glossary of terms for property development

Glossary Property Development Terms A to L

This is a Glossary of simple explanation of the commonly used terms from A to L. In property development like Splitters, Strata and Subdivisions.  It is not necessarily the legal definition.

Acid Sulfate Soils
Acid Sulfate Soils are sediments which contain sulfidic mineral pyrite which may become extremely acid following disturbance or drainage as sulfur compounds react when exposed to oxygen to form sulfuric acid. More detailed explanation and definition can be found in the NSW Government Acid Sulfate Soil Manual published by Acid Sulfate Soil.

Acquisition Costs
The total cost of acquiring an asset. This will include stamp duty, legal fees, building report, valuation fees, survey fees and any other due diligence costs directly related to the acquisition. Generally allowed for in a discounted cash flow approach, but not in a traditional capitalised income approach.

Administration Fund
A fund set up to pay the body corporate costs for strata title.

Amenity
Means any quality, condition or factor that makes, or contributes to making, a locality or building harmonious, pleasant or enjoyable.

Amortisation
(1) The process of recovering, over a period of time, the capital investment through scheduled, systematic repayments at regular intervals.
(2) Periodic contributions to a sinking fund to discharge a debt or make a replacement at a future date.

Annual Effective Interest Rate
A rate of interest or discount rate expressed as an annual rate taking into account a periodic interest rate with cash flow frequency (i.e. frequencies of compounding).

Annual Exceedance Probability (AEP)
The chance of a flood of a given or larger size occurring in any one year, usually expressed as a percentage. For example, if a peak flood discharge of 500 m3/s has an AEP of 5{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855}, it means that there is a 5{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855} chance (that is one-in-20 chance) of a 500 m3/s or larger event occurring in any one year (see ARI).

Annualised Yield
The annualised yield is the total holding period return of an investment expressed as an annual compound rate. It is a measure used to enable comparison with other investment vehicles, such as bonds, whose return is usually expressed as annual effective rate.

Apartment or Home Unit
A single level or bi level residence contained within a multi storey complex, being strata or company title. Top level usually larger and often referred to as a penthouse or sub penthouse if on the immediate level below.

Area Previously Developed.
The area of a subdivision or Development site on which buildings, impervious pavements or similar works were constructed before the commencement of the present subdivision or Development.

As-Constructed Asset Information
Survey information describing the type, size and location of a newly completed asset.

ASIC
Australian Securities and Investment Commission.

Assessed Annual Value (AAV)
A statistical conjunction of annual value as used for certain rating purposes in New South Wales, South Australia, Tasmania and Queensland.

ATO
Australian Taxation Office

Audit
A systematic and independent examination to determine whether quality activities and related results comply with planned arrangements and whether these arrangements are implemented effectively and are suitable to achieve objectives.

Australian Height Datum
A common national surface level datum approximately corresponding to mean sea (AHD) level.

Australian Property Institute (API)
Australian professional body in the field of property and valuation. Formerly known as Australian Institute of Valuers and Land Economists (AIVLE), Australian Institute of Valuers and Land Administrators (AIVLA), Australian Institute of Valuers (AIV), and Commonwealth Institute of Valuers.

Average Annual Damage (AAD)
Depending on its size (or severity),each flood will cause a different amount of flood damage to a flood prone area. AAD is the average damage per year that would occur in a nominated Development situation from flooding over a very long period of time.

Average Recurrence Interval (ARI) The long term average number of years between the occurrence of a flood as big as, or larger than, the selected event. For example, floods with a discharge as great as, or greater than, the 20 year ARI flood event will occur on average once every 20 years. ARI is another way of expressing the likelihood of occurrence of a flood event.

Basic Size Water Main
A 150mm diameter size of the water for residential, commercial and industrial subdivision.(225mm diameter in the inner city and in Offensive Industrial Zone).

Benchmarking
A tool for continuous improvement that involves quantifying internal performance and then comparing performance against an external group.

Beta Factor
The volatility of an industry in comparison to the market in general. The measure of systematic risk in a security or property. It measures the sensitivity of return to general market movements.

Book Value
The amount at which the asset is recorded in the accounting records as at a particular date after deducting accumulated depreciation or amortisation. (See Written Down Value; Carrying Amount).

Boundary Realignment
A minor boundary amendment to a Plan of Subdivision that does not increase the number of lots.

Break Charges
This is the charge levied for renegotiating or terminating a finance facility, usually a fixed interest loan, prior to a previously agreed date.

Building Code
Refers to the 1996 Edition of the Building Code of Australia published by the Australian Building Codes Board. This document regulates the performance, standard or form of building work to be performed.

Building Rules
Refers to codes or regulations under the Development Act (or adopted under the Act) that regulate the performance, standard or form of building work.

Building Work
Any construction, demolition or removal of a building, associated excavation of filling of land, and other prescribed activities according to the Development Act.

Call Option
An option contract that gives the holder the right, but not the obligation, to purchase a specified asset at the given strike price, on or before the contract’s expiration date.

Capital Expenditure
Those items that are significant replacements or additions to existing properties or for new Developments, as distinguished from cash outflows for expense items that are normally considered part of the current period’s operations. Capital expenditure does not include general maintenance and repair items.

Capitalisation
The process of determining the yearly net income in terms of the amount of capital it would be necessary to invest in order to receive that income, calculated at a given rate of interest. It is the method of determining the value of a property by reference to net income and an expected percentage yield.

Capitalisation Rate
This is the most simple measure of return. It is an expression of the net income divided by the price, usually expressed as a {964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855}, i.e.

Net Income $15,000 x 100 = 15{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855}


Price $100,000 1

The multiplier or “Years Purchase” is – 100 divided by 15 = 6.66 Y.P. x Net
Income = Value

The years purchase is the inverse of the capitalisation rate, and is sometimes called the payback period. Similar to a “price earnings ratio” for shares it is often quoted by Valuers and investors as a reflection of the yield expected on specified properties, excluding borrowing costs, and some other adjustments. It is not used in circumstances where irregular or negative cash flows occur, or say a Development project.

Caravan and Moveable Home Parks
Caravans and moveable dwellings are being increasingly used for longterm and permanent accommodation purposes. Standards relating to their siting, design, construction and management can be found in the Regulations under the LG Act.

Catchment
The land area draining through the main stream, as well as tributary streams, to a particular site. It always relates to an area above a specific location.

Certificate of Title –
A certificate pursuant to the Real Property Act that records details in relation to specified land including ownership, boundaries, limitations of title and mortgages.

The original of the certificate of title is held by the Lands Titles Office, or such namesake, and may be in an electronic form. A copy of the certificate is delivered to the registered proprietor or other person entitled to receive it.

Certificate of Title
A Certificate of Title is the legal documentation of a parcel of land. The title contains information including: Ownership details; Easements; Heritage listing and land management agreements.

CCF
Civil Contractors Federation.

C.G.T.
Capital Gains Tax. Payable on property purchased after 19/9/85 and subsequently re sold subject to certain exclusions.

Common Drain
A private sewer line owned and operated by more than one lot owner and servicing more than one dwelling.

Common (Use)
Area All floor areas for circulation within a building plus standard facilities for the common use of occupiers, tenants and/or the public.

Community Corporation
The corporation automatically created on the deposit of a community plan. The community corporation manages the common property within that plan and facilitates various matters of common interest for the residents of the community lots. The owners of the community lots are its members.

Community Lot
A defined piece of land (not being common property or a Development lot) within a community plan.

Community Plan A plan under the Community Titles Act that divides a parcel of land into community lots and common property and sometimes Development lots. Where the community lots are on different levels, the division of the land must be by strata.

Community Title
A title to land within a community plan. Title created by the division of land to create lots and common property.

Company Title
Method of owning real estate by way of company shares (usually preceded Strata Title Act.)

Complying Development
Which according to the list in the Development Plan or as specified in the Regulations is classed as complying (being desired or expected)

Concrete Cancer
The deterioration, fracturing and spoiling of concrete in exposed locations, caused mainly by the corrosion of steel reinforcement due to an alkaline environment created by unsuitable concrete ingredients and the presence of water and oxygen. Concrete cancer results in structural weakening as well as unsightliness.

Connection Point
The intersection of a Water sewer and a private sewerage service.

Consent Development
Not classed as either complying or non-complying.
This is individually assessed on merit having regard to the Development plan policies.

Consent Authority
The Council, government agency or person having the function to determine a Development application for land use under the EP&A Act. The consent authority is most often the Council, however legislation or an EPI may specify a Minister or public authority (other than a Council), or the Director General of DIPNR, as having the function to determine an application.

Consolidation (of lots)
The combination of two or more lots to create one lot.

Construction Industry Training Levy
An 0.25{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855} levy applying to building or construction work where the total value exceeds $15,000. The levy is used to finance training schemes inthe building industry. (State Specific)

Contributory Place
Properties listed under the Development Plan as contributing to the character of the Residential Historic Conservation Zone, and subject to controls according to the plan.

Consultant
A person or agency engaged by a property owner to undertake the design, project management, construction, survey and asset recording of water reticulation and sewerage services.

Consumer Price Index (CPI)
A measure in percentage terms of the change in the costs of living, being the weighted average cost of a standard basket of retail goods and services expressed in relation to a base period.

Contractor
The agent engaged by the Developer to undertake the construction of the works.

Contributions
Charges, payable by the property owner, that recover the cost of providing water and sewer infrastructure works.

Conveyance
The legal and statutory processes required to transfer ownership of real estate. The preparation, execution, verification, and lodgement of various legal documents are important elements of a conveyance.

Conveyancer
A person approved to advise on and prepare documents to transfer, or convey, real estate.

The term “Conveyancer” includes a property solicitor and registered conveyancer.

Cooling Off
Withdrawing from, or rescinding or terminating a contract under a statutory right given by a relevant Act.

CT See: Certificate of Title

Current Assets
Cash or other assets of an entity that would in the ordinary course of operations of the entity be consumed or converted into cash within twelve months from the end of the last reporting period of the entity.

DCF (Discounted Cash Flow)
A method analysing investment opportunities in which annual cash flows are discounted and accumulated to arrive at their Present Value (PV). Also used as a basis in certain types of property valuations.

Deepening
Additional excavation of a trench or hole to allow the sewer or drain to control upstream Development.

Density index (ID)
Terminology by which density is defined for cohesionless soils. It relates the actual void ratio of the soil to the void ratio of the soil in its densest and loosest states.

Deposit Bond
A deposit Bond is a financial guarantee issued by an insurance company in the form of a bond, on behalf of a purchaser. This allows a deposit to be paid without disturbing invested funds, and can be cheaper than doing so, especially if buying “off the plan” where settlement is considerably delayed.

Depreciation Straight Line Depreciation:
The provision each year of a fixed proportion of the original cost of the asset;

Diminishing Value Depreciation:
The provision by annual instalments of a diminishing amount computed by taking a fixed percentage of the book value of the asset as reduced by previous provisions.

Develop
To improve (land) in some way, often by building.

Developed Lot
The land on which buildings, paving, driveways and the like have been constructed and connected.

Developer
The person entitled to execute a transfer of the land. The Developer may be the land owner, Developer or the subdivision owner.

Developers Profit/ Risk Margin
Profit calculated as a percentage of the total costs of Development.

Development
Building work, change in use of land, division of an allotment, or other prescribed activities as defined in the Development Act.

Development


• Infill Development: refers to the Development of vacant blocks of land that are generally surrounded by developed properties and is permissible under the current zoning of the land. Conditions such as minimum floor levels may be imposed on infill Development.
• New Development: refers to Development of a completely different nature to that associated with the former land use. For example, the urban subdivision of an area previously used for rural purposes. New Developments involve rezoning and typically require major extensions of existing urban services, such as roads, water supply, sewerage and electric power.
• ReDevelopment: refers to rebuilding in an area. For example, as urban areas age, it may become necessary to demolish and reconstruct buildings on a relatively large scale. ReDevelopment generally does not require either rezoning or major extensions to urban services.

Development Assessment
The process of assessing a proposal against the Development Plan and Building Code of Australia to determine Development approval.

Development Assessment Commission (DAC)
A statutory body responsible for the assessment and authorisation of Development of state or regional significance. Reports to the Minister with recommendations for regulations that should be made under the Development Act.

Development Assessment Panel (DAP)
A committee of the City Council responsible for decision making in regard to Development.

Development Lot
A defined piece of land within a community plan that is neither common property nor a community lot. Not all community plans include Development lots.

Development lots are subsequently converted into one or more community lots plus (in most cases) additional common property.

Development Plan
A statutory document which spells out the desired character for different parts of the Council area.

Disaster Plan (DISPLAN)
A step by step sequence of previously agreed roles, responsibilities, functions, actions and management arrangements for the conduct of a single or series of connected emergency operations, with the object of ensuring the coordinated response by all agencies having responsibilities and functions in emergencies.

Discharge
The rate of flow of water measured in terms of volume per unit time, for example, cubic metres per second (m3/s). Discharge is different from the speed or velocity of flow, which is a measure of how fast the water is moving for example, metres per second (m/s).

Distribution Works
The works associated with the transfer of potable water (water suitable for drinking) from major assets to the reticulation system.

Dry Density Ratio (RD)
Terminology by which density is defined for cohesive soils.

Dual Occupancy 
2 properties on one Torrens title.

Due Diligence
An investigation of the legal, financial and physical nature and characteristics, including the entitlements and liabilities attaching to and arising from a real estate asset or assets, usually for acquisition or compliance purposes.

Duplex
A property containing two attached dwellings, each with their own title.

Easement
A legal right to use a designated part of some-one’s land for a particular purpose. Types of easement include a right of way (to pass and repass to access adjoining land) and a right to use and maintain sewerage pipes. A section of land which is controlled by a service authority. Building work is generally not permitted over easements.

EBIT
Earnings Before Interest and Tax.

EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation

Ecologically Sustainable Development (ESD)
Using, conserving and enhancing natural resources so that ecological processes, on which life depends, are maintained, and the total quality of life, now and in the future, can be maintained or increased.

Effective Warning Time
The time available after receiving advice of an impending flood and before the floodwaters prevent appropriate flood response actions being undertaken.
The effective warning time is typically used to move farm equipment, move stock, raise furniture, evacuate people and transport their possessions.

Emergency Management
A range of measures to manage risks to communities and the environment.
In the flood context it may include measures to prevent, prepare for, respond to and recover from flooding.

Encumbrances
Registered on a Certificate of Title, an encumbrance may stipulate building conditions, including the use of certain materials.

Environment, Resources & Development Court (ERDC)
A specialist court set up to deal with disputes, and the enforcement of the laws that relate to the Development and management of land, the natural and built environment and natural resources.

Environmental Protection Authority (EPA)
Australia’s primary environmental regulator, responsible for the protection of air and water quality, and the control of pollution, waste, noise and radiation. An independent statutory authority.

ERDC
See Environment, Resources & Development Court Established / Unserviced Lot. A lot that was created as a separate title without a requirement to provide water reticulation, and/or sewerage services as part of the subdivision.

Existing / Unserviced Developments
Buildings that were erected on a lot without a requirement to provide water reticulation, sewerage and/or drainage services.

Fixture
This term has a highly technical legal definition when used in a contract for the sale of land. In simple terms, it describes something that has been deliberately affixed to the land (or some building on the land) for the better use or enjoyment of the land, not of the fixture: hence, difficulties arise in classifying equipment such as air conditioners, dishwashers and clothes driers. Any item that may be a fixture should be specifically referred to in the contract to avoid disputes.

Flood Fringe
Areas The remaining area of flood prone land after floodway and flood storage areas have been defined.

Flood Liable
Land Is synonymous with flood prone land (i.e. land susceptible to flooding by the probable maximum flood (PMF) event). Note that the term flood liable land covers the whole of the floodplain, not just that part below the flood planning level(see flood planning area).

Flood Mitigation Standard
The average recurrence interval of the flood, selected as part of the floodplain risk management process that forms the basis for physical works to modify the impacts of flooding.

Floodplain
Area of land which is subject to inundation by floods up to and including the probable maximum flood event, that is, flood prone land.

Floodplain Risk Management
Options The measures that might be feasible for the management of a particular area of the floodplain. Preparation of a floodplain risk management plan requires a detailed evaluation of floodplain risk management options.

Floodplain Risk Management Plan
A management plan developed in accordance with the principles and guidelines in this manual. Usually includes both written and diagrammetic information describing how particular areas of flood prone land are to be used and managed to achieve defined objectives.

Flood Plan (local)
A sub-plan of a disaster plan that deals specifically with flooding. They can exist at State, Division and local levels. Local flood plans are prepared under the leadership of the State Emergency Service.

Flood Planning Area
The area of land below the flood planning level and thus subject to flood related Development controls. The concept of flood planning area generally supersedes the ‘flood liable land concept’ in the 1986 manual.

Flood Planning Levels (FPLs)
FPL’s are the combinations of flood levels(derived from significant historical flood events or floods of specific AEPs) and freeboards selected for floodplain risk management purposes, as determined in management studies and incorporated in management plans.

Flood Proofing
A combination of measures incorporated in the design, construction and alteration of individual buildings or structures subject to flooding, to reduce or eliminate flood damages.

Flood Prone
Land Is land susceptible to flooding by the Probable Maximum

Flood (PMF) event.
Flood prone land is synonymous with flood liable land.

Flood Risk
Potential danger to personal safety and potential damage to property resulting from flooding.

The degree of risk varies with circumstances across the full range of floods. Flood risk can be is divided into 3 types, existing, future and continuing risks. They are described below.

Freeboard
Freeboard provides reasonable certainty that the risk exposure selected in deciding on a particular flood chosen as the basis for the FPL is actually provided. It is a factor of safety typically used in relation to the setting of floor levels, levee crest levels, etc. Freeboard is included in the flood planning level.

Fronted by (a Water Main)
To have a water main, that provides for a legal tapping, abutting the property boundary.

Functional Requirements
Base design values or parameters supplied to enable the consultant to design the works specified in the Notice of Agreement.

Gearing (Leverage)
A measure of indebtedness; i.e. the extent of borrowings as against the equity held by a person or company in an asset.

Gravity Control
A sewer deep enough to enable sewerage to be discharged under gravity flow.

Habitable Room 
– In a residential situation: a living or working area, such as a lounge room, dining room, rumpus room, kitchen, bedroom or workroom.
– in an industrial or commercial situation: an area used for offices or to store valuable possessions susceptible to flood damage in the event of a flood.

Hazard
A source of potential harm or a situation with a potential to cause loss. In relation to this manual the hazard is flooding which has the potential to cause damage to the community.

Highest and Best Use
The permissible property use that at a given point of time is deemed likely to produce the greatest net return in the foreseeable future, whether or not such use is the current use of the property.

Holding Period Return
This is the simplest profitability measure for existing property investment. It is the total of all income minus the total of all costs ignoring the timing. It is shown as an amount and a {964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855}.

Hydraulics
Term given to the study of water flow in waterways; in particular, the evaluation of flow parameters such as water level and velocity.

Hydrograph
A graph which shows how the discharge or stage/flood level at any particular location varies with time during a flood.

Hydrology
Term given to the study of the rainfall and runoff process; in particular, the evaluation of peak flows, flow volumes and the derivation of hydrographs for a range of floods.

Implied Easement
An easement, for the benefit of lots, necessary to provide passage or provision of water supply and sewerage over land or buildings in a subdivision. The easement is specified in words, not dimensions, in a Plan of Subdivision.

IMS
Integrated Management System.

Initial Yield
The initial yield is the percentage return on price or value derived from current net passing income. This is merely a statement of the ratio between the initial income and price or capital value, expressed as a percentage. No allowance is made for any future rent growth.

In-sequence Development
A Development that does not require connecting works through future sub-dividable land. Also known as next-inline.

Intensive Audit
Audits undertaken due to the unsatisfactory performance of a consultant. The performance is measured by assessing a consultant’s conformance with the quality system.

Internal Service
Water pipes or sewers owned and operated by private lot owners. See also joint private service.

Internal Sewer
Sewer pipes owned and operated by private lot owners.
Investment Value This is the value that a buyer should pay after deciding on the return required on the property. This can be different to market value, which is based on comparable sales.

IRR (Internal Rate of Return)
(1) The discount rate that equates the Present Value of expected future cash flows to the cost of the investment outlay.

A measure of investment yield.
(2) Because of the importance, “mystery” and lack of understanding of this term, especially among professionals, we have included a special section on this at the end of this glossary. This is the best explanation we have seen and is reproduced with the kind permission of leading property analysts, Property Investment Research.

Joint Private Service
A water or sewer pipe owned and operated by more than one land owner.

Joint Tenancy
One of the two main ways in which two or more persons may own the same parcel of land (the other being tenancy in common).

The principal features which distinguish a joint tenancy are:
unity of time, title, interest and possession;
and the right of survivorship?
Under which the interest of a joint tenant passes automatically upon death to the surviving joint tenant(s).
Two or more people holding land under a joint tenancy. Each joint tenant is entitled to the use, possession, and enjoyment of the whole of the land, subject to the rights of the other joint tenant(s).
The ownership of land in common by several persons where there is a right or survivorship; i.e. where on the death of one joint owner the land as a whole vests in the survivors and can only be disposed of by will by the last surviving owner.
Division of ownership can also be specified (e.g. 60{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855}:40{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855}).

Land
The term to describe land whether built upon on not. By law, land defined by a certificate of title includes all buildings, fixtures and improvements on the land.

Land Management Agreement (LMA)
An agreement between the Minister or Council and the land owner relating to the Development, management, preservation or conservation of land.

Lands Titles Office (or similar namesake) –
The office of the Registrar-General (a public officer) that holds the records of all nongovernment land. All transfers of land must be registered there.

Lease
An exclusive right to occupy land (whether for residential or other purposes) for a fixed period (see also”License”).

Lessee (Tenant)
A person/legal entity who receives the right to occupy and use a property under the terms of a lease.

Lessor (Landlord)
The owner of a property who transfers the right to occupy and use property to another by way of a lease agreement.

License
A non-exclusive right to occupy land (see also “Lease”).

Live Asset
A live asset is defined as an asset that is operational, that is, carrying water or sewage, or connected to live assets carrying water or sewerage provided there is no plug, break or other blocking device between the asset and a live asset.

LMA
See Land Management Agreement

Loan to Value Ratio (LVR)
The ratio of the whole loan principal dollar amount divided by the property’s appraised value amount.

Local Heritage Place
A place that is designated as a place of local heritage value in the Development Plan.

Lot
An abbreviated reference to a community lot or a Development lot (see “Community Lot” and “Development Lot”). A part of land that can be sold or transferred separately.