Glossary

UK property investment glossary

36 terms every UK property investor runs into, defined plainly and without the sales pitch. Where a term has a calculator or a longer explanation on this site, it is linked.

Returns and measurement

Gross yield: Annual rent divided by purchase price, as a percentage. It ignores every cost, which makes it useful for quickly ranking a long list and misleading for deciding whether a deal works. Two properties with identical gross yields can have very different net positions once service charges, management and finance are counted. Buy-to-let calculator →
Net yield: Annual rent minus running costs, divided by purchase price. Running costs normally mean management, insurance, maintenance, service charge and ground rent, but not mortgage interest. Net yield is the honest version of gross yield and typically lands one to three percentage points lower. Buy-to-let calculator →
ROIReturn on investment: Annual profit expressed as a percentage of the money you actually put in, rather than of the purchase price. Because it is measured against your own capital, leverage raises ROI even when the underlying yield is unchanged — which is why ROI and yield tell you different things.
Cash-on-cash return: Annual pre-tax cash flow divided by total cash invested, including deposit, stamp duty, legal fees and refurbishment. It is the figure that answers "what is my money actually earning this year", and it is the one most often quoted optimistically because refurbishment and acquisition costs get quietly left out.
Price per square foot: Purchase price divided by internal floor area. The most reliable single way to compare properties of different sizes on the same street, and the fastest way to spot an overpriced listing. Its weakness is that it ignores condition, so a refurbished flat and a wreck can show the same figure.
GDVGross development value: What a property is expected to be worth once the planned works are complete. Every development appraisal hangs off it, and an optimistic GDV is the most common reason a deal that looked profitable on paper loses money in practice. Base it on completed comparables, not on asking prices.
Maximum offer price: The highest price you can pay and still hit your target return. Working backwards from your required profit rather than forwards from the asking price is the single discipline that separates investors who buy well from investors who buy often.

Strategies

BMVBelow market value: A property bought for less than its assessed open-market value. The figure only means something if the market value is evidenced by comparable sold prices rather than by the agent’s asking price. Area-average discounts are the usual culprit behind inflated BMV claims. BMV properties →
BRRRBuy, refurbish, refinance, rent: Buy a property below value, refurbish it to raise the valuation, refinance to pull the original capital back out, then let it. It works when the post-works valuation genuinely supports the refinance; it stalls when the uplift is smaller than the refurbishment spend. BRRR calculator →
Flip: Buy, improve and resell for profit rather than holding for income. Returns are realised quickly but taxed as trading profit rather than capital gain, and the strategy carries full exposure to market movement over the holding period. Flip calculator →
HMOHouse in multiple occupation: A property let to three or more tenants forming more than one household, sharing facilities. Yields are materially higher than single lets and so is the regulation: licensing, minimum room sizes, fire safety and often planning consent all apply. HMO calculator →
Serviced accommodation: Short-term furnished letting, priced nightly rather than monthly. Gross income can be several times an equivalent assured shorthold tenancy, offset by higher operating costs, real seasonality and, increasingly, local licensing or planning restrictions.
R2SARent to serviced accommodation: Renting a property from a landlord and operating it as short-term accommodation, keeping the margin. It requires no purchase capital, which is its appeal, but you carry the void risk on a lease you must pay regardless of occupancy, and you need the freeholder’s written consent to sublet.
Title split: Dividing one legal title into several — most commonly converting a block held on a single freehold into individually saleable leasehold flats. Done properly it can create substantial value; it requires a solicitor, lender consent where a charge exists, and often takes longer than the underwriting assumed.
Sourcing fee: The fee a deal sourcer charges an investor for finding and packaging a purchase. In the UK, sourcing is a regulated activity: sourcers must be registered with a redress scheme, hold client money protection where relevant, and comply with anti-money-laundering supervision.

Finance

LTVLoan to value: The mortgage balance as a percentage of the property’s value. It determines which products you qualify for and what rate you pay, and it moves on its own as values change — which is why a portfolio can drift into a worse LTV band without anyone borrowing another penny.
ICRInterest coverage ratio: Rental income as a multiple of mortgage interest, used by buy-to-let lenders to decide how much they will advance. Lenders stress-test it at a notional rate well above the rate you will actually pay, so ICR — not the headline rate — is usually what caps your borrowing.
DSCRDebt service coverage ratio: Net operating income divided by total debt service, covering capital as well as interest. More common in commercial lending than residential buy-to-let, where ICR dominates. A ratio below 1 means the property does not cover its own borrowing.
Bridging finance: Short-term secured lending, typically arranged in weeks and priced monthly rather than annually. Used for auction purchases, unmortgageable stock and chain breaks. The exit — sale or refinance — matters more than the rate, because bridging that cannot be repaid on time becomes very expensive very quickly. Finance →
Section 24: The rule restricting individual landlords from deducting finance costs from rental income, replacing that deduction with a basic-rate tax credit. It is the main reason higher-rate taxpayers commonly hold property through a limited company, and it can push a nominally profitable let into a post-tax loss.
SDLTStamp duty land tax: The transaction tax on property purchases in England and Northern Ireland, charged in bands. Additional-property purchases attract a surcharge on top of the standard rates. Rates and thresholds change at fiscal events, so always price a deal against current rates rather than remembered ones. Investment calculators →
LBTT and ADS: Scotland’s equivalents of stamp duty: Land and Buildings Transaction Tax, plus the Additional Dwelling Supplement on second and investment properties. The bands differ from SDLT, so an English rate applied to a Scottish purchase will misprice the deal.
LTTLand transaction tax: The Welsh equivalent of stamp duty, with its own bands and its own higher-rate surcharge for additional properties. As with Scotland, do not assume English thresholds apply.

Planning and compliance

Article 4 direction: A local authority direction removing permitted development rights in a defined area. For investors it most often means a small HMO that would elsewhere be created without planning permission now needs a full application. Always check Article 4 coverage before underwriting an HMO conversion.
Permitted developmentPD: Changes you may make without a full planning application, granted by national legislation rather than by your council. Valuable because it removes planning risk from an appraisal — but it can be withdrawn locally by an Article 4 direction, and conditions and prior-approval requirements still apply.
Sui generis: Latin for "of its own kind": a planning use class that belongs to no standard category, which includes large HMOs of more than six occupants. Because it sits outside the normal classes, no permitted-development route into it exists and planning permission is always required.
Certificate of lawfulnessCLEUD: A formal confirmation from the council that an existing use or development is lawful, usually because it has continued unchallenged for long enough to become immune from enforcement. Frequently the document that makes a long-running unlicensed HMO mortgageable and saleable.
EPCEnergy performance certificate: A rating from A to G, required before a property can be let or sold and valid for ten years. Minimum standards already restrict letting the worst-rated stock, and proposed tightening is a live risk for anyone buying low-rated property to hold.
Auction legal pack: The bundle of title documents, searches, leases and special conditions published before an auction lot is sold. The special conditions are where the risk hides — buyer’s premiums, undisclosed liabilities and short leases routinely appear there rather than in the catalogue description. Auction pack analysis →
Leasehold and freehold: Freehold is outright ownership of land and building. Leasehold is time-limited ownership subject to ground rent and service charges. Lease length drives both value and mortgageability: below roughly eighty years, extension costs rise sharply and lender appetite narrows.

Market and process

ComparableComp: A recently sold property used as evidence of what a subject property is worth. Quality depends on proximity, recency, similarity of type and size, and whether the sale was an ordinary arm’s-length transaction — a repossession or a transfer between family members is not a fair comparison. How we value →
SSTCSold subject to contract: An offer has been accepted but contracts have not exchanged, so nothing is legally binding. A meaningful proportion of SSTC sales fall through, which is why long-standing SSTC listings can be worth tracking rather than dismissing.
Motivated seller: A vendor with a reason to prioritise speed or certainty over price — probate, relocation, divorce, repossession or a broken chain. Motivation is what makes a genuine discount available; without it, a below-asking offer is usually just a rejected offer.
Void period: Time when a property is untenanted and producing no income while costs continue. Two to four weeks a year is a common planning assumption for single lets. Appraisals that assume none are overstating net yield by a few percent before anything else goes wrong.
Refurbishment cost: The full cost of works to bring a property to its intended standard, including materials, labour, professional fees, contingency and the finance carried while it is empty. The contingency is the line most often omitted and most often needed. Refurb scan →
Deal pack: The document presenting a deal to an investor or lender: the property, the numbers, the comparable evidence, the refurbishment schedule, the exit and the risks. A good one shows its working, so the reader can check the assumptions rather than take the headline return on trust.

Put the terms to work

Knowing what ICR means is not the same as knowing whether this property clears it. Archie runs the numbers on live UK listings and ranks what actually stacks.

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Returns and measurement

Gross yield

Annual rent divided by purchase price, as a percentage. It ignores every cost, which makes it useful for quickly ranking a long list and misleading for deciding whether a deal works. Two properties with identical gross yields can have very different net positions once service charges, management and finance are counted. Buy-to-let calculator →

Net yield

Annual rent minus running costs, divided by purchase price. Running costs normally mean management, insurance, maintenance, service charge and ground rent, but not mortgage interest. Net yield is the honest version of gross yield and typically lands one to three percentage points lower. Buy-to-let calculator →

ROIReturn on investment

Annual profit expressed as a percentage of the money you actually put in, rather than of the purchase price. Because it is measured against your own capital, leverage raises ROI even when the underlying yield is unchanged — which is why ROI and yield tell you different things.

Cash-on-cash return

Annual pre-tax cash flow divided by total cash invested, including deposit, stamp duty, legal fees and refurbishment. It is the figure that answers "what is my money actually earning this year", and it is the one most often quoted optimistically because refurbishment and acquisition costs get quietly left out.

Price per square foot

Purchase price divided by internal floor area. The most reliable single way to compare properties of different sizes on the same street, and the fastest way to spot an overpriced listing. Its weakness is that it ignores condition, so a refurbished flat and a wreck can show the same figure.

GDVGross development value

What a property is expected to be worth once the planned works are complete. Every development appraisal hangs off it, and an optimistic GDV is the most common reason a deal that looked profitable on paper loses money in practice. Base it on completed comparables, not on asking prices.

Maximum offer price

The highest price you can pay and still hit your target return. Working backwards from your required profit rather than forwards from the asking price is the single discipline that separates investors who buy well from investors who buy often.

Strategies

BMVBelow market value

A property bought for less than its assessed open-market value. The figure only means something if the market value is evidenced by comparable sold prices rather than by the agent’s asking price. Area-average discounts are the usual culprit behind inflated BMV claims. BMV properties →

BRRRBuy, refurbish, refinance, rent

Buy a property below value, refurbish it to raise the valuation, refinance to pull the original capital back out, then let it. It works when the post-works valuation genuinely supports the refinance; it stalls when the uplift is smaller than the refurbishment spend. BRRR calculator →

Flip

Buy, improve and resell for profit rather than holding for income. Returns are realised quickly but taxed as trading profit rather than capital gain, and the strategy carries full exposure to market movement over the holding period. Flip calculator →

HMOHouse in multiple occupation

A property let to three or more tenants forming more than one household, sharing facilities. Yields are materially higher than single lets and so is the regulation: licensing, minimum room sizes, fire safety and often planning consent all apply. HMO calculator →

Serviced accommodation

Short-term furnished letting, priced nightly rather than monthly. Gross income can be several times an equivalent assured shorthold tenancy, offset by higher operating costs, real seasonality and, increasingly, local licensing or planning restrictions.

R2SARent to serviced accommodation

Renting a property from a landlord and operating it as short-term accommodation, keeping the margin. It requires no purchase capital, which is its appeal, but you carry the void risk on a lease you must pay regardless of occupancy, and you need the freeholder’s written consent to sublet.

Title split

Dividing one legal title into several — most commonly converting a block held on a single freehold into individually saleable leasehold flats. Done properly it can create substantial value; it requires a solicitor, lender consent where a charge exists, and often takes longer than the underwriting assumed.

Sourcing fee

The fee a deal sourcer charges an investor for finding and packaging a purchase. In the UK, sourcing is a regulated activity: sourcers must be registered with a redress scheme, hold client money protection where relevant, and comply with anti-money-laundering supervision.

Finance

LTVLoan to value

The mortgage balance as a percentage of the property’s value. It determines which products you qualify for and what rate you pay, and it moves on its own as values change — which is why a portfolio can drift into a worse LTV band without anyone borrowing another penny.

ICRInterest coverage ratio

Rental income as a multiple of mortgage interest, used by buy-to-let lenders to decide how much they will advance. Lenders stress-test it at a notional rate well above the rate you will actually pay, so ICR — not the headline rate — is usually what caps your borrowing.

DSCRDebt service coverage ratio

Net operating income divided by total debt service, covering capital as well as interest. More common in commercial lending than residential buy-to-let, where ICR dominates. A ratio below 1 means the property does not cover its own borrowing.

Bridging finance

Short-term secured lending, typically arranged in weeks and priced monthly rather than annually. Used for auction purchases, unmortgageable stock and chain breaks. The exit — sale or refinance — matters more than the rate, because bridging that cannot be repaid on time becomes very expensive very quickly. Finance →

Section 24

The rule restricting individual landlords from deducting finance costs from rental income, replacing that deduction with a basic-rate tax credit. It is the main reason higher-rate taxpayers commonly hold property through a limited company, and it can push a nominally profitable let into a post-tax loss.

SDLTStamp duty land tax

The transaction tax on property purchases in England and Northern Ireland, charged in bands. Additional-property purchases attract a surcharge on top of the standard rates. Rates and thresholds change at fiscal events, so always price a deal against current rates rather than remembered ones. Investment calculators →

LBTT and ADS

Scotland’s equivalents of stamp duty: Land and Buildings Transaction Tax, plus the Additional Dwelling Supplement on second and investment properties. The bands differ from SDLT, so an English rate applied to a Scottish purchase will misprice the deal.

LTTLand transaction tax

The Welsh equivalent of stamp duty, with its own bands and its own higher-rate surcharge for additional properties. As with Scotland, do not assume English thresholds apply.

Planning and compliance

Article 4 direction

A local authority direction removing permitted development rights in a defined area. For investors it most often means a small HMO that would elsewhere be created without planning permission now needs a full application. Always check Article 4 coverage before underwriting an HMO conversion.

Permitted developmentPD

Changes you may make without a full planning application, granted by national legislation rather than by your council. Valuable because it removes planning risk from an appraisal — but it can be withdrawn locally by an Article 4 direction, and conditions and prior-approval requirements still apply.

Sui generis

Latin for "of its own kind": a planning use class that belongs to no standard category, which includes large HMOs of more than six occupants. Because it sits outside the normal classes, no permitted-development route into it exists and planning permission is always required.

Certificate of lawfulnessCLEUD

A formal confirmation from the council that an existing use or development is lawful, usually because it has continued unchallenged for long enough to become immune from enforcement. Frequently the document that makes a long-running unlicensed HMO mortgageable and saleable.

EPCEnergy performance certificate

A rating from A to G, required before a property can be let or sold and valid for ten years. Minimum standards already restrict letting the worst-rated stock, and proposed tightening is a live risk for anyone buying low-rated property to hold.

Auction legal pack

The bundle of title documents, searches, leases and special conditions published before an auction lot is sold. The special conditions are where the risk hides — buyer’s premiums, undisclosed liabilities and short leases routinely appear there rather than in the catalogue description. Auction pack analysis →

Leasehold and freehold

Freehold is outright ownership of land and building. Leasehold is time-limited ownership subject to ground rent and service charges. Lease length drives both value and mortgageability: below roughly eighty years, extension costs rise sharply and lender appetite narrows.

Market and process

ComparableComp

A recently sold property used as evidence of what a subject property is worth. Quality depends on proximity, recency, similarity of type and size, and whether the sale was an ordinary arm’s-length transaction — a repossession or a transfer between family members is not a fair comparison. How we value →

SSTCSold subject to contract

An offer has been accepted but contracts have not exchanged, so nothing is legally binding. A meaningful proportion of SSTC sales fall through, which is why long-standing SSTC listings can be worth tracking rather than dismissing.

Motivated seller

A vendor with a reason to prioritise speed or certainty over price — probate, relocation, divorce, repossession or a broken chain. Motivation is what makes a genuine discount available; without it, a below-asking offer is usually just a rejected offer.

Void period

Time when a property is untenanted and producing no income while costs continue. Two to four weeks a year is a common planning assumption for single lets. Appraisals that assume none are overstating net yield by a few percent before anything else goes wrong.

Refurbishment cost

The full cost of works to bring a property to its intended standard, including materials, labour, professional fees, contingency and the finance carried while it is empty. The contingency is the line most often omitted and most often needed. Refurb scan →

Deal pack

The document presenting a deal to an investor or lender: the property, the numbers, the comparable evidence, the refurbishment schedule, the exit and the risks. A good one shows its working, so the reader can check the assumptions rather than take the headline return on trust.