Glossary / Abbreviations

To help you understand the some of the terminology and 'jargon' that may be used when purchasing a property, we have complied this listing.

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easement - An interest in real property that conveys use, but not ownership, of a portion of an owner's property.

Easement - The legal entitlement that someone has to the use of land belonging to another. This could be dual access driveways, water board needing access to sewerage pipes etc.

economic age life method - A method of estimating accrued depreciation in which the ratio between the effective age of a building and its total economic life is applied to the current cost of the improvements to obtain a lump sum deduction

economic life - The period over which improvements to real property contribute to property value.

Economic Risk - is the risk that global economies may outperform the New Zealand economy, causing you to miss out on potentially higher returns through soley investing in the local economy.

Economies of Scale - describes the ability to reduce costs - for example, brokerage fees - because of a large number of investors. In plain English, the term describes the ability to "buy in bulk".

Edw - Edwardian (architectural style)

effective age - The age indicated by the condition and utility of a structure.

effective gross income (EGI) - The anticipated income from all operations of the real property after an allowance is made for vacancy and collection losses.

effective gross income multiplier - The ratio between the sale price (or value) of a property and its effective gross income.

effective interest rate - Interest per dollar per period; the nominal annual interest rate divided by the number of conversion periods per year.

elf - electric light fittings

elhws - electric hot water service

encl - enclosed

Encroachment - A section of a building, be it a house or other structure that is illegally overhanging the boundaries of your property into an adjoining property.

Enduring Power of Attorney - refers to an authorised individual who takes over the management of your affairs for either a temporary period (for example, while you're overseas), permanently (in the event of your permanent incapacitation)

ens - ensuite bathroom

ent - entrance, entry

Entry Fees - are charged when you purchase a managed fund, such as a unit trust. The fee is usually paid to the intermediary, as commission for selling the managed fund. Keep an eye out for those intermediaries who offer free entry.

equity - The net value of a property, calculated by subtracting all liens or other charges against the property from its total value.

equity capitalization rate - An income rate that reflects the relationship between a single year's pretax cash flow expectancy and the equity investment.

equity debt ratio - The ratio of the equity value or equity capital invested in a property to the amount of debt incurred on that property.

equity ratio - The ratio between the down payment paid on a property and its total price; the fraction of the investment that is unencumbered by debt.

equity yield - The dollar return on equity from all sources.

escalation clause - A clause in an agreement that provides for the adjustment of a price or rent based on some event or index.

Essential Expenses - are those expenses required for your health and shelter. They're the expenses you'll always need to pay. Examples include mortgage or rent, food, and power. Note, howver, that if the expense is a variable cost, such as food, you may be able to reduce that cost, though you can never do away with it completely.

estab - established

estate - A right or interest in property. excess land. The land not needed to accommodate the site's highest and best use.

Eviction - The lawful removal of an occupant or tenant from a property. This can only be actioned through proper legal channels.

exc - excellent

excess rent - The amount by which contract rent exceeds market rent at the time of the appraisal; created by a lease favorable to the landlord.

Exclusive Authority - A contract that provides a real estate agency the exclusive right to sell the property within specified time periods.

Exit Fees - are the fees you may be required to pay when you cash in your investments. Always understand the complete fee structure before undertaking an investment.

expense ratio - The ratio of total expenses, excluding debt service, to either potential or effective gross income

ext - external

external obsolescence - An element of accrued depreciation; a defect, usually incurable, caused by negative influences outside a site and generally incurable on the part of the owner, landlord, or tenant.

externalities - The principle that economics outside a property have a positive effect on its value while diseconomies outside a property have a negative effect upon its value.