glossary of terms for property development

Glossary Property Development Terms M to Z

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

Main (water)
Any pipe vested in, belonging to, or under the control of, Water Authorities and used for conveying potable water. Also known as the water main.

Mainstream Flooding
Inundation of normally dry land occurring when water overflows the natural or artificial banks of a stream, river, estuary, lake or dam.

Major Drainage
Councils have discretion in determining whether urban drainage problems are associated with major or local drainage.

Major drainage involves:
The flood plains of original watercourses (which may now be piped, channelised or diverted), or sloping areas where overland flows develop along alternative paths once system capacity is exceeded; and/or water depths generally in excess of 0.3m (in the major system design storm as defined in the current version of Australian Rainfall and Runoff).

These conditions may result in danger to personal safety and property damage to both premises and vehicles; and/or major overland flow paths through developed areas outside of defined drainage reserves; and/or the potential to affect a number of buildings along the major flow path.

Margin on Development Costs (MDC).
This is the total income minus the Development costs (GST excluded). The resultant figure is also divided by the total Development cost to give a {964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855} result.

Market Capitalisation
Issued units of a trust or security listed on the stock exchange, multiplied by the market price of each unit or security.

Market Value:
1. Market value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.

2. This does not necessarily mean “the price you get on the day” and may be different to the purchase price.

Market Valuer:
Is the person who values a property.

Valuers doing property valuations for lending institutions. Normally value a property extremely conservatively to protect the lender. Their valuation is only at Valuers opinion.

A Valuers opinion is not normally the REAL VALUE or Market Value of a property taking into comparable sales.

Memorandum of Transfer
A document signed by the vendor and the purchaser (not being the contract) that, when registered at the Lands Titles Office, (or similar namesake) legally changes the ownership of the land.

Merit Approach
The merit approach weighs social, economic, ecological and cultural impacts of land use options for different flood prone areas together with flood damage, hazard and behaviour implications, and environmental protection and well being of the State’s rivers and floodplains.

The merit approach operates at two levels. At the strategic level it allows for the consideration of social, economic, ecological, cultural and flooding issues to determine strategies for the management of future flood risk which are formulated into Council plans, policy and EPIs.

At a site specific level, it involves consideration of the best way of conditioning Development allowable under the floodplain risk management plan, local floodplain risk management policy and EPIs.

MIA
Managed Investment Act

Minor, Moderate and Major Flooding
Both the State Emergency Service and the Bureau of Meteorology use the following definitions in flood warnings to give a general indication of the types of problems expected with a flood:

Minor Flooding
Causes inconvenience such as closing of minor roads and the submergence of low level bridges. The lower limit of this class of flooding on the reference gauge is the initial flood level at which landholders and townspeople begin to be flooded.

Moderate Flooding
Low-lying areas are inundated requiring removal of stock and/or evacuation of some houses. Main traffic routes may be covered.

Major Flooding
Appreciable urban areas are flooded and/or extensive rural areas are flooded. Properties, villages and towns can be isolated.

Mortgage
A loan for which land is used as security for repayment.

Mortgagee
A lender in a mortgage, typically a bank or savings and loan association. whose debt is secured over property.

Mortgagor
A borrower who uses property as security for a loan or for the advance of credit.

Multi-Unit Development
Two or more dwellings or buildings (for example, factoryettes) on one lot.

Net Lettable Area (NLA)
Used to refer to tenancy areas in office buildings, and office and business parks. Can apply to whole or part of building.

Next-in-line Development
See in sequence Development.

Nominal Interest Rate
Distinct from annual effective interest rate, a rate of interest or discount rate that is equal to a periodic interest rate that is equal to a periodic interest rate multiplied by the frequency of that periodic rate per annum without compounding. For example, a monthly discount rate of 1{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855} is an annual nominal interest rate of 12{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855} (1{964da63682b4a4948efdcfd605dc3f5f3712110af1b3f71710f6c2c7be781855} x 12).

Non-Current Assets
Refers to assets or liabilities that are receivable or payable respectively beyond a year.

Non-Works
A service that does not require the construction of reticulated water or sewer works. For example, sewer connection branches and water tappings are considered to be non works.

Notice of Agreement
The agreement (offer), which an owner enters for the provision of water supply or sewerage services.

Non-Complying Development
Classed as Non-complying as listed in the Development plan (inappropriate or inconsistent with the desired character of a locality). The act provides a process of application and assessment in special cases where the proposal has substantial merit.

NPV (Net Present Value)
The aggregate Present Value of the projected cash flows less the opening amount. The capital amount equivalent to the sum of the periodic net cash flows discounted by the required rate of return. That is, the capital sum a hypothetical purchaser would be willing to pay for an expected net income stream that would provide that purchaser his/her required return.

The Net Present Value is calculated as the sum of the Present Values of all periodic cash flows excluding any ‘opening value’ or ‘initial purchase price’, using a constant discount rate to find the Present Value of each periodic cash flow.

Obligatory Activities
These include planning, determining standards and auditing.

Option (Property):
A right given for a consideration to purchase property on or before a fixed date, on terms previously agreed upon. An option entitles, but does not oblige, the person having the option to make the purchase. An option in a lease refers to a further term of tenancy.

Original Lot
The property title on which the Development occurs. See also parent lot.

Outfall Sewer
A sewer pipe installed between a Development and a treatment facility, usually a branch, main or trunk sewer.

Outgoings (Recoverable)
The expenditures paid in connection with operating a property, which are properly charged to tenants in accordance with the lease.

Out-of-Sequence Development
A Development that does require connecting works through future sub-dividable land. See also in sequence Developments.

Outlet Sewer
The sewer between the boundary of a Development and the existing sewer system. Also known as a connecting sewer.

Owner
See Vendor or Developer

Owner/Builder
Land owners who either carry out or coordinate building on their land themselves.

PAR
See: Plan Amendment Report

Partially Developed Lot
Land on which only a portion of the site area has been developed and is likely to be developed further.
See also developed lot.

Payback Period
The number of years required to pay back the purchase price of the investment, excluding entry/exit costs.

PBRC
See Provisional Building Rules Consent

PDPC
See Provisional Development Plan Consent

Peak Discharge
The maximum discharge occurring during a flood event.

Permanent Works
Constructed works that will not be replaced by other works.

Plan Amendment Report (PAR)
A Plan Amendment Report (PAR) is the document and process required for amending the Development Plan.

Planning Permit
A permit required under the Planning and Environment Act 1987 for a use or Development of land.

Potable Water
Water which is suitable for drinking.

Present Value (PV)
Current value of future amounts or the value today of a future payment, or stream of payments, discounted at the appropriate discount rate.

Private Certification
Assessment and granting of Provisional Building
Rules Consent by a suitably qualified individual. (May be used as an alternative to the relevant authority).

Private Service
A privately owned water or sewer pipe, laid by agreement with authorities. From a reticulated water main, aqueduct or sewer, to provide a service to one or more lots.
 Also known as a private extension or trunk service.

Probability
A statistical measure of the expected chance of flooding (see AEP).

Probable Maximum Flood (PMF)
The PMF is the largest flood that could conceivably occur at a particular location, usually estimated from probable maximum precipitation, and where applicable, snow melt, coupled with the worst flood producing catchment conditions. Generally, it is not physically or economically possible to provide complete protection against this event.

The PMF defines the extent of flood prone land, that is, the floodplain. The extent, nature and potential consequences of flooding associated with a range of events rarer than the flood used for designing mitigation works and controlling Development, up to and including the PMF event should be addressed in a floodplain risk management study.

Probable Maximum Precipitation (PMP)
The PMP is the greatest depth of precipitation for a given duration meteorologically possible over a given size storm area at a particular location at a particular time of the year, with no allowance made for long-term climatic trends (World Meteorological Organisation, 1986). It is the primary input to PMF estimation.

Profit Rent
The difference between the market rent and the current rent or ground rent resulting in a leasehold interest.

Property Trust (Listed)
Quoted on the stock exchange, the price of units
in the trust fluctuate with supply and demand.

Property Trust (Unlisted)
Transactions are directly with the trust’s manager, who fixes the prices in relation to the established asset backing of the trust, with adjustments for expenses.

Provisional Building Rules Consent (PBRC)
This consent signifies a proposal satisfies the technical requirements of the Building Rules and will be structurally sound if built in accordance with the approved plans.

Provisional Development Plan Consent (PDPC)
This consent signifies a proposed Development has been assessed in relation to the Development Plan.

Purchaser – Buyer.

Quality System
 The organisational structure, responsibilities, procedures, activities, capabilities and resources that together aim to ensure that products, processes or services will satisfy stated or implied needs.

Real
A term used to describe a cash flow after adjusting for the effect of inflation. A real growth rate describes the quantum of growth or decline for cash flows recorded in present dollar terms.

Real Interest Rate
A rate of interest or discount rate, which is adjusted for inflation.
Recoverable (Outgoings) The expenditures paid in connection with operating a property, which are properly charged to tenants in accordance with the lease.

Rectification Works
Works required to correct a fault in the works.

Refinancing Principle
This is a tax effective term used in property investment structuring. This is simply the ability of investors with the use of Trusts or Companies, to refinance their equity at a later date by converting it to debt, generating a further tax deduction via the interest on that debt.

Registered Proprietor
The person whose name appears on the certificate of title as the owner of the land.

Relevant Authority
The decision making body charged with the responsibility of making planning decisions on certain forms of Development. (i.e. Council, DAC)

Representation
A formal expression which may be made to the relevant authority in relation to the granting or refusal of consent for a Category 2 or Category 3 Development.

Reserve
Land that is set aside for public use. Reserves include general public open spaces, nature reserves, tree reserves, reserve parks, public gardens, recreation reserves, sporting, sewerage and water reserves.

Residential Historic (Conservation) Zone
A zone designated under the Development Plan as residential of historic character. This zone seeks to enhance the ‘character’ housing of the pre World War 1 and interwar suburbs.

Residential Zone
A zone designated under the Development Plan as residential. This zone caters for low to medium density housing and seeks to enhance the existing character of the suburbs.

Reticulated Sewer
A sewer pipe, usually of a small diameter used for conveying sewage or effluent. The pipe is vested in, belongs to, or is under the control of the Water authority.

Reticulated Water
 A water pipe, usually of a small diameter used for conveying potable water. The pipe is vested in, belongs to, or is under the control of the Water authority.

Right of Way
A right to use a designated part of someone’s land to access adjoining land.

Risk
Chance of something happening that will have an impact. It is measured in terms of consequences and likelihood. In the context of the manual it is the likelihood of consequences arising from the interaction of floods, communities and the environment.

Runoff
The amount of rainfall which actually ends up as streamflow, also known as rainfall excess.

Scheme
An arrangement for the construction of assets for unserviced lots, in accordance with relevant legislation.

Self – Contained Unit
Residential

– A unit that comprises of a bathroom, kitchen, laundry & toilet.
Industrial / Commercial
– A unit that comprises of toilet facilities

Sensitivity Analysis
An analysis of the impact on the investment return assuming graduated variations to each of the major variables, e.g. interest rates, holding period etc.

Settle
To fulfil the terms of the contract of sale. This involves handing over the purchase price in exchange for a memorandum of transfer that has been properly signed by the vendor and physical and legal possession of the land in accordance with the contract.

Settlement 
The time at which the parties settle (see “settle”).

Sewage
Any waterborne human excreta, domestic waste water or trade waste that passes through sewers.

Sewer
Any conduit that conveys sewage.

Sewer in Common
A sewer owned and operated by more than one lot owner. It collects sewage from more than one dwelling and connects to a sewer owned and operated by a public authority.
See also common drain and joint private service.

Sewerage System
All the sewers and sewerage works vested in a Water authority for the purpose of sewage collection and disposal.

Sinking Fund
An account set up with regular payments made over a period of time for the purpose of paying for future maintenance and repairs of a capital nature (e.g. the fund established by a body corporate for the collection of strata monies for capital expenditure within the unit block).

Special Condition
A condition in a contract of sale that must be satisfied or waived before the person for whose benefit the condition was inserted can be forced to settle on the contract.

Split Trust
A trust which offers different classes of unit each offering different forms of return.

Stage
Equivalent to “water level”.
Both are measured with reference to a specified datum.

Stage Hydrograph
A graph that shows how the water level at a particular location changes with time during a flood.
It must be referenced to a particular datum.

Stage Lot
An area of land that will be subdivided into further lots.
Also known as a Super Lot.

Strata Corporation
The corporation automatically created on the deposit of the strata plan. The strata corporation manages the common property within that plan and facilitates various matters of common interest for the residents of the strata units. The owners of the strata units are its members.

Strata Plan
A plan under the Strata Titles Act that divides a parcel of land into strata units and common property.
Note that a parcel of land may also be divided into strata by a community plan under the Community Titles Act (see “community plan”).

Strata Title
A title created by the division of a structure into separate units.
See Also: Community Title

Subdivision
The division of land into two or more lots that can be sold or transferred separately.

Super Lot
An area of land that will be subdivided into further lots. Also known as a Stage Lot.
For example, S1 or Lot A.

Survey
All activities associated with the establishment of a subdivision and the supply of as-constructed asset information to the Water authority.

Survey Plan
A plan prepared by a registered surveyor.

Swap
An interest rate, currency or equity exchange transaction involving two parties.

Tapping
The connection of the internal water service to Service Provider.

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

Tenancy in common lacks at least one of the features of joint tenancy, for example the parties own the land in unequal shares (see “joint tenancy”).

Temporary Works
Usually minor works that service a small area until a permanent system is constructed.

Tenants in Common
Two or more people holding land under a tenancy in common.

Terminal Capitalisation Rate 
The capitalisation rate used to calculate the terminal value (the value at the end of the discounted cash flow period).

Terminal Value
The value at the end of the term of projection, which is used to approximate the value of future cash flows thereafter in perpetuity. Typically calculated using the capitalisation approach basin on the passing annual net income as at the end of the term.

Title
The right to occupy and use specified land but subject to any limitations of title set out on the certificate of title. (See also “Certificate of Title”).

Torrens System
A system of registration of titles. Torrens Title A certificate of title issued pursuant to the Real Property Act (or similar namesake).

Torrens Title
A certificate of title for an interest in land. On this single certificate all transactions for the property land are registered; transfers, mortgages, leases and so on, with this registration guaranteed correct by the State.

Townhouse
A residence with two or three levels, within a group of two or more. Can be attached to others or detached, Torrens or Strata Title.

Tree Protection Zone (TPZ)
Determined by an Arborist, a TPZ is a measurement of the critical root zone of a tree which must be protected during any Development.

Trustee
The trustee overseas the flow of funds, collecting principal and interest from the servicer, distributing payments and reporting to those with an interest in the trust.

Unit
– See “Strata Unit”.

Unit Trust
A pooled investment fund or collective investment, established under a trust deed, that continually offers new units and stands ready to redeem existing ones from the owners.

Unplugged
An asset (for water) is unplugged when there is no plug, break or other blocking device between the asset and a live asset.

Upsizing
The installation of a water main and sewer that is larger than required, in order to service other Developments.

Vendor
Seller.
Owner

Villa
A single level residence within a group of two or more. Can be attached to others or detached, Torrens or Strata Title.

Waive
To give up a legal right. A purchaser of land may waive the right to cool off in certain circumstances (see “Cooling Off”).
A person may waive the right to be able to rely on a term (including a special condition) of a contract of sale.

Water Main in Common
A water service owned and operated by more than one lot owner, and providing a water supply to more than one dwelling.
See also joint private service and internal service.

Water Surface Profile
A graph showing the flood stage at any given location along a watercourse at a particular time.

Water Supply System
All dams, storage reservoirs, aqueducts, mains and water supply works vested in a Water authority for the storage, transfer and distribution of potable water.

Water supply zone
The area serviced by a particular water supply facility or pipe network.

Weighted Average Cost of Capital (WACC)
A measure of the cost of capital for a given entity, comprising both debt and equity, which is required to service debts and to maintain a return on equity and thus maintain solvency.

The WACC can be calculated for specific companies listed on the stock exchange, based on the return required to service debts and to provide dividends based on the number of issued shares.

The WACC can be used as a comparison with adopted discount rates for discounted cash flow. In general, the WACC is calculated for companies which are within a similar asset class to that of the subject asset.

Typically, in respect of real estate, analysed companies include managed funds, trusts and companies dealing specifically in property investment or Development.

WITS
Water Industry Technical Standards.

WSAA
Water Services Association of Australia.

Works
The design, construction, project management and survey of water mains, sewers and associated work. For example, filling and grading that changes the natural condition or topography of land, construction of structures, holding tanks, pump stations and buildings.
See also permanent works, temporary works and non works.

Years Purchase
The number of years required for the net income from an interest in property to amount (without interest) to a sum equal to the purchase price. The years purchase in any particular instance is determined by dividing 100 by the yield.