows the footprint of consented buildings on the land.

  • Flip

    Getting a property under contract and assigning the property to another purchaser under a Deed of Nomination.

    Flip is also a term used in the USA but in a slightly different context – for them, a flip is the equivalent to what we would refer to as a trade.

  • Freehold Title

    Freehold  title refers to the ownership rights you have over property.  Freehold gives the most benefit, with freehold ownership property rights including the right to occupy the land, earn income from the property/land, erect buildings on the land, lease the land, sell the land, subdivide the land, use the land/property as security for loan purposes. In other words, freehold ownership gives total unencumbered ownership.

  • Gross Margin

    Difference between purchase price plus renovation cost and the selling price (only direct costs are accounted for).

  • Gross Yield

    The gross annual rental income, expressed as a percentage of property purchase price. This is what a property owner can expect as return on investment before taxes, maintenance fees and other costs.

  • Hold

    A property that you intend to keep for a long time and rent out.

  • Joint Venture (JV)

    Where two or more parties enter in to an agreement to work on a property together.

    The agreement should set out the basis for the business transaction including a dispute resolution mechanism.

    Members of My Properties have access to a templated Development Agreement @ a discounted rate.

  • Land Information New Zealand (LINZ)

    LINZ manage land titles, geodetic and cadastral survey systems, topographic information, hydrographic information, managing Crown property and supporting government decision making around foreign ownership.

  • Land Value (LV)

    Available on a council rates assessment together with CV or RV.

  • Leverage

    The amount as a percentage that you borrow again the value of your assets.

  • Loan to Value (LVR) Ratio

    The amount of lending the bank will go up to and is calculated using the loan divided by asset value.

    A higher LVR means you are required to put in a larger deposit or leverage the property at a lower rate.

  • Minor Dwelling

    Known by different names in other jurisdictions (Minor Dwelling Units, Minor Household Units etc).

    Permitted second dwelling (not permissible in all jurisdictions).

  • My Properties Chapter

    My Properties is made up of small chapters of people who go out on weekly (or more frequent) RoadTrips together. Collectively our chapters form the My Properties community – everyone is connected through our software.

  • Net Yield

    Rent less operating costs divided by acquisition cost.

  • Operating Expense (OPEX)

    A day to day or regular and ongoing expense (i.e. insurance, rates, property management fee, body corporate levy etc).

    Note: excludes interest/loan costs.

  • Passive Income

    Broadly, this is revenue you earn even when you aren’t actively working. Whilst the term is often applied to rental income, it’s a mistake to think that owning rental properties is passive. Sure, you may not be working on them 40 hours a week, but you do need to run your property portfolio like a business, which means having a solid strategy and the appropriate structures and financing in place, ensuring your portfolio is sustainable (i.e. generating positive cash flow), planning and managing maintenance and so on.

  • Positive and Negative Cashflow

    Where the property has surplus cashflow after all expenses have been deducted / where a property runs at a loss.

  • Recycling

    Where a property is revalued at some point (often after a renovation) and the mortgage over the property is increased based on a higher value of the property.

  • Registered Valuation (RV)

    An assessment/report prepared by a registered valuer and is usually required by the lending bank to assess security and risk.

  • Resource Consent

    Resource Consent is issued to permit activities that affect the environment.

  • Safe and Sanitary

    For works that were carried out prior to 1 July 1992.

    Generally looks at whether the work is considered safe, the structure is sanitary (not offensive or likely to be a health risk), the structure is subject to dampness, the structure has adequate drinkable water or sanitary facilities (for the intended use).

    If Council accepts a safe and sanitary report the report will be held on the property’s file and will show on any land information memorandum.

    A letter acknowledging acceptance of the report will be sent to you.

    The report may identify remedial work needed to bring the structure up to the required standards.

    A building consent may be required for any remedial work.

  • Sleep Out

    Often a garage that has been turned in to utility rooms. Note – you cannot legally rent out a garage as a habitable space.

    Very often unconsented but may be possible to obtain a consent (i.e. CCC or CoA).

  • Tainting

    Where hold properties are contaminated from a tax perspective by the selling off of another hold property in the portfolio.

  • Trade

    We prefer to call it UPCYCLING – a property you buy to renovate and sell.