Speak the Language of Property Investment
Don’t let confusing terms slow you down. Our expert-curated A-Z Property Dictionary is your essential guide to understanding the UK market, helping you build your hands-off rental income with clarity and confidence. Your journey to becoming a savvy investor starts here.
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A-Z Property Dictionary
A
- Agreement in Principle (AIP): A document from a mortgage lender stating that they are prepared to lend you a certain amount of money, based on the information you have provided. It is not a formal mortgage offer.
- Arrears: A term used to describe payments that have not been made on time. For example, if you are in mortgage arrears, you have missed one or more mortgage payments.
- Auction: A method of selling property where buyers bid against each other. The property is sold to the highest bidder once the reserve price has been met.
- Amortization: The process of gradually paying off a debt over time through a series of regular payments. Each payment consists of both principal and interest.
B
- Below Market Value (BMV): A property that is for sale at a price lower than the estimated market value of similar properties in the same area. Property sourcing agents often specialize in finding BMV deals for investors.
- Bridging Loan: A short term loan used to ‘bridge’ the gap between buying a new property and selling an existing one.
- Buy to Let: A property that is bought with the intention of renting it out to tenants.
- Building Survey: A detailed inspection of a property’s condition. It is the most comprehensive type of survey and is particularly useful for older or unconventional properties.
- Break Clause: A clause in a tenancy agreement that allows the landlord or tenant to end the tenancy early, under certain conditions.
C
- Conveyancing: The legal process of transferring ownership of a property from one person to another.
- Capital Gains Tax (CGT): A tax on the profit made from selling an asset that has increased in value. It applies to properties that are not your main home.
- Chain: A sequence of linked property transactions, where each buyer is dependent on the sale of their own property to be able to buy the next one in the chain.
- Covenants: Rules and restrictions that are written into the deeds of a property, which the owner must abide by.
D
- Deal Sourcing: The process of finding and securing investment-worthy property deals for a client. This is a primary service of a property sourcing agent.
- Deeds: The legal documents that prove ownership of a property. They are usually held by the mortgage lender until the loan is fully repaid.
- Deposit: A sum of money paid upfront when buying a property. It is usually a percentage of the property’s total value.
- Dilapidations: A term used to describe the state of disrepair of a property at the end of a tenancy. The tenant is usually responsible for the cost of rectifying any dilapidations.
- Draft Contract: The initial version of the contract drawn up by the seller’s solicitor and sent to the buyer’s solicitor for consideration.
E
- Easement: A right given to someone to use another person's land for a specific purpose, for example, a right of way.
- Energy Performance Certificate (EPC): A certificate that shows how energy efficient a property is. It is a legal requirement to have a valid EPC when a property is sold or rented.
- Equity: The value of a property that you own outright. It is the difference between the property's market value and the amount of any outstanding mortgage or loans secured against it.
- Exchange of Contracts: The point at which a property transaction becomes legally binding on both the buyer and the seller.
F
- Freehold: A type of property ownership where you own the property and the land it stands on outright, for an unlimited period.
- Fixtures and Fittings: Items in a property that are included in the sale. Fixtures are items that are fixed to the property, such as a boiler, while fittings are items that are not fixed, such as curtains.
- Fixed Rate Mortgage: A mortgage where the interest rate is fixed for a set period of time, meaning that your monthly repayments will not change during that period.
- Forfeiture: The termination of a lease by the landlord due to a breach of contract by the tenant.
G
- Gazumping: When a seller accepts a higher offer from another buyer, after they have already accepted an offer from someone else.
- Gazundering: When a buyer lowers their offer on a property just before the exchange of contracts, after the seller has already accepted their previous offer.
- Ground Rent: A regular payment made by a leaseholder to the freeholder of a property.
- Guarantor: A person who agrees to be responsible for someone else's mortgage or rent payments if they are unable to make them.
H
- Home Buyers Report: A type of property survey that is suitable for most modern properties in a reasonable condition. It provides more detail than a basic valuation, but less than a full building survey.
- HMO (House in Multiple Occupation): A property that is rented out to three or more people who are not from the same household, and who share facilities such as a kitchen and bathroom.
- Holding Deposit: A sum of money paid by a prospective tenant to a landlord or letting agent to reserve a rental property.
I
- Inventory: A detailed list of the contents and condition of a rental property at the start of a tenancy. It is used to check for any damage or missing items at the end of the tenancy.
- Interest Only Mortgage: A mortgage where you only pay the interest on the loan each month. You will still need to repay the original loan amount at the end of the mortgage term.
- Indemnity Insurance: An insurance policy that protects the buyer of a property against any potential legal defects with the property.
J
- Joint Tenancy: A type of property ownership where two or more people own a property in equal shares. If one of the owners dies, their share of the property automatically passes to the other owner(s).
- Joint Mortgage: A mortgage taken out by two or more people.
L
- Lease Option: An agreement that allows an investor to rent a property with the option to buy it at a pre-agreed price in the future. This is a creative strategy often used in property sourcing.
- Leasehold: A type of property ownership where you own the property, but not the land it stands on, for a set period of time. You will have a lease with the freeholder, which sets out the rights and responsibilities of both parties.
- Land Registry: A government department that records the ownership of land and property in England and Wales.
- Loan to Value (LTV): The ratio of the amount of money you are borrowing to the value of the property you are buying. It is expressed as a percentage.
M
- Mortgage: A loan taken out to buy a property. The loan is secured against the value of the property.
- Mortgage Deed: A legal document that confirms that a mortgage lender has a legal charge over a property.
- Mortgage in Principle: Another term for an Agreement in Principle (AIP).
N
- Negative Equity: A situation where the value of a property is less than the amount of the outstanding mortgage on it.
- New Build: A property that has been newly built and has not been lived in before.
O
- Offer: The price that a potential buyer is willing to pay for a property.
- Open Market Value: The price that a property would be expected to sell for on the open market.
P
- Peppercorn Rent: A very low or nominal rent, paid to the freeholder of a property.
- Private Sale: A property sale that is arranged directly between the buyer and the seller, without the involvement of an estate agent.
R
- Return on Investment (ROI): A performance measure used to evaluate the efficiency of an investment. For property, it's typically the annual rental income divided by the total cash invested.
- Rent to Rent (R2R): A strategy where an individual or company rents a property from a landlord and then sublets it to other tenants, often on a room-by-room basis, to generate a profit.
- Repossession: The legal process by which a mortgage lender takes ownership of a property if the borrower fails to keep up with their mortgage payments.
- Retention: When a mortgage lender holds back part of the mortgage loan until certain repairs or improvements have been made to the property.
- Right to Buy: A government scheme that gives council tenants the right to buy their home at a discount.
S
- Serviced Accommodation (SA): Fully furnished property available for short-term lets, which includes services like cleaning and utility bills in the price. A popular strategy for maximising rental income.
- Stamp Duty Land Tax (SDLT): A tax paid to the government when you buy a property or land over a certain price in England and Northern Ireland.
- Survey: An inspection of a property’s condition, carried out by a qualified surveyor.
- Searches: Enquiries made by a solicitor to various authorities to find out more information about a property, such as whether it is affected by any planning proposals or environmental issues.
- Shared Ownership: A government scheme that allows you to buy a share of a property and pay rent on the remaining share.
T
- Tenancy Agreement: A legal document that sets out the terms of a rental agreement between a landlord and a tenant.
- Title Deeds: The legal documents that prove ownership of a property.
- Transfer Deed: The legal document that transfers ownership of a property from the seller to the buyer.
U
- Under Offer: When a seller has accepted an offer from a buyer, but the sale has not yet been completed.
- Underpinning: A method of strengthening the foundations of a property.
V
- Valuation: An assessment of a property’s worth, carried out by a qualified valuer.
- Variable Rate Mortgage: A mortgage where the interest rate can go up or down, depending on changes in the Bank of England base rate or the lender’s standard variable rate.
- Vendor: The legal term for the seller of a property.
Y
- Yield: The annual rental income from a property, expressed as a percentage of the property’s value. It is a measure of the return on a property investment.
