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Property Investment Glossary

Property has its own language. Here is every key term explained in plain English.

The strategies

Buy-to-LetBTL: Buying a property to let to a tenant and hold for rental income plus long-term capital growth. The foundation strategy most investors start with.
House in Multiple OccupationHMO: A property let room-by-room to three or more tenants from more than one household who share facilities. Higher yield than a single let, but needs licensing and stricter compliance.
Buy, Refurbish, Rent, RefinanceBRRR: Buy a run-down property below value, refurbish it to force the value up, let it, then remortgage at the higher value to pull most of your cash back out and reuse it on the next deal.
Serviced AccommodationSA: A fully-furnished property let to guests on short stays (Airbnb, Booking.com, corporate). Much higher income potential than a standard let, but run like a hospitality business.
Commercial Property: Property let to businesses — offices, shops, warehouses, industrial units. Longer leases, tenant often pays repairs, and value is driven by the income and tenant quality.
Flip: Buying a property, adding value quickly through refurbishment, and selling for a lump-sum profit rather than holding for rent. Taxed as a trade, not a capital gain.
Development: Building or converting property (or a site) and selling the finished result. Like a flip but usually larger, often involving planning permission.

Money & returns

Gross Yield: Annual rent divided by the property price, as a percentage. A quick headline measure of income — before any costs are taken off.
Net Yield: Annual rent minus running costs, divided by the property price. A truer measure of what the property actually earns.
Cashflow: The money left in your pocket each month after the mortgage and all running costs are paid. Positive cashflow means the property pays you; negative means it costs you.
Return on InvestmentROI: Your annual profit as a percentage of the actual cash you put in (deposit plus costs). Shows how hard your money is working.
Cash-on-Cash Return: The annual cash profit divided by the total cash you invested. A common way to compare how much income each deal produces per pound invested.
Capital Growth: The increase in a property's value over time. One of the two ways property makes money, alongside rental income.
Equity: The part of the property you actually own — its value minus the outstanding mortgage. Grows as you repay the loan and as the value rises.
Gross Development ValueGDV: What a property will be worth after refurbishment or development is finished. The single most important figure in BRRR, flips and development.

Finance & mortgages

Deposit: The cash you put down up front, usually 25% of the price for a buy-to-let. The rest is borrowed as a mortgage.
Loan-to-ValueLTV: The size of the mortgage as a percentage of the property value. A 75% LTV means you borrow 75% and put down 25%.
Interest-Only Mortgage: A mortgage where you pay only the interest each month, not the loan itself. Common for buy-to-let because it keeps monthly costs lower.
Interest Coverage RatioICR: A stress test lenders use for buy-to-let: the rent must cover the mortgage interest by a set margin (often 125%–145%) at a stressed rate.
Decision in PrincipleDIP: A lender's early indication of how much they will likely lend you, before a full application. Lets you offer on a property with credibility.
Bridging Finance: Short-term, fast, higher-cost lending used to buy or refurbish quickly (e.g. in BRRR or at auction), then repaid by refinancing or selling.
Remortgage / Refinance: Replacing your current mortgage with a new one — often to get a better rate, or to release equity by borrowing against a higher value.
Special Purpose VehicleSPV: A limited company set up purely to hold property. Many investors buy through an SPV for tax and financing reasons.

Tax

Stamp Duty Land TaxSDLT: A tax paid when you buy property in England & Northern Ireland. Investors usually pay a 3% surcharge on top of standard rates for an additional property.
Section 24: The rule that stops personally-held landlords fully deducting mortgage interest — they get only a 20% tax credit instead. A major reason many now buy through a company.
Capital Gains TaxCGT: Tax on the profit when you sell an investment property. For UK residential property it must be reported and paid within 60 days of sale.
Corporation Tax: The tax a limited company pays on its profits. Property held in an SPV pays this instead of personal Income Tax.
Trading Income: Profit from buying and selling (like a flip) is taxed as trading income — at Income Tax or Corporation Tax rates — not the usually-lower Capital Gains rate.
VAT Threshold: Once turnover passes the VAT registration limit (currently £90k), you must charge VAT. A real risk for high-turnover serviced accommodation.

Buying & legal

Conveyancing: The legal process of transferring property ownership, handled by a solicitor — checking title, searches and contracts.
Exchange of Contracts: The point where the sale becomes legally binding and you pay the deposit. Backing out after this has serious consequences.
Completion: The final step where the money is paid, you get the keys, and you legally own the property.
Freehold: You own the property and the land it sits on outright, with no time limit.
Leasehold: You own the property for a fixed number of years but not the land. Common for flats; watch the lease length and ground rent/service charges.
Covenant: A rule written into a property's title that restricts what you can do with it — for example, banning short-lets or multiple occupation.

Compliance & planning

Energy Performance CertificateEPC: A rating of a property's energy efficiency (A–G). A minimum rating is legally required to let a property, and the standard is rising.
Gas Safety CertificateCP12: An annual safety check of gas appliances by a registered engineer — a legal requirement before and during a tenancy.
Electrical Installation Condition ReportEICR: A safety inspection of the property's electrics, legally required at least every five years for rented homes.
Article 4 Direction: A council rule that removes automatic permitted-development rights in an area — meaning you need full planning permission to convert a home into an HMO.
Permitted Development: Changes you can make without a full planning application. Some conversions (e.g. offices to homes) can be done under permitted development rights.
Deposit Protection Scheme: A government-approved scheme that must hold a tenant's deposit. Landlords must protect it within 30 days or face penalties.

Letting & management

Assured Shorthold TenancyAST: The standard tenancy agreement for private residential lettings in England & Wales.
Void: A period when a property is empty and earning no rent. Always budget for voids — they eat into your returns.
Right to Rent: A legal check landlords must do to confirm a tenant is allowed to rent in the UK, before a tenancy starts.
Letting Agent: A company that finds tenants and/or manages the property for you, typically charging 8%–12% of the rent for full management.
Inventory: A detailed, photographed record of a property's condition and contents at the start of a tenancy — vital for resolving deposit disputes.
Covenant Strength: In commercial property, how financially reliable a tenant is. A strong tenant on a long lease makes the building far more valuable.

Still unsure about a term?Ask the Strategy Assistant to explain any concept in plain English.