Property investment has its own language, and understanding the terminology is crucial for making informed decisions. This comprehensive glossary covers all the key terms you'll encounter on your investment journey, from basic concepts to advanced strategies.
Search Terms
A
Agreement in Principle (AIP)
Simple Definition:
An Agreement in Principle (also known as a Decision in Principle or DIP) is a formal estimate from a mortgage lender stating how much they might be willing to lend you.
Context & Detail:
It is not a guaranteed mortgage offer, but it is a crucial first step that shows estate agents and sellers that you are a serious and credible buyer. The check is usually a 'soft' credit check, so it won't affect your credit score.
Example:
Before you start viewing properties, you get an AIP for £150,000. This allows you to confidently make offers on properties up to that value, knowing your financing is likely to be approved.
Annual Percentage Rate of Charge (APRC)
Simple Definition:
The APRC is a figure that represents the total cost of borrowing over a year, including the interest rate and any other compulsory charges.
Context & Detail:
It is designed to help you compare the true cost of different mortgage deals from different lenders. Unlike a simple interest rate, it includes fees like arrangement and booking fees, giving a more complete picture.
Example:
A mortgage with a lower initial interest rate but high fees might have a higher APRC than a mortgage with a slightly higher rate but no fees.
Arrears
Simple Definition:
Arrears is the legal term for when a tenant has fallen behind on their rent payments.
Context & Detail:
If a tenant is in arrears, it means they owe money from past rental periods. Managing arrears is a key part of being a landlord, and a good tenancy agreement will have clear clauses on how and when late fees are applied.
Example:
If a tenant misses their August rent payment, they are said to be 'in arrears' by one month's rent.
Assured Shorthold Tenancy (AST)
Simple Definition:
An Assured Shorthold Tenancy is the most common type of tenancy agreement used by private landlords in England to let a residential property to tenants.
Context & Detail:
Most new tenancies are automatically ASTs. They give the landlord the right to regain possession of their property at the end of the agreed term and provide the tenant with certain legal protections.
Example:
You sign a 12-month AST with your new tenants, which clearly outlines the rent amount, payment date, and the obligations of both you and the tenant.
Auction
Simple Definition:
A property auction is a public sale where a property is sold to the highest bidder.
Context & Detail:
Auctions can be an excellent way to find Below Market Value deals, but they are fast-paced and legally binding. When the auctioneer's hammer falls, you have legally exchanged contracts and are required to pay a deposit (usually 10%) immediately.
Example:
We will cover auctions in more detail in our future guide, but for now, remember to always view the property and read the legal pack before bidding.
B
Bank of England Base Rate
Simple Definition:
The official interest rate set by the Bank of England that other banks and financial institutions use as a basis for their own interest rates.
Context & Detail:
Changes to this rate directly impact the cost of borrowing for mortgages, especially those on a variable or tracker rate. It's a key indicator of the UK's financial health and directly influences landlord mortgage payments.
Example:
If the Base Rate increases by 0.25%, your tracker mortgage payment will also increase. You can find the current rate on the Bank of England's website.
Below Market Value (BMV)
Simple Definition:
A property that is available to purchase for a price significantly below its true and independently assessed market value.
Context & Detail:
Genuine BMV deals occur for various reasons, such as a seller needing a very quick sale (a motivated seller), the property requiring substantial renovation, or a probate case. They are highly sought after by investors as they provide instant equity.
Example:
Finding genuine BMV deals is a key benefit of using a professional sourcer. Read our full guide on What "Below Market Value" (BMV) Actually Means to learn more.
Break Clause
Simple Definition:
A term in a tenancy agreement that allows either the tenant or the landlord to end the tenancy agreement early.
Context & Detail:
A break clause can typically be activated after a certain period has passed (e.g., after 6 months of a 12-month fixed term) and requires a specific, written notice period to be given as outlined in the contract.
Example:
Your 12-month tenancy agreement has a 6-month break clause, meaning you or your tenant can give two months' notice to end the tenancy any time after the fourth month, with the tenancy ending after the sixth month.
Bridging Loan
Simple Definition:
A short-term, specialist loan used to "bridge" a financial gap, most often until long-term finance like a mortgage can be secured.
Context & Detail:
Bridging loans are essential for buying at auction where funds are needed quickly, or for funding the purchase and renovation of a property in a BRRR deal that is currently unmortgageable. They are faster to arrange than mortgages but come with higher interest rates and fees.
Example:
This is a key financing tool for active investors. We cover this in detail in our BRRR Investing Explained guide.
Broker (Mortgage Broker)
Simple Definition:
A professionally qualified individual or company that advises on and arranges mortgages on behalf of a client.
Context & Detail:
A good mortgage broker, especially one who specialises in buy-to-let, has access to deals from a wide range of lenders (not just high street banks) and can find the best product for your specific circumstances. They are a vital part of an investor's "power team."
Example:
Your mortgage broker was able to find a lender who specialises in finance for limited companies, securing you a better deal than you could find on your own.
BRRR (Buy, Refurbish, Refinance, Rent)
Simple Definition:
A popular property investment strategy that involves buying a property (often needing work), renovating it, refinancing onto a mortgage at its new higher value, and renting it out.
Context & Detail:
The goal of the BRRR strategy is to pull most, if not all, of your initial investment back out during the refinance step, allowing you to "recycle" your capital into the next project and scale a portfolio quickly.
Example:
This is a powerful but active strategy. Learn exactly how it works in our Step-by-Step Guide to BRRR Investing.
Buy-to-Let (BTL)
Simple Definition:
The act of buying a property with the specific intention of letting it out to tenants to generate rental income.
Context & Detail:
This is the most common form of property investment in the UK. A property purchased with a BTL mortgage cannot typically be lived in by the owner or their immediate family.
Example:
To understand the fundamentals of this strategy, read our Beginner's Guide to Buy-to-Let Investing.
C
Capital Gains Tax (CGT)
Simple Definition:
A tax on the profit (or 'gain') you make when you sell an asset that has increased in value.
Context & Detail:
For property investors, this means you pay tax on the difference between the price you bought a property for and the price you sell it for, minus certain allowable costs like stamp duty, solicitor fees, and the cost of improvement works.
Example:
The rules, rates, and allowances for CGT can change. For the most current information, it is essential to consult the official Gov.uk website on Capital Gains Tax.
Capital Growth (or Capital Appreciation)
Simple Definition:
The increase in the market value of your property over a period of time.
Context & Detail:
This is one of the two main ways an investment property makes money, alongside rental income (cash flow). Capital growth is only 'realised' as cash when you either sell the property or refinance it at its new, higher value.
Example:
You bought a property for £100,000 in 2025. By 2035, its market value is £160,000. The property has achieved £60,000 in capital growth.
Cash Flow
Simple Definition:
The amount of money left over from your rental income each month after all of your property-related expenses have been paid.
Context & Detail:
This is the lifeblood of a buy-to-let portfolio. Positive cash flow means the property is paying for itself and providing you with a monthly profit. Negative cash flow means you have to top up the expenses from your own pocket.
Example:
Calculating your potential cash flow is a key part of due diligence. See how this works in our Practical Guide to Vetting an Investment Property.
Chain (Property Chain)
Simple Definition:
A sequence of linked property sales, where each transaction is dependent on the one before it completing successfully.
Context & Detail:
A problem anywhere in the sequence (e.g., a buyer pulling out or a mortgage offer being withdrawn) can cause the entire chain to collapse, delaying or ending your own transaction. As an investor, being a "chain-free" buyer is a significant advantage in negotiations.
Example:
Your purchase was delayed because the person you were buying from couldn't find a property to move into, which broke their onward chain.
Comparables (or Comps)
Simple Definition:
Properties that are similar in size, style, condition, and location to a property you are trying to value.
Context & Detail:
Analysing the recent sold prices of "comps" is the most effective way to determine the true current market value of a property. This research is vital to avoid overpaying and is a critical part of the refinancing process in a BRRR deal.
Example:
We show you exactly how to find and use comps in our Deal Analysis 101 article.
Completion Date
Simple Definition:
The date when the property purchase is finalised, all funds are transferred to the seller, and the buyer legally takes ownership and receives the keys.
Context & Detail:
This is the final step in the buying process and takes place after the 'exchange of contracts'. The completion date is mutually agreed upon by the buyer and seller earlier in the process.
Example:
You exchanged contracts on the 1st of September, with an agreed completion date set for the 15th of September.
Conveyancing
Simple Definition:
The entire legal and administrative process of transferring the ownership of a property from one person to another.
Context & Detail:
This work is carried out by a solicitor or a licensed conveyancer. It involves conducting local authority searches, drawing up contracts, handling the transfer of funds between parties, and registering the new ownership with the Land Registry.
Example:
The conveyancing process for a simple, chain-free purchase typically takes between 8 and 12 weeks from the offer being accepted.
Council Tax
Simple Definition:
A local tax paid to the council to help fund local services like waste collection, schools, and road maintenance.
Context & Detail:
As a landlord, you are legally responsible for paying the council tax during any 'void periods' when the property is empty between tenants. Once a tenant moves in, the responsibility for paying the council tax bill usually transfers to them for the duration of their tenancy.
Example:
Your property was empty for one month between lets, so you had to cover the £120 council tax bill for that void period.
D
Decision in Principle (DIP)
Simple Definition:
An alternative name for an Agreement in Principle (AIP).
Context & Detail:
It is a conditional offer from a lender confirming the amount they would likely be willing to lend you before you make a full mortgage application. It is a crucial step to prove to sellers and agents that you are a serious buyer.
Example:
See Agreement in Principle (AIP) for a full definition.
Deposit (Mortgage)
Simple Definition:
The amount of your own money you contribute towards the purchase price of a property when taking out a mortgage.
Context & Detail:
For a Buy-to-Let mortgage in the UK, the minimum deposit is typically 25% of the property's purchase price. A larger deposit means you are borrowing less (a lower Loan-to-Value), which can give you access to better interest rates from lenders.
Example:
For a £100,000 investment property, you would need to provide a cash deposit of at least £25,000.
Deposit (Tenancy)
Simple Definition:
A sum of money paid by a tenant at the start of a tenancy which acts as security against non-payment of rent or damage to the property.
Context & Detail:
As a landlord in the UK, you are legally required to protect this security deposit in a government-approved tenancy deposit scheme (TDP). The maximum amount you can request is capped by law, typically at five weeks' rent where the annual rent is under £50,000.
Example:
You can find the official rules and approved schemes on the Gov.uk website for Tenancy Deposit Protection.
Dilapidations
Simple Definition:
A term for any damage, disrepair, or failure to maintain a rental property that is the tenant's responsibility at the end of a tenancy.
Context & Detail:
This goes beyond 'fair wear and tear'. It refers to breaches of the tenancy agreement regarding the property's condition, such as broken fixtures, unauthorised alterations, or leaving the property in a poor state of cleanliness. The cost of rectifying dilapidations can potentially be deducted from the tenant's deposit.
Example:
At the end of the tenancy, the landlord noted a broken window and a large, deep stain on the living room carpet as dilapidations.
Down Valuation
Simple Definition:
An event where a mortgage lender's appointed surveyor values a property for less than the price the buyer has agreed to pay for it.
Context & Detail:
A down valuation can be a major problem in a property transaction. The lender will only base their mortgage offer on their lower valuation, creating a funding shortfall that the buyer must make up with extra cash. This is a significant risk in a BRRR strategy during the refinance stage if the surveyor doesn't agree with your post-refurbishment valuation.
Example:
You agreed a purchase price of £100,000, but the lender's survey resulted in a down valuation to £90,000. This meant their 75% LTV mortgage offer would be £67,500, not the £75,000 you were expecting.
Due Diligence
Simple Definition:
The comprehensive process of research, investigation, and analysis an investor undertakes before committing to purchasing a property.
Context & Detail:
This involves everything from checking the numbers and analysing the local rental market to getting surveys done and having a solicitor review all legal documents. Proper due diligence is the single most important activity for mitigating risk and ensuring you are making a sound investment.
Example:
Our Deal Analysis 101 guide provides a complete framework for conducting your own thorough due diligence.
E
Early Repayment Charge (ERC)
Simple Definition:
A penalty fee charged by a mortgage lender if you pay off some or all of your mortgage loan earlier than the end of a specified deal period.
Context & Detail:
ERCs are a standard feature of most fixed-rate or discounted-rate mortgage products. For example, a 5-year fixed rate mortgage will typically have ERCs for those first 5 years, often on a sliding scale. This is a critical consideration for investors using a BRRR strategy who plan to refinance within a short period.
Example:
You wanted to sell your BTL property after two years, but your 5-year fixed mortgage had an Early Repayment Charge of 3% of the outstanding loan, which would have cost you several thousand pounds.
Easement
Simple Definition:
A legal right that allows someone to use another person's land for a specified purpose without possessing it.
Context & Detail:
The most common example is a 'right of way', where a neighbour has the legal right to walk or drive across a part of your property to access their own. Easements are detailed in the property's title deeds and are an important part of the solicitor's conveyancing checks.
Example:
The cottage you bought had an easement allowing the neighbouring farm to use a track at the bottom of your garden to access their fields.
Electrical Installation Condition Report (EICR)
Simple Definition:
A formal report that assesses the safety and condition of the electrical wiring, sockets, consumer unit (fuse box), and fixtures within a property.
Context & Detail:
In England, it is a legal requirement for landlords in the private rented sector to have a satisfactory EICR performed by a qualified electrician at least every five years. A copy of this report must be provided to tenants.
Example:
You can find the latest government guidance on this topic by searching for "electrical safety standards in the private rented sector" on the Gov.uk website.
Energy Performance Certificate (EPC)
Simple Definition:
A certificate that measures and rates a property's energy efficiency on a scale from A (most efficient) to G (least efficient).
Context & Detail:
It is a legal requirement for a property to have a valid EPC before it can be marketed for sale or rent in the UK. As of 2025, rental properties in England must have a minimum EPC rating of 'E'. This is a critical consideration for investors, as upgrading a property with a low rating can be costly.
Example:
The Victorian terrace you were considering had an EPC rating of 'F', meaning you would need to budget for improvements like loft insulation or a new boiler to bring it up to the legal minimum 'E' rating before you could let it out.
Equity
Simple Definition:
The portion of your property that you own outright.
Context & Detail:
It is calculated by taking the current market value of your property and subtracting the outstanding mortgage balance. Your equity grows as you pay down your mortgage or as the property's value increases through capital appreciation or refurbishment.
Example:
Your investment property is currently worth £120,000 and you have an outstanding mortgage of £90,000. This means you have £30,000 of equity in the property.
Estate Agent
Simple Definition:
A professional individual or company that arranges the marketing and sale of properties on behalf of the property owner (the seller or vendor).
Context & Detail:
Their legal and primary duty is to the seller, and their goal is to achieve the best possible price and terms for them. This is a fundamental difference from a Property Sourcer or Buying Agent, who works exclusively for the buyer.
Example:
We explain this crucial distinction in our article, The Power of a Local Sourcer: Why Hyper-Local Knowledge Wins.
Exchange of Contracts
Simple Definition:
The point in the property buying process in England and Wales where the sale becomes legally binding on both the buyer and the seller.
Context & Detail:
At this stage, both parties sign identical contracts, a non-refundable deposit (typically 10% of the purchase price) is paid by the buyer's solicitor to the seller's solicitor, and a completion date is formally fixed. After the exchange, neither party can pull out of the sale without incurring significant financial penalties.
Example:
Once you had exchanged contracts, you could finally relax and book your removals, knowing the property was legally secured.
F
Fair Wear and Tear
Simple Definition:
The minor, unavoidable deterioration that occurs to a property and its contents over time through normal, everyday use by a tenant.
Context & Detail:
This is a crucial legal concept for landlords. You cannot deduct money from a tenant's deposit for issues that fall under fair wear and tear, such as worn carpets in high-traffic areas or minor scuffs on walls. This is distinct from 'damage', which is caused by negligence, carelessness, or deliberate acts.
Example:
Faded curtains due to sunlight is fair wear and tear; a large red wine stain on a new carpet would be considered damage.
First Charge
Simple Definition:
The primary mortgage or loan secured against a property, which takes precedence over all other secured debts on that property.
Context & Detail:
If a property has to be sold to repay debts, the lender with the 'first charge' is legally entitled to be paid back first from any proceeds of the sale. Your main residential or buy-to-let mortgage will almost always be a first charge loan.
Example:
A 'second charge' loan, like some homeowner loans, can be taken out, but it will always rank behind the first charge mortgage in priority for repayment.
Fixtures and Fittings
Simple Definition:
A collective term for the non-structural items that are included in a property sale.
Context & Detail:
A 'fixture' is an item that is physically attached to the property (e.g., a boiler, a built-in kitchen, or a bathroom suite). A 'fitting' is a freestanding item (e.g., curtains, a freestanding fridge, or a lampshade). What is included in the sale is formally documented on the TA10 Fittings and Contents form, which is a standard part of the conveyancing process.
Example:
You reviewed the fixtures and fittings list to confirm that the seller was leaving the integrated oven (a fixture) and the garden shed (a fitting) as part of the sale.
Fixed-Rate Mortgage
Simple Definition:
A mortgage where the interest rate is fixed at a set level for an agreed period of time, such as two, three, or five years.
Context & Detail:
During the fixed-rate period, your monthly mortgage payment will not change, regardless of what happens to the Bank of England Base Rate or the lender's standard variable rate. This provides certainty and stability over your largest monthly cost, which is very useful for budgeting.
Example:
You took out a 5-year fixed-rate mortgage to ensure your monthly payments would be predictable for the first five years of your investment, protecting you from potential interest rate rises.
Flying Freehold
Simple Definition:
A part of a freehold property that is built over land or a structure that is not part of that property's freehold title.
Context & Detail:
This is most commonly found in older, terraced properties where a room from one house (e.g., a bedroom) is situated above a shared passageway or a room belonging to the neighbouring house. Flying freeholds can sometimes make properties more difficult for lenders to grant a mortgage on, so it is a key issue for a solicitor to identify and advise on.
Example:
The solicitor's search revealed that the second bedroom of the Victorian terrace constituted a flying freehold as it was partially situated over the shared alleyway below.
Freehold
Simple Definition:
A type of property ownership where you own the building and the land it stands on outright and in perpetuity.
Context & Detail:
This is the most common and generally most desirable type of ownership for houses in the UK. As a freeholder, you do not have to pay ground rent or service charges to a landlord (as you are the landlord), and there is no time limit on your ownership of the property.
Example:
This is fundamentally different from Leasehold ownership, which is the standard for flats and apartments.
G
Gas Safety Record (formerly CP12)
Simple Definition:
A certificate issued by a Gas Safe registered engineer confirming that all gas appliances, pipework, and flues in a property are safe and working correctly.
Context & Detail:
It is a major legal requirement for landlords in the UK to have an annual gas safety check carried out on their rental properties. A copy of the valid Gas Safety Record must be given to the tenants before they move in and within 28 days of each subsequent annual inspection.
Example:
Failure to comply can result in significant fines and even imprisonment. You can find a registered engineer in your area on the Gas Safe Register website.
Gazumping
Simple Definition:
An event where a property seller accepts a verbal offer from one buyer, but then accepts a higher offer from a different buyer before contracts are legally exchanged.
Context & Detail:
While considered unethical by many, gazumping is legal in England and Wales because the agreement to sell is not legally binding until the formal exchange of contracts. It is a significant risk for buyers, who can lose money already spent on surveys and solicitor fees.
Example:
You had your offer of £100,000 accepted and your survey completed, but a week before exchange, you were gazumped by another buyer who offered the seller £105,000.
Gearing (or Leverage)
Simple Definition:
A financial term that refers to the use of borrowed money, such as a mortgage, to purchase an asset in order to increase the potential return on your investment.
Context & Detail:
In property, a high level of gearing means you have a large mortgage relative to the property's value (a high LTV). While gearing amplifies your potential returns (as you benefit from all the capital growth on an asset you only partially own with your own cash), it also amplifies your risk if property prices fall.
Example:
An investor buying a £100,000 property with a £75,000 mortgage is more highly geared than one buying the same property with a £50,000 mortgage.
Gross Development Value (GDV)
Simple Definition:
The estimated market value of a property or development project once all the planned renovation and building works have been fully completed.
Context & Detail:
This is a critical figure in BRRR and property development strategies. Lenders, especially bridging finance providers, will often assess the viability of a deal based on its potential GDV. Your total profit is calculated as the GDV minus your total costs (purchase + refurbishment + finance).
Example:
Accurately estimating the GDV is a key part of the 'Refinance' step in our BRRR Investing Explained guide.
Gross Yield
Simple Definition:
The annual rental income of a property expressed as a percentage of its purchase price or market value.
Context & Detail:
It is a quick and simple metric used to compare the rental returns of different properties before accounting for any running costs. The calculation is: (Annual Rental Income ÷ Purchase Price) x 100 = Gross Yield %.
Example:
For a more accurate measure of profitability, you also need to calculate the Net Yield, which includes your running costs. You can calculate both with our Yield Calculator.
Ground Rent
Simple Definition:
A regular fee paid by a leaseholder to a freeholder (the landlord) as a condition of the lease agreement.
Context & Detail:
This is a specific feature of leasehold properties, which are most commonly flats and apartments. The amount of ground rent and any clauses for future increases will be detailed in the lease. Recent government reforms have aimed to abolish ground rent on most new leases in England and Wales.
Example:
The lease on the city centre flat stated you had to pay an annual ground rent of £150 to the building's freeholder.
Guarantor
Simple Definition:
A person, typically a parent or guardian, who legally agrees to pay the rent and cover any damages if the tenant fails to do so.
Context & Detail:
Landlords often require a guarantor for tenants who may be considered higher risk, such as students with no regular income, first-time renters, or those with a poor credit history. The guarantor is legally liable for the tenant's obligations and is usually required to be a UK homeowner with a good income.
Example:
As the three university students had no proof of income, you required each of them to have a parent act as a guarantor for their portion of the rent before you would grant the tenancy.
H
Head Lease
Simple Definition:
The primary or superior lease that is granted by the freeholder to a leaseholder.
Context & Detail:
In a block of flats, for example, the freeholder might grant a head lease for the entire building to a management company. This company then grants individual 'sub-leases' or 'under-leases' to the owners of each flat. Understanding the terms of the head lease is a key part of a solicitor's job when you buy a leasehold property.
Example:
Your solicitor reviewed the building's head lease to check for any unusual clauses before you committed to buying the apartment.
HMRC (His Majesty's Revenue and Customs)
Simple Definition:
The government department responsible for the administration and collection of taxes in the United Kingdom.
Context & Detail:
As a landlord and property investor, you will deal with HMRC for several key taxes, including Stamp Duty Land Tax (paid on purchase), Income Tax (paid on rental profits), and Capital Gains Tax (paid when you sell a property for a profit).
Example:
You can find all the forms, guidance, and information you need on the official HMRC section of the Gov.uk website.
Holding Deposit
Simple Definition:
A payment made by a prospective tenant to a landlord or letting agent to reserve a rental property.
Context & Detail:
Once a holding deposit is paid, the landlord should stop advertising the property and begin the referencing process. In England, this payment is legally capped at a maximum of one week's rent and is usually refundable unless the tenant provides false information, fails the 'Right to Rent' check, or pulls out of the agreement.
Example:
You paid a £120 holding deposit to reserve the flat, which was then deducted from your first month's rent when you moved in.
HomeBuyer Report (RICS Home Survey Level 2)
Simple Definition:
A mid-level property survey that is suitable for most conventional properties that are in a reasonable condition.
Context & Detail:
Now officially called the RICS Home Survey Level 2, this survey is more detailed than a basic mortgage valuation. It highlights any significant problems like damp or subsidence but does not go into the same level of detail as a full structural survey (Level 3). It uses a traffic-light system (red, amber, green) to rate the condition of different parts of the property.
Example:
The HomeBuyer Report on the 1960s semi-detached house flagged an 'amber' warning for the roof, suggesting it would likely need maintenance in the next few years.
HMO (House in Multiple Occupation)
Simple Definition:
A property that is rented out by at least three people who are not from one 'household' (e.g., a family) but share facilities like the bathroom and kitchen.
Context & Detail:
HMOs, such as student houses or professional house shares, can generate significantly higher rental income than standard single-let properties. However, they are subject to much stricter legal regulations and management requirements. Larger HMOs (those with five or more tenants) require a mandatory licence from the local council.
Example:
This is a more advanced investment strategy. You can find the baseline legal definition and licensing requirements on the Gov.uk website.
I
Income Tax
Simple Definition:
A tax paid on your income, which for a landlord includes the profit made from renting out property.
Context & Detail:
Your net rental profit is added to your other earnings (e.g., from a salary or self-employment) to determine your total taxable income and the tax band you fall into (Basic, Higher, or Additional Rate). This income must be declared to HMRC annually via a Self-Assessment tax return.
Example:
We explain how rental profit is calculated in our Beginner's Guide to Buy-to-Let, and you can find the current official rates on the Gov.uk website.
Indemnity Insurance
Simple Definition:
A specialist, one-off insurance policy taken out during the conveyancing process to protect a buyer and their mortgage lender from a specific, potential legal defect with a property.
Context & Detail:
It doesn't fix the underlying problem but provides financial compensation if the issue causes a loss in value in the future. Common reasons for needing an indemnity policy include a lack of building regulation certificates for an old extension or a restrictive covenant on the property that may have been breached.
Example:
The seller couldn't provide the FENSA certificate for a window they replaced ten years ago, so they paid £150 for an indemnity insurance policy to allow the sale to proceed without delay.
Independent Financial Advisor (IFA)
Simple Definition:
A professionally qualified and regulated advisor who provides independent advice on financial products and services from across the whole market.
Context & Detail:
An IFA can help with overall financial planning, pensions, and investment strategy. For property, they are often consulted for long-term portfolio planning, such as inheritance tax or structuring your investments in the most efficient way. This is different from a mortgage broker, who specialises solely in mortgages.
Example:
You consulted an IFA to discuss how your growing property portfolio fits into your wider retirement and estate planning.
Initial Interest Rate
Simple Definition:
The introductory or 'deal' interest rate offered on a mortgage product for a set period, such as the first two, three, or five years.
Context & Detail:
This is the headline rate you see advertised, for example, on a "5-year fixed-rate" mortgage. It's crucial to know what happens when this period ends, as the interest rate will almost always move to the lender's much higher Standard Variable Rate (SVR) unless you remortgage onto a new deal.
Example:
The mortgage had an attractive initial interest rate of 4.5% fixed for two years, after which it would revert to the lender's SVR, which was currently 8.75%.
Interest-Only Mortgage
Simple Definition:
A type of mortgage where your monthly payments only cover the interest being charged on the loan, without paying off any of the original capital amount borrowed.
Context & Detail:
This is a very common structure for Buy-to-Let mortgages as it results in significantly lower monthly payments and therefore higher cash flow for the landlord. The major drawback is that at the end of the mortgage term, you still owe the full capital amount you originally borrowed, which is typically repaid by either selling the property or refinancing.
Example:
On your £100,000 interest-only mortgage, your monthly payments just covered the interest charged by the bank. After the 25-year term, you still owed the lender the original £100,000.
Inventory (and Schedule of Condition)
Simple Definition:
A detailed report that documents the contents and condition of a rental property, including all fixtures, fittings, and any furniture, at the very beginning of a tenancy.
Context & Detail:
A professionally prepared inventory, complete with dated photos or video and signed by the tenant at check-in, is one of the most important documents a landlord can have. It provides crucial, impartial evidence if there is a dispute over the return of the tenant's deposit at the end of the tenancy.
Example:
The inventory report noted that the walls were freshly painted and the carpets were professionally cleaned. You used this as evidence to claim for the cost of repainting and cleaning after the tenant left significant marks and stains.
J
Joint Tenancy
Simple Definition:
A common way of co-owning a property in equal shares with one or more other people.
Context & Detail:
Under a joint tenancy, all owners have an equal right to the whole property. A key feature is the 'right of survivorship', which means that if one owner dies, their share automatically passes to the surviving owner(s), regardless of what is stated in their will. This is a very common ownership structure for married couples.
Example:
This is fundamentally different from being Tenants in Common, where each owner can have a different share size and can pass their share on in their will.
Joint Venture (JV)
Simple Definition:
A business arrangement where two or more parties agree to pool their resources to accomplish a specific project, such as buying and developing an investment property.
Context & Detail:
Joint Ventures are an extremely common and powerful strategy in property investment. Often, one JV partner provides the majority of the capital (the money for the deposit and works), while the other provides the time, knowledge, and expertise to find, manage, and complete the project. Profits are then split according to a pre-agreed share detailed in a legal JV agreement.
Example:
You entered into a Joint Venture with an experienced developer to fund your first BRRR project. You provided the £50,000 deposit, while they managed the entire renovation and refinance. You agreed to split the final profits 50/50.
K
Kerb Appeal
Simple Definition:
The attractiveness and general first impression of a property and its surroundings when viewed from the street.
Context & Detail:
A property with good kerb appeal—such as a tidy front garden, clean windows, and a freshly painted front door—creates a positive and welcoming first impression on potential tenants and mortgage valuers. Improving kerb appeal is often a quick and cost-effective way to add value during a refurbishment.
Example:
You spent £500 on painting the front of the house and adding some plant pots by the door, which significantly improved the property's kerb appeal before the letting agent took photos for the rental listing.
Know Your Customer (KYC)
Simple Definition:
The mandatory process that businesses in the financial and legal sectors undertake to verify the identity of their clients.
Context & Detail:
KYC checks are a crucial part of anti-money laundering (AML) regulations in the UK. When you work with a property sourcer, solicitor, or mortgage broker, you will be required to go through their KYC process. This typically involves providing formal proof of your identity (like a passport) and proof of your address (like a recent utility bill).
Example:
Before the solicitor could start the conveyancing process, you had to complete their KYC checks by providing a certified copy of your driving licence and a recent bank statement.
Knotweed (Japanese Knotweed)
Simple Definition:
A highly invasive and destructive plant with bamboo-like stems and a deep, aggressive root system that can cause significant damage to property foundations, drains, and walls.
Context & Detail:
The presence of Japanese Knotweed on or near a property is a major red flag for both buyers and mortgage lenders. Most lenders will refuse to grant a mortgage on an affected property unless there is a professional treatment plan in place with an insurance-backed guarantee from a reputable firm.
Example:
Identifying Japanese Knotweed is a critical part of your due diligence. For official guidance on identification and your legal obligations, refer to the Gov.uk website.
L
Landlord
Simple Definition:
A person or company that owns a property and rents or leases it out to another party, known as a tenant, in return for regular payment (rent).
Context & Detail:
As a landlord in the UK, you have numerous legal responsibilities to ensure your property is safe, habitable, and compliant for your tenants. This includes arranging annual gas safety checks, ensuring electrical safety, and protecting their tenancy deposit in a government-approved scheme.
Example:
The official Gov.uk "How to Let" guide provides a comprehensive overview of your obligations.
Land Registry (HM Land Registry)
Simple Definition:
The government department responsible for registering the ownership of land and property in England and Wales.
Context & Detail:
The Land Registry maintains a public record of who owns what property. When you buy a property, your solicitor will register your ownership with them, providing you with a "Title Register" which serves as your legal proof of ownership.
Example:
Your solicitor obtained an official copy of the Title Register from the Land Registry to confirm the legal owner and check for any restrictions on the property before you proceeded with the purchase.
Leasehold
Simple Definition:
A type of property ownership where you own the right to occupy a property for a fixed period of time, but you do not own the land it stands on.
Context & Detail:
This is the most common form of ownership for flats and apartments in the UK. The 'lease' is a legal agreement with the freeholder which sets out the obligations of both parties, including the payment of ground rent and service charges. The length of the remaining lease is a critical factor; a short lease (typically under 80 years) can be difficult to get a mortgage on and expensive to extend.
Example:
This is fundamentally different from Freehold ownership, where you own the building and the land it stands on outright.
Letting Agent
Simple Definition:
A company that acts on behalf of a landlord to find suitable tenants and/or manage a rental property.
Context & Detail:
Services can range from a basic 'tenant-find only' service to 'full management', where they handle everything from collecting rent and arranging repairs to conducting inspections. While they charge a fee (usually a percentage of the monthly rent), they can save a landlord a significant amount of time and help them stay compliant with ever-changing regulations.
Example:
As you lived far from your investment property, you hired a local letting agent to provide a full management service for a fee of 12% of the monthly rent.
Leverage
Simple Definition:
An alternative term for Gearing.
Context & Detail:
It refers to the use of borrowed money, such as a mortgage, to increase the potential return on an investment by controlling a larger asset with a smaller amount of your own capital.
Example:
See Gearing for a full definition.
Licensing (Landlord/Property)
Simple Definition:
A legal requirement in some areas for landlords to obtain a licence from their local council before they can legally let out a property.
Context & Detail:
There are several types of licensing. 'Mandatory HMO licensing' applies to most large HMOs across the UK. Some councils also operate 'Additional' and 'Selective' licensing schemes that can cover smaller HMOs or even all single-let rental properties in a specific area. It is vital to check the local council's website for the specific rules in your investment area.
Example:
The council in that area had a selective licensing scheme, meaning you had to apply for and be granted a licence before you could legally rent out your two-bedroom terrace.
Listed Building
Simple Definition:
A building that is placed on the National Heritage List for England due to its special architectural or historic interest.
Context & Detail:
Owning a listed building (Grade I, II*, or II) comes with significant responsibilities. You cannot make any changes—inside or out—that would affect its special character without first obtaining Listed Building Consent from your local planning authority. Renovations are often more complex, restrictive, and expensive.
Example:
You considered buying a Grade II listed cottage for a BRRR project, but the legal restrictions on what you could change made the refurbishment too complicated and costly.
Loan-to-Value (LTV)
Simple Definition:
A financial term that expresses the size of your mortgage loan as a percentage of the property's total appraised value.
Context & Detail:
LTV is a key metric used by mortgage lenders to assess risk. A lower LTV (meaning you have a larger deposit or more equity) is less risky for the lender and will usually allow you to access better interest rates.
Example:
If you buy a £100,000 property with a £75,000 mortgage, your LTV is 75%. If you put down a larger deposit of £40,000 and take a £60,000 mortgage, your LTV is 60%.
M
Maintenance
Simple Definition:
The ongoing work and repairs required to keep a property in a good, safe, and habitable state of repair for tenants.
Context & Detail:
This includes both planned, preventative maintenance (like annual boiler servicing or gutter cleaning) and reactive maintenance (like fixing a leak or replacing a broken appliance). Landlords should always budget a portion of their rental income (a common rule of thumb is 10-15%) for ongoing maintenance and repair costs.
Example:
You set aside £70 per month from the rent into a separate bank account to build a maintenance fund for covering any unexpected repair costs.
Market Value
Simple Definition:
The estimated price that a property would be expected to sell for on the open market at a particular point in time.
Context & Detail:
This value is determined by numerous factors, including the property's size, condition, location, and the recent sold prices of comparable properties ('comps') in the immediate area. A formal market valuation is carried out by a RICS-qualified surveyor as part of a mortgage application process.
Example:
Learning how to accurately estimate market value is a key investor skill. We cover this in our Deal Analysis 101 guide.
MEES (Minimum Energy Efficiency Standards)
Simple Definition:
The UK government regulations that make it illegal for landlords to grant a new tenancy or continue an existing tenancy for a property with an EPC rating below 'E'.
Context & Detail:
As of August 2025, all privately rented properties in England and Wales must have a minimum EPC rating of 'E' to be legally let. There are ongoing government proposals to raise this standard to 'C' in the coming years, making a property's energy efficiency a critical factor for investors to consider before purchasing.
Example:
See Energy Performance Certificate (EPC) for more details on the rating system.
Mortgage
Simple Definition:
A large loan taken out from a bank, building society, or other lender for the purpose of buying a property.
Context & Detail:
The loan is 'secured' against the value of the property. This means that if you fail to make your repayments according to the agreement, the lender has the right to repossess and sell the property to recover their money. The vast majority of property purchases in the UK are made with a mortgage.
Example:
We explain the specific type of mortgage for investors in our Beginner's Guide to Buy-to-Let.
Mortgage Broker
Simple Definition:
A professionally qualified and regulated advisor who specialises in finding and arranging mortgages for their clients from a variety of lenders.
Context & Detail:
A good broker will assess your personal and financial situation and search the wider market to find the most suitable and competitive mortgage product for your needs. They are particularly valuable for property investors who may require specialist Buy-to-Let, HMO, or Limited Company mortgage products that are not available on the high street.
Example:
See also Broker (Mortgage Broker) and Independent Financial Advisor (IFA).
Mortgage Offer
Simple Definition:
The formal, legally-binding document issued by a mortgage lender confirming that they have approved your loan application and will provide you with the specified funds.
Context & Detail:
This is issued only after the lender has completed their full underwriting process, which includes a satisfactory valuation of the property and a full check of your finances, income, and credit history. A mortgage offer is usually valid for a set period, typically three to six months.
Example:
Once the formal mortgage offer was received by your solicitor, you were finally in a position to set a date to exchange contracts.
Motivated Seller
Simple Definition:
A property owner who has a strong, often urgent, reason to sell their property quickly, even if it means accepting a lower price.
Context & Detail:
Reasons for being motivated can include relocating for a job, financial difficulties, illness, a desire to fix a broken property chain, or inheriting a property they do not wish to keep. Identifying a genuinely motivated seller can present an opportunity for an investor to negotiate a purchase price that is Below Market Value (BMV) in exchange for offering a quick and certain sale.
Example:
The seller had already found their next home and was very motivated to sell quickly to avoid losing it, which put you in a strong negotiating position.
N
National Association of Property Sourcing Agents (NAPSA)
Simple Definition:
A professional body in the United Kingdom specifically established for property sourcing agents.
Context & Detail:
NAPSA aims to raise standards and promote best practices within the sourcing industry by providing its members with training, a professional code of conduct to follow, and promoting full legal compliance. Working with a NAPSA-accredited member can provide investors with an extra layer of confidence and assurance.
Example:
As professional sourcers, we adhere to the highest standards, such as those promoted by respected bodies like NAPSA.
Negative Equity
Simple Definition:
A situation where the outstanding balance of your mortgage loan is greater than the current market value of your property.
Context & Detail:
This can happen if you buy a property with a small deposit (a high LTV) and house prices subsequently fall. It becomes a significant problem if you need to sell or remortgage, as the sale price would not be enough to repay the lender, leaving you with a shortfall to make up.
Example:
You bought a flat for £120,000 with a £110,000 mortgage. After a local market downturn, its value fell to £105,000. You were now in £5,000 of negative equity.
Negotiation
Simple Definition:
The process of discussion and bargaining between a buyer and a seller to agree on the final price and terms of a property sale.
Context & Detail:
Almost every property purchase in the UK involves a negotiation on the initial asking price. A successful negotiation is based on thorough research of comparable properties, understanding the seller's level of motivation, and making a credible, well-reasoned offer.
Example:
Professional negotiation on your behalf to secure the best possible price is one of the key services offered by a Property Sourcer.
Net Yield
Simple Definition:
The annual profit from a rental property, after deducting all running costs, expressed as a percentage of the total capital you have invested.
Context & Detail:
This is a much more accurate and important measure of a property's profitability than Gross Yield. This is because it accounts for all your expected expenses, such as your mortgage payments, insurance, maintenance, letting agent fees, and service charges.
Example:
You can calculate this vital figure using our Yield Calculator. See also Gross Yield.
New Build
Simple Definition:
A property that has been newly constructed by a developer and has never been lived in before.
Context & Detail:
New builds appeal to some investors as they require little initial maintenance, are highly energy-efficient (good EPC ratings), and often come with warranties like the NHBC guarantee. However, they are often sold at a premium price compared to older properties and may have less scope for adding value through refurbishment.
Example:
You considered buying a new-build flat for your BTL portfolio because of the 10-year NHBC warranty and its high EPC rating, meaning lower running costs.
NHBC (National House Building Council)
Simple Definition:
The UK's leading independent standard-setting body and provider of warranties and insurance for new-build homes.
Context & Detail:
The NHBC's 10-year 'Buildmark' warranty provides protection against defects for newly built properties. Typically, the first two years are covered directly by the builder for any issues, and the following eight years are covered by the NHBC's insurance for major structural problems.
Example:
The fact that the new-build house came with a 10-year NHBC warranty gave you peace of mind about the risk of potential structural problems.
Notice Period
Simple Definition:
The amount of advance warning that a landlord or tenant must legally give to the other party to formally end a tenancy agreement.
Context & Detail:
The length of the notice period is specified in the tenancy agreement itself but is also governed by statutory law. In England, the rules for landlords giving notice are set out in the Housing Act 1988, primarily via a Section 21 or Section 8 notice, each with its own specific requirements.
Example:
To end the periodic tenancy, you were legally required to give the tenants two full months' written notice.
O
Offer
Simple Definition:
A formal bid made by a potential buyer to a seller to purchase their property at a specified price and under certain conditions.
Context & Detail:
In England and Wales, a verbal or written offer is not legally binding on either party until the 'Exchange of Contracts'. Until that point, a buyer can withdraw their offer, or a seller can reject it, even if it has been previously accepted. An offer is usually made 'subject to contract' and 'subject to survey'.
Example:
After viewing the property, you instructed the estate agent to make a formal offer of £95,000, which was £5,000 below the asking price.
Off-Market
Simple Definition:
A property that is for sale but is not being publicly advertised on major property portals like Rightmove, Zoopla, or OnTheMarket.
Context & Detail:
These deals are highly sought after by investors as they face significantly less competition from the general public. Off-market properties are typically found through the private networks of industry professionals, including estate agents, developers, and property sourcers.
Example:
Access to genuine off-market deals is a key advantage of working with a professional. We explain this in our guide, The Power of a Local Sourcer.
Off-Plan
Simple Definition:
The process of buying a property, typically a new-build flat or house, before it has been constructed.
Context & Detail:
Investors buy off-plan based on the developer's architectural plans and specifications. The potential advantages include securing a property at a discount to its anticipated future market value and benefiting from any capital appreciation that occurs during the construction period. However, it also carries risks, such as construction delays, the developer going out of business, or the final product not meeting the promised specifications.
Example:
You bought the city centre apartment off-plan, paying a 10% deposit to reserve it 18 months before its scheduled completion date.
Ombudsman (The Property Ombudsman - TPO)
Simple Definition:
An independent and impartial body that resolves disputes between consumers (like buyers, sellers, landlords, and tenants) and property professionals.
Context & Detail:
All estate agents, and most letting agents and property sourcers, are legally required to be members of a government-approved redress scheme. The two main schemes are The Property Ombudsman (TPO) and the Property Redress Scheme (PRS). This provides a free, fair, and independent service for consumers to make a formal complaint if they feel an agent has acted unfairly or unprofessionally.
Example:
You can check if an agent is a member and read their codes of practice on the official TPO website.
Open Market Value (OMV)
Simple Definition:
The estimated price that a property would sell for if it were offered for sale on the open market for a reasonable period of time, with a willing buyer and a willing seller.
Context & Detail:
This is a formal valuation term, effectively meaning the same as 'Market Value'. A RICS-qualified surveyor will provide an OMV in their report, and this is the figure a mortgage lender will use to determine the property's value and the amount they are willing to lend against it.
Example:
See also Market Value and Down Valuation.
Owner-Occupier
Simple Definition:
A person who owns the property that they live in as their primary residence.
Context & Detail:
This is the most common form of homeownership in the UK. Owner-occupiers use a 'residential mortgage', which has different rules, interest rates, and often lower deposit requirements than a 'Buy-to-Let mortgage' which is used by investors and landlords.
Example:
The seller of the house was an owner-occupier who had lived there for 20 years, as opposed to a landlord who was selling a tenanted investment property.
P
Periodic Tenancy (or Rolling Tenancy)
Simple Definition:
A tenancy agreement that runs for a set period, such as month-to-month or quarter-to-quarter, with no fixed end date.
Context & Detail:
When a fixed-term Assured Shorthold Tenancy (AST) ends and the tenant remains in the property without signing a new contract, it automatically becomes a 'statutory periodic tenancy'. It continues on the same terms as the original agreement but on a rolling basis, requiring specific notice periods to be ended by either party.
Example:
After the initial 12-month fixed term ended, the tenancy became a periodic tenancy, rolling from one month to the next.
Planning Permission
Simple Definition:
Formal approval from the local council's planning department (the Local Planning Authority) that is required for certain types of building work or for a significant change of use of a property.
Context & Detail:
You typically need planning permission for major projects like building an extension, converting a single house into multiple flats, or changing a residential property (Use Class C3) into a large HMO with 7 or more people (Sui Generis). Smaller projects may fall under 'Permitted Development' rights, which do not require a full planning application.
Example:
It is a criminal offence to carry out work that requires planning permission without obtaining it first. You can find out more on the government's Planning Portal website.
Portfolio (Property Portfolio)
Simple Definition:
A collection of two or more investment properties owned by a single person, couple, or company.
Context & Detail:
The primary goal for most serious property investors is to build a portfolio of properties over time that provides a regular income and long-term capital growth. Lenders often have specific 'portfolio landlord' criteria and stress tests for investors who own four or more mortgaged properties.
Example:
After ten years of diligent investing, the landlord had successfully built a portfolio of eight properties across Teesside.
Power Team
Simple Definition:
An informal term used by property investors to describe their personal network of trusted, investor-savvy professionals and tradespeople.
Context & Detail:
A good power team is essential for investing successfully and efficiently. It typically includes a specialist mortgage broker, an efficient solicitor, a knowledgeable accountant, and reliable tradespeople (such as plumbers, electricians, and general builders).
Example:
One of the key benefits of using a property sourcer is getting instant access to their pre-vetted and established power team.
Principal
Simple Definition:
The original amount of money borrowed for a loan, such as a mortgage, excluding any interest charged on it.
Context & Detail:
On a 'repayment' mortgage, your monthly payments consist of both an interest payment and a small repayment of the principal, so the loan balance gradually decreases over time. On an 'interest-only' mortgage, you are only paying the interest, and the principal amount you owe remains unchanged.
Example:
After five years on your repayment mortgage, the outstanding principal had reduced from £100,000 to £92,000.
Private Rented Sector (PRS)
Simple Definition:
The official term for the segment of the UK housing market where properties are owned and let out by private individuals or companies (landlords).
Context & Detail:
The PRS is a vital part of the UK's housing supply, providing homes for millions of people. It is distinct from the 'social rented sector' (which includes council and housing association homes) and the 'owner-occupied sector'.
Example:
As a private landlord, you are operating within the Private Rented Sector and must comply with all of its specific laws and regulations.
Probate
Simple Definition:
The legal process of dealing with the property, money, and possessions (the 'estate') of a person who has passed away.
Context & Detail:
A 'probate sale' refers to a property being sold by the executors of a will as part of the deceased's estate. These can often be a source of Below Market Value (BMV) deals, as the beneficiaries inheriting the property may be more focused on achieving a quick and certain sale rather than holding out for the absolute maximum price.
Example:
The house was a probate sale, as the previous owner had passed away and the family living elsewhere wanted to sell it quickly.
Property Redress Scheme (PRS)
Simple Definition:
One of the two government-authorised schemes in the UK that provides impartial dispute resolution between consumers and property professionals.
Context & Detail:
All property agents, including estate agents, letting agents, and property sourcers, must be a member of an approved redress scheme. The two options are the PRS and The Property Ombudsman (TPO). This ensures consumers have access to a free and fair service to make a complaint.
Example:
See also The Property Ombudsman (TPO).
Property Sourcer
Simple Definition:
A professional individual or company that works exclusively for an investor to find, analyse, negotiate, and help acquire a property that meets their specific goals.
Context & Detail:
A sourcer acts as a buyer's agent, representing the investor's best interests throughout the purchasing process. Their role is to leverage their local knowledge, professional network, and expertise to find suitable investment opportunities, often including off-market deals that are not publicly available.
Example:
We explain the role in full in our guide: The Power of a Local Sourcer: Why Hyper-Local Knowledge Wins.
Q
Quarter Day
Simple Definition:
One of four traditional dates in the year on which rents or other payments were historically due to be settled.
Context & Detail:
The traditional English Quarter Days are Lady Day (25 March), Midsummer's Day (24 June), Michaelmas (29 September), and Christmas Day (25 December). While most modern residential tenancies use monthly rent payments, these dates are still sometimes used in older or long-term commercial lease agreements.
Example:
The commercial lease for the shop unit stated that the annual rent was payable in four equal instalments on the traditional English quarter days.
Quiet Enjoyment
Simple Definition:
A tenant's fundamental and legal right to live in their rental property peacefully without unreasonable disturbance or harassment from their landlord or anyone acting on the landlord's behalf.
Context & Detail:
This is a core covenant implied in every tenancy agreement in the UK, even if it is not explicitly written down. Breaching this right, for example by entering the property without giving proper notice, repeatedly contacting the tenant without good reason, or cutting off utilities, is illegal and can lead to legal action being taken against the landlord.
Example:
You were required to provide your tenants with at least 24 hours' written notice before visiting the property for a routine inspection in order to respect their right to quiet enjoyment.
Quit (Notice to Quit)
Simple Definition:
A formal legal notice that a landlord serves to a tenant to bring a tenancy to an end and request that the tenant vacates the property.
Context & Detail:
While the term is often used generically, in England the formal "Notice to Quit" is most commonly associated with older, non-Assured Shorthold Tenancies or tenancies with tenants who are not private individuals (e.g., a company let). For most modern private tenancies (ASTs), landlords use a "Section 21 Notice" or a "Section 8 Notice" to regain possession, which are governed by different specific rules.
Example:
The process of ending a tenancy is highly regulated. You can find official guidance on the possession process on the Gov.uk website.
R
Redress Scheme
Simple Definition:
A government-authorised, independent body that resolves disputes between consumers and property agents.
Context & Detail:
It is a legal requirement for all UK estate agents, letting agents, and property sourcers to be a member of an approved redress scheme. This provides a free, fair, and impartial service for clients to make a formal complaint if they believe an agent has acted improperly or provided a substandard service.
Example:
The two approved schemes for property agents in the UK are The Property Ombudsman (TPO) and the Property Redress Scheme (PRS).
Remortgage
Simple Definition:
The process of switching your existing mortgage on a property to a new deal, either with your current lender or by moving to a different one.
Context & Detail:
Investors typically remortgage at the end of an initial fixed-rate period to avoid being moved onto the lender's much more expensive Standard Variable Rate (SVR). It is also the key 'Refinance' step in a BRRR strategy, where you remortgage based on a property's new higher value to release the equity created during a refurbishment.
Example:
Your two-year fixed rate was about to end, so you spoke to your mortgage broker six months in advance to find a new remortgage deal and lock in a better rate.
Rental Yield
Simple Definition:
A measurement of the annual rental income a property generates, expressed as a percentage of its value.
Context & Detail:
It is the most common metric used by investors to quickly assess the performance of a buy-to-let investment and to compare different opportunities on a like-for-like basis.
Example:
See Gross Yield for the basic calculation and Net Yield for a more accurate, cost-adjusted figure. You can calculate both with our Yield Calculator.
Repayment Mortgage
Simple Definition:
A type of mortgage where your monthly payments consist of both the interest being charged on the loan and a small repayment of the original capital borrowed.
Context & Detail:
With a repayment mortgage, the total loan amount you owe gradually decreases over the mortgage term. Assuming you make all your payments, at the end of the term, you will have paid off the entire mortgage and will own the property outright. This is the standard type of mortgage for an owner-occupied home.
Example:
This is different from an Interest-Only Mortgage, where the capital balance does not decrease over the term.
Repossession
Simple Definition:
The legal process where a mortgage lender takes ownership and control of a property because the borrower has seriously and persistently failed to make their loan repayments (defaulted).
Context & Detail:
This is the ultimate sanction a lender has if a borrower does not pay their mortgage. The lender will then sell the property, often at auction, to recover the outstanding debt. A repossession has a severe and long-lasting negative impact on a person's credit score, making it very difficult to get credit in the future.
Example:
After many months of non-payment and failed negotiations, the bank began legal proceedings for the repossession of the property.
Retention
Simple Definition:
A situation where a mortgage lender holds back part of the approved mortgage loan until certain specified repairs or improvements on the property have been completed.
Context & Detail:
This often happens when a mortgage surveyor's report flags essential repairs, such as fixing a dangerous roof, dealing with significant damp, or replacing a broken heating system. The lender will release the 'retained' funds once you provide proof (e.g., an invoice from a qualified tradesperson or a re-inspection) that the work has been finished to a satisfactory standard.
Example:
The lender offered a £100,000 mortgage but with a £5,000 retention, which they would only release to you once the damp proofing course flagged in the survey had been installed and guaranteed.
RICS (Royal Institution of Chartered Surveyors)
Simple Definition:
The globally recognised professional body that accredits professionals and sets standards within the land, property, construction, and infrastructure sectors.
Context & Detail:
RICS sets the benchmark for property valuation and surveying in the UK. A 'RICS Registered Valuer' is a chartered surveyor who has been accredited by the institution and is qualified to provide formal valuations for mortgage and legal purposes.
Example:
For the mortgage application, the bank would only accept a valuation report that had been carried out by a RICS-accredited surveyor.
Right to Rent
Simple Definition:
A legal obligation for all landlords in England to check that any prospective tenant or lodger has the legal right to rent a residential property in the UK.
Context & Detail:
Before a tenancy agreement can begin, the landlord or their letting agent must check and take copies of the identity and immigration status documents for all adult tenants who will be living in the property. Failure to comply can result in significant fines or even imprisonment.
Example:
The rules are very specific and must be followed for every new tenancy. You must follow the official process outlined on the Gov.uk Right to Rent guide.
S
Searches (Conveyancing Searches)
Simple Definition:
A set of formal enquiries made by a solicitor to various authorities to find out more information about a property during the buying process.
Context & Detail:
The main searches include the Local Authority Search (revealing planning history, road schemes, and other notices), an Environmental Search (checking for risks like contaminated land or flooding), and a Water and Drainage Search. These are essential for uncovering potential legal or structural issues that are not visible during a viewing.
Example:
The local authority search revealed that a planning application had been submitted for a large housing estate on the field behind the property, which could affect its future value.
Section 21 Notice (S21)
Simple Definition:
A formal notice a landlord in England can serve to a tenant to regain possession of a property at the end of a fixed-term tenancy or during a periodic tenancy, without having to provide a reason.
Context & Detail:
It is often referred to as the 'no-fault' possession notice. For an S21 notice to be legally valid, the landlord must have complied with all their key legal obligations, such as protecting the tenant's deposit and providing the required safety certificates.
Example:
See also Section 8 Notice. The laws around eviction are strict and complex. Always refer to the official Gov.uk guidance on possession.
Section 8 Notice (S8)
Simple Definition:
A formal notice a landlord in England can serve to a tenant to seek possession of a property because the tenant has broken one or more terms of their tenancy agreement.
Context & Detail:
This notice is used when there are legal grounds for eviction, such as significant rent arrears, damage to the property, or causing a nuisance. Unlike an S21 notice, it can be served at any time during the tenancy, but if the tenant does not leave, the landlord will have to attend a court hearing to prove the grounds are met.
Example:
See also Section 21 Notice.
Service Charge
Simple Definition:
A recurring fee paid by a leaseholder to the building's freeholder or a designated management company for the ongoing maintenance and upkeep of the shared parts of the building and its grounds.
Context & Detail:
This is a key cost associated with owning a leasehold property (most commonly flats). It typically covers expenses like the cleaning of communal hallways, gardening, buildings insurance, lift maintenance, and contributions to a 'sinking fund' for major future repairs like a new roof.
Example:
The two-bedroom flat had an annual service charge of £1,200, which you had to factor into your net yield calculations before making an offer.
Sitting Tenant (or Tenant in Situ)
Simple Definition:
A tenant who is already living in a property at the time that it is being sold to a new owner.
Context & Detail:
Buying a property with a "tenant in situ" means you become their landlord on the day of completion and start receiving rent from day one. This can be excellent for immediate cash flow but also means you inherit the existing tenancy agreement and all the landlord's legal responsibilities associated with it.
Example:
You bought the property with a sitting tenant, which saved you the time, effort, and potential void period of finding a new tenant yourself.
Stamp Duty Land Tax (SDLT)
Simple Definition:
A government tax that is paid on the purchase of property or land over a certain price in England and Northern Ireland.
Context & Detail:
The amount of SDLT you pay is calculated on a tiered basis according to the purchase price. It is a crucial cost for investors, as anyone buying an additional property (i.e., not their main home) must pay a higher 'additional rate' of SDLT. This is a significant upfront cost that must be factored into every deal analysis.
Example:
You can calculate the exact amount for any proposed purchase using our Stamp Duty Calculator.
Standard Variable Rate (SVR)
Simple Definition:
A mortgage lender's default, long-term interest rate that borrowers are automatically moved onto after their initial fixed, tracker, or discounted deal period comes to an end.
Context & Detail:
The SVR is set by the lender themselves and is usually significantly higher than the initial deal rates. Most savvy investors will remortgage to a new deal before their current one expires to avoid reverting to the expensive SVR, which would increase their monthly payments.
Example:
Your 2-year fixed rate of 4.5% was ending, so you remortgaged to avoid moving onto the lender's current SVR of 8.99%.
Subject to Contract (STC)
Simple Definition:
A legal phrase used in property sales in England and Wales to indicate that an agreement is not yet legally binding.
Context & Detail:
When a seller accepts a buyer's offer, the sale is agreed 'Subject to Contract'. This means that either party can still withdraw from the deal without penalty at any point up until the formal 'Exchange of Contracts' takes place.
Example:
The property was listed as 'Sold STC' on Rightmove, indicating that an offer had been accepted but the crucial legal process was not yet complete.
Sui Generis
Simple Definition:
A Latin term meaning "of its own kind," which is used in UK planning law to describe properties that do not fall into any of the standard 'Use Classes'.
Context & Detail:
For property investors, this is most relevant to Houses in Multiple Occupation (HMOs). While a small HMO of up to six people falls under Use Class C4, a property with seven or more occupants is classed as a 'Sui Generis' HMO and will always require a full planning application to be created or operated legally.
Example:
See also HMO (House in Multiple Occupation).
Survey
Simple Definition:
A physical inspection of a property's condition carried out by a qualified surveyor on behalf of a potential buyer before they are legally committed to the purchase.
Context & Detail:
A survey is designed to highlight any potential problems, from minor defects to significant structural issues like subsidence or damp. The main types are the RICS Home Survey Level 2 (formerly a HomeBuyer Report) and the more detailed RICS Home Survey Level 3 (formerly a full Building Survey).
Example:
The survey revealed evidence of damp in the living room, which allowed you to go back and renegotiate a £2,000 discount off the purchase price to cover the cost of the necessary repairs.
T
Tenant
Simple Definition:
A person or group who pays rent to a landlord in exchange for the right to occupy a property or piece of land.
Context & Detail:
The relationship between a landlord and a tenant is governed by the tenancy agreement and a significant body of law in the UK that sets out the legal rights and responsibilities of both parties.
Example:
Landlords in England have a legal duty to check that a prospective tenant has the Right to Rent before a tenancy can begin.
Tenancy Agreement
Simple Definition:
The legally binding contract between a landlord and a tenant that sets out all the terms and conditions of the rental arrangement.
Context & Detail:
This document should include key details such as the names of all parties, the property address, the rent amount and due date, the tenancy term, and the specific obligations of both the landlord and tenant. The most common type in England is an Assured Shorthold Tenancy (AST).
Example:
Before the tenant moved in, both you and they signed two copies of the tenancy agreement, and each party kept a copy for their records.
Tenants in Common
Simple Definition:
A way of co-owning a property where each owner holds a distinct, separate share which can be passed on to a beneficiary in their will.
Context & Detail:
Unlike in a Joint Tenancy, these shares can be unequal (e.g., one person can own 70% and the other 30%). Crucially, there is no automatic 'right of survivorship'. When an owner dies, their share of the property forms part of their estate and is dealt with according to their will. This is a common ownership structure for business partners or unmarried couples.
Example:
This is fundamentally different from a Joint Tenancy, where the deceased's share of the property automatically passes to the surviving owner.
Term
Simple Definition:
A specified, fixed length of time for which a legal agreement is valid.
Context & Detail:
In property, this is used in two main ways. The **mortgage term** is the total length of time you have to repay your mortgage loan (e.g., 25 years). The **tenancy term** is the initial fixed period of a tenancy agreement during which neither party can end the agreement without grounds (e.g., 12 months).
Example:
You took out a BTL mortgage with a 25-year term and signed a tenant onto an initial 12-month fixed tenancy term.
The Property Ombudsman (TPO)
Simple Definition:
One of the two government-authorised schemes in the UK that provides impartial dispute resolution between consumers and property agents.
Context & Detail:
All property agents, including sourcers, must be a member of an approved redress scheme. TPO provides a free and fair service for clients to make a complaint if they believe an agent has broken the TPO Code of Practice or treated them unfairly.
Example:
See also Property Redress Scheme (PRS). You can check an agent's membership on the official TPO website.
Title Deeds / Title Register
Simple Definition:
The legal documents that act as the definitive proof of ownership for a property.
Context & Detail:
Historically, these were a collection of paper documents passed down through sales. Today, for most properties in England and Wales, ownership is recorded electronically in the 'Title Register' which is held and maintained by HM Land Registry. This register is the ultimate proof of ownership and details any rights, restrictions, or secured loans (charges) affecting the property.
Example:
Your solicitor will obtain an official copy of the Title Register from the Land Registry as a core part of the conveyancing process.
Tracker Mortgage
Simple Definition:
A type of variable-rate mortgage where the interest rate is set at a fixed percentage margin above the Bank of England Base Rate for a specific period.
Context & Detail:
This means that your interest rate, and therefore your monthly payment, will go up and down in direct line with any changes to the Base Rate. It offers more transparency than a lender's Standard Variable Rate (SVR) but provides less certainty over your monthly costs than a Fixed-Rate Mortgage.
Example:
Your tracker mortgage was set at 'Base Rate + 2.1%'. When the Base Rate was 5%, your interest rate was 7.1%. When the Base Rate dropped to 4.75%, your rate automatically fell to 6.85%.
U
Under Offer
Simple Definition:
A term used by estate agents to indicate that a seller has verbally accepted an offer on a property, but the legal process is not yet complete and contracts have not been exchanged.
Context & Detail:
The property is not yet legally sold, and the sale is still 'Subject to Contract'. During this period, it is still possible for the sale to fall through, or for the seller to consider a higher offer from another party (see Gazumping).
Example:
The house you wanted to view was already listed as 'Under Offer', but the agent agreed to take your details in case the current sale did not proceed to exchange.
Underlease (or Sub-lease)
Simple Definition:
A new, secondary lease that is created by a tenant (who themselves holds a lease) to another person (a sub-tenant).
Context & Detail:
For an underlease to be legally valid, it must be for a shorter period than the original lease (the 'Head Lease') and must be permitted by the terms of that original lease agreement. This is a common structure in blocks of flats and commercial property.
Example:
See also Head Lease and Leasehold.
Underwriting
Simple Definition:
The comprehensive process a mortgage lender undertakes to assess the risk, verify the information, and make a final decision on a loan application.
Context & Detail:
After an initial approval, your application is passed to an underwriter. They will manually scrutinise all aspects of your application, including your credit history, income, bank statements, the property's valuation survey, and your overall financial stability, before a formal mortgage offer can be issued.
Example:
Your mortgage application had been approved by the initial automated checks and was now with the lender's underwriting team for a final manual review and sign-off.
Unencumbered
Simple Definition:
A property that is owned outright by its owner, with no mortgages or other financial loans ('charges') secured against it.
Context & Detail:
An unencumbered property is a highly desirable asset. When being sold, the legal process can sometimes be quicker as there is no mortgage lender on the seller's side that needs to be dealt with. An owner can also raise finance against an unencumbered property relatively easily.
Example:
The seller was able to proceed very quickly as the probate property was unencumbered, meaning there was no mortgage lender that needed to be involved in the sale on their side.
Use Class
Simple Definition:
A classification system, defined in The Town and Country Planning (Use Classes) Order 1987, that categorises what different buildings and land in England can legally be used for.
Context & Detail:
For investors, the most relevant class is C3 - Dwellinghouses, which covers a property occupied by a single family. A small House in Multiple Occupation (up to 6 people) falls under C4 - Houses in Multiple Occupation. Changing the use of a property (e.g., from C3 to C4, or from a commercial use to residential) may require planning permission.
Example:
See also Planning Permission and Sui Generis.
V
Valuation
Simple Definition:
The process of professionally assessing a property's market worth at a specific point in time.
Context & Detail:
There are several types of valuation. An estate agent provides an 'appraisal' or 'market valuation' to suggest an asking price for a seller. A RICS-qualified surveyor provides a formal 'mortgage valuation' on behalf of a lender to ensure the property is adequate security for the loan. The lender's valuation is the most critical one in any mortgage-backed purchase process.
Example:
See also Market Value, RICS, and Down Valuation.
Variable-Rate Mortgage
Simple Definition:
A mortgage where the interest rate you pay can go up or down during the loan term.
Context & Detail:
This is a broad category that includes both 'Tracker' mortgages, which follow the Bank of England Base Rate, and 'Standard Variable Rate' (SVR) or 'Discounted Rate' mortgages, where the rate is set by the lender. While these can be cheaper if interest rates fall, they offer no certainty over your monthly payments if rates rise.
Example:
This is the opposite of a Fixed-Rate Mortgage, where the rate is guaranteed to stay the same for a set period.
Vendor
Simple Definition:
The legal and formal term for the person or entity who is selling a property.
Context & Detail:
Throughout the conveyancing process and in all legal documentation, your solicitor and the estate agent will refer to the seller of the property as the 'vendor'.
Example:
The vendor's solicitor was slow in responding to enquiries, which delayed the exchange of contracts.
Viewing
Simple Definition:
A scheduled appointment for a prospective buyer or tenant to physically inspect a property that is for sale or to let.
Context & Detail:
For property investors, a viewing is a crucial part of the due diligence process. It's an opportunity to assess the property's true condition beyond the marketing photos, check for any obvious defects (like damp or cracks), and get a feel for the local area, street, and neighbourhood.
Example:
You arranged a second viewing of the property to take a trusted builder with you to get an accurate quote for the potential refurbishment work.
Void Period (or 'The Void')
Simple Definition:
The period of time when a rental property is empty and unoccupied between tenancies, generating no rental income.
Context & Detail:
Voids are a significant and inevitable cost for landlords, as there is no rental income to cover ongoing expenses like the mortgage, insurance, and council tax. Minimising void periods through effective marketing, quick turnarounds, and keeping good tenants happy for longer is a key part of maximising the profitability of any buy-to-let investment.
Example:
After the previous tenants moved out, you had a three-week void period while you repainted the property and conducted viewings before the new tenants could move in.
W
Warranty
Simple Definition:
A written guarantee issued to the purchaser of an item, promising to repair or replace it if necessary within a specified period.
Context & Detail:
In property, this most commonly refers to the structural warranty provided with new-build homes. The most well-known of these is the 10-year 'Buildmark' warranty from the NHBC, which provides protection against major structural defects.
Example:
See also NHBC (National House Building Council).
Wear and Tear
Simple Definition:
An alternative term for Fair Wear and Tear.
Context & Detail:
It describes the minor, unavoidable deterioration of a property and its contents that occurs over time through normal, everyday use by a tenant. It is not considered damage.
Example:
See Fair Wear and Tear for a full definition and examples.
Whole of Market
Simple Definition:
A term used by mortgage brokers to describe the comprehensive range of lenders and mortgage products they have access to when searching for a loan for their client.
Context & Detail:
A 'whole of market' or 'comprehensive' mortgage broker is not tied to a specific lender or a limited panel of lenders. They can therefore search for the most suitable and competitive deal for you from across the entire mortgage landscape. This is in contrast to a bank's mortgage advisor, who can only offer and advise on their own employer's products.
Example:
For your limited company buy-to-let, you used a whole of market mortgage broker to ensure you had access to specialist lenders not available on the high street.
Will
Simple Definition:
A legal document in which a person (the 'testator') states their wishes regarding the distribution of their property and assets after they die.
Context & Detail:
For property owners, a will is a critical document for estate planning, as it determines who will inherit your property portfolio. It is important to note that the way your property is co-owned (as Joint Tenants or Tenants in Common) can also affect how it is passed on, in some cases overriding the instructions in a will.
Example:
See also Probate, Joint Tenancy, and Tenants in Common.
Y
Yield
Simple Definition:
A measurement of the potential annual return from a rental property, expressed as a percentage of its value.
Context & Detail:
Yield is the most common and important metric used by investors to assess the performance of a buy-to-let investment. It allows you to quickly compare the rental income potential of different properties on a like-for-like basis, helping you to identify which deals are most profitable from an income perspective.
Example:
There are two main types to consider for accuracy: Gross Yield (which is calculated before costs) and Net Yield (which is calculated after costs). You can calculate both with our Yield Calculator.
Z
Zoning (UK Context)
Simple Definition:
A term, primarily used in North America, for the system of designating the permitted uses of land and buildings by a local planning authority.
Context & Detail:
While the principle is the same, the correct terminology in the UK planning system is the 'Use Class' order. This system categorises what different buildings and land can be used for (e.g., residential, commercial, industrial).
Example:
See Use Class for the relevant UK definition.
Zoopla
Simple Definition:
One of the UK's largest and most popular online property portals for buying, selling, and renting homes.
Context & Detail:
Alongside Rightmove and OnTheMarket, Zoopla is an essential tool for property investors. It is used for finding potential deals, researching local asking prices, and, crucially, checking historical sold price data to find 'comparables' as part of the deal analysis process.
Example:
You set up an instant alert on Zoopla to be notified via email as soon as a two-bedroom house was listed for sale in your target postcode.
Ready to Put Your Knowledge Into Action?
Register your interest for our Q4 2025 launch. Now that you know the terminology, we'll consult with you on your investment strategy and show you exclusive opportunities in Teesside.