A-Z of Acronyms and Initialisms

No one can be expected to remember them all, but here we highlight some key terms in property and construction across the 26 letters of the alphabet.

What is the difference between an acronym and an initialism?

An acronym is an abbreviation pronounced as if it were a word: for example, FIFA (pronounced “feefa”) is the acronym adopted worldwide for the Fédération Internationale de Football Association.

An initialism is an abbreviation where the constituent letters are pronounced separately – such as EG, pronounced “ee gee”, not “egg”.

Of course, there are some other types of abbreviation too, including des res (short for desirable residence), proptech (property technology) and, of course, Brexit. The last two are each an example of a portmanteau – a single word formed by blending the sounds and meanings of two other words.

However, for our purposes, we will concentrate on acronyms and initialisms in the property and construction industry – one for each letter of the alphabet (almost)!

Best practice

These are only a small sample of initialisms and acronyms used in the industry. In practice – and especially for some clients, and certainly for members of the public – it is always best to provide the full title/spelling of each initialism or acronym first, followed by the letters of the initialism or acronym in brackets. This is much better than just providing a glossary at the beginning and expecting readers to remember them or have to go fishing back to find out what something stands for.

A: ARLA (acronym) – Association of Residential Letting Agents   

ARLA, now also known as ARLA Propertymark, is part of a consortium of property-based professional associations for residential letting agents. It represents more than 9,000 members in the UK. In Scotland and Wales, such agents are regulated, but, as yet, they are not in England, though this is likely to change.

B: BREEAM (acronym) – Building Research Establishment Environmental Assessment Method          

The Building Research Establishment provides a series of assessment methods to evaluate the environmental credentials of a range of building types and urban areas. It is considered a leading assessment tool in the UK and many other parts of the world.

C: CDM (initialism) – Construction (Design and Management)

The Construction (Design and Management) Regulations 2015 aim to provide high standards of health and safety on construction sites. They set out various roles, such as the client, principal contractor and principal designer. Nearly all concerned with the design and construction have some measure of responsibility.

D: DD (initialism) – Due diligence    

Being rigorous and exhaustive, usually in relation to all things – including legal matters – that might have an impact on a decision to take on a lease or buy a property.

E: EPC (initialism) – Energy performance certificate            

By law, all newly built and all other existing properties that are to be leased or sold need an energy performance certificate. This will provide a rating of the energy performance of a building, and also provides recommendations for its improvement.

F: FRI (initialism) – Full repairing and insuring

This refers to a “full repairing and insuring” lease, where the burden of cost for the repair of a building’s fabric and its insurance is the responsibility of a tenant. Note, however, that the landlord will normally take responsibility for taking out the insurance. A common variation is an internal repairing and insuring lease.

G: GDV (initialism) – Gross development value      

Gross development value is the sum that a new development is estimated to be worth if sold on the open market given current economic conditions. According to the RICS valuation information paper Valuation of development land, “As the GDV does not incorporate an allowance for purchaser’s costs, the net proceeds are more often aligned to the Net Development Value, which reflects the transaction costs that would be incurred if the completed development was sold, again, on the date of valuation.”

H: HMO (initialism) – House in multiple occupation           

These are residential properties occupied by multiple people. A property is a house in multiple occupation if both of the following apply: (i) at least three tenants live there forming more than one household; and (ii) the occupants share toilet, bathroom or kitchen facilities with other tenants.

I: IRR (initialism) – Internal rate of return

The internal rate of return is used in investment appraisal in order to estimate its profitability. The IRR is the discount rate for a project that makes the net present value (NPV) of all cash flows equal to zero.

J: JV (initialism) – Joint venture           

Joint ventures are a common legal form of business association or project organisation where more than one party take on and share the potential risks, as well as the rewards, of an undertaking.

K: km (symbol/initialism hybrid, in that only the first letter is commonly pronounced, eg a 10k race) – Kilometre

A distance of 1,000 metres – an easy one, but how many kilometres are there in a mile? Answer: 1.60934km (Remember: there are 10,000 sq m in a hectare and 43,560 sq ft in an acre).

L: LTV (initialism) – Loan to value     

Loan to value is calculated by dividing the amount lent on a property by its value, then stating that as a percentage, eg if the value of the property is £500,000 and the loan is £300,000, the LTV is 60%. The lower the LTV%, the more you have a financial stake in the property.

M: MEES (acronym) – Minimum Energy Efficiency Standard               

Energy efficiency legislation currently preventing residential and commercial properties with an EPC rating or F or G being let (either through existing leases continuing or new leases being agreed).

N: NIA (initialism) – Net internal area            

A basis of measurement set out in RICS property measurement (2nd edition), referring back to the Code of measuring practice. It is typically used for retail shops and is the usable area measured to the internal face of perimeter walls at each floor.

O: OO (initialism) – Owner-occupier 

A person or business that owns and occupies a property outright on a freehold basis, thus excluding any form of lease arrangement, however long. Roughly 64% of residential property is owner-occupied in England, compared with 58% in Scotland, 66% in Wales, 65% in Northern Ireland and, the highest, 70% in the Republic of Ireland.

P: PII (initialism) – Professional indemnity insurance         

A type of insurance required for chartered surveyors, other property professionals and surveying firms. It protects people and firms from financial loss in the event of a negligence claim, and clients from financial losses that the professional or firm cannot meet.

Q: QS (initialism) – Quantity surveyor           

A QS typically manages costs relating to construction and civil engineering projects. They work with other property professionals during the life cycle of a building to provide reasoned professional advice to clients.

R: RICS (initialism/acronym) – Royal Institution of Chartered Surveyors

The leading global professional body promoting the high standards in its members’ behaviours and actions. Although some pronounce this as “ricks”, many members do not like this, so make sure you say this as an initialism, pronouncing each letter – and, when referring to it in full, don’t make the common mistake of saying “institute” rather than “institution”!

S: SDD (initialism) – Standard due diligence            

SDD is a type of due diligence for anti-money laundering purposes, generally where the risk is low and only basic verification is required, eg checking company status.

T: TDS (initialism) – Tenancy deposit scheme          

If a residential property is rented using an assured shorthold tenancy (AST) that commenced after 6 April 2007, the landlord must register the tenant’s deposit using a TDS.

U: UCTA (acronym) – Unfair Contract Terms Act 1977       

This relates to disclaimers used in agency marketing particulars and introduced a test of reasonableness. It regulates contracts by limiting the avoidance of liability through use of exclusion clauses such as disclaimers.

V: VP (initialism) – Vacant possession          

A common term found in many leases, particularly in break clauses. Although there is no firm legal definition, case law precedent means that the tenant should ensure that nothing substantially prevents or interferes with the right of possession of a substantial part of the property.

W: WLC (initialism) – Whole-life costs

Whole-life costs consider all costs over the life cycle of a building. They are defined in the RICS New Rules of Measurement (3rd edition) and include costs relating to procurement, maintenance, refurbishment, operations and disposal.

X: XPS (initialism) – Extruded polystyrene  

A type of polystyrene used in insulation board, with good compressive strength and thermal performance.

Y: YTD (initialism) – Year to date

A term used in accounting and investment scenarios relating to the period beginning on the first day of the relevant year and ending on the current date.

Z: ITZA (acronym) – In terms of Zone A          

This one might be cheating, but it is used in valuation analysis for high street retail shops, based on the principle of “halving back” the value of the area of each 20 ft (6.1m) zone of a shop away from its street frontage.

 

Paul Collins is a senior lecturer at Nottingham Trent University and Mainly for Students editor, and Jen Lemen is co-founder of Property Elite

Read the complete series online at:  https://www.egi.co.uk/news/mainly-for-students