Property glossary

The terms and abbreviations used in buying, financing and letting property in the UK, explained in plain English. 52 terms.

AIPAgreement in principle: A lender's initial indication of how much it might lend, based on a quick check of your circumstances. Also called a decision in principle (DIP). It is not a mortgage offer.
ASTAssured shorthold tenancy: The standard tenancy type in England for decades. The Renters' Rights Act 2025 replaces it with periodic assured tenancies that have no fixed end date, and ends no-fault Section 21 evictions.
BMVBelow market value: Buying for less than a property would normally sell for, usually because the seller needs speed or certainty. Lenders often value on the market price, not the price you paid.
Bridging loan: Short-term finance, usually for up to 12 to 18 months, used to buy quickly or to buy a property that a normal mortgage lender would not lend on until it has been improved. Interest is charged monthly and is much higher than a mortgage.
BRRRBuy, refurbish, refinance, rent: A strategy of buying a property that needs work, improving it, refinancing on the higher value to pull your money back out, then letting it. Sometimes written BRRRR with a final R for repeat. Maximum offer calculator
BTLBuy to let: Buying a property to rent out. A buy to let mortgage is assessed mainly on the rent rather than your salary. Buy to let investment calculator
Capital growth: The rise in a property's value over time. Total return from a rental property is the income plus the capital growth, less costs.
Cash flow: What is left each month or year after rent has paid every cost, including the mortgage. Positive cash flow means the property pays you; negative means you top it up.
CGTCapital gains tax: Tax on the profit when you sell a property that is not your main home. Residential property gains must be reported and the tax paid within 60 days of completion.
Comparables: Recently sold properties similar to the one you are looking at, used to judge its value. Surveyors rely on sold prices, not asking prices.
Completion: The day the purchase money is paid and ownership passes to the buyer. Stamp duty is due within 14 days of completion.
Cost of moneyCOM: The cost of the cash tied up in a deal before it is refinanced or sold: bridging interest, or the return your own money could have earned elsewhere.
Deposit protection: In England and Wales a tenant's deposit on an assured tenancy must be protected in a government-approved scheme within 30 days of receipt, with the prescribed information given to the tenant.
DSCRDebt service coverage ratio: Income before finance divided by the yearly mortgage payments. A ratio above 1 means the income covers the loan payments. Commercial lenders use it much as buy to let lenders use rental cover.
Due diligenceDD: The checks done before committing: the legal title, searches, survey, rental demand, comparables, and the numbers.
DUVDone-up value: What a property will be worth once the planned work is finished. The starting point for a BRRR deal and the biggest risk in it.
EICRElectrical installation condition report: An inspection of the fixed wiring by a qualified electrician. Private landlords in England must have one at least every five years and give a copy to tenants.
EPCEnergy performance certificate: A rating of a property's energy efficiency from A to G, valid for ten years. Rented homes in England and Wales must currently meet at least band E unless an exemption is registered.
Equity: The part of the property you own outright: its value less the mortgage left on it.
Equity multiple: Everything you get back from an investment, including the sale, divided by the cash you put in. A multiple of 2x means you doubled your money, regardless of how long it took. Buy to let investment calculator
ERCEarly repayment charge: A fee for repaying or switching a mortgage during its fixed or discounted period, often a percentage of the loan that falls each year. Also called an early redemption penalty (ERP).
ExchangeExchange of contracts: The point at which a purchase becomes legally binding, usually with a 10% deposit paid. Before exchange either side can walk away.
Freehold: Outright ownership of the building and the land it stands on, with no time limit.
Gas safety certificate: A record of the yearly check of every gas appliance, flue and fitting, carried out by a Gas Safe registered engineer. Landlords must have one every 12 months and give a copy to tenants.
Gross yield: A year's rent divided by the property price, as a percentage. Quick to work out, but it ignores every cost. Rental yield calculator
Ground rent: A yearly payment from a leaseholder to the freeholder. Most new residential leases in England and Wales since 2022 must have a ground rent of zero.
HMOHouse in multiple occupation: A property let to three or more people from more than one household who share facilities such as a kitchen or bathroom. Larger HMOs need a licence from the council and must meet extra safety standards.
Holding deposit: A payment to reserve a property while checks are done. In England it is capped at one week's rent and must normally be returned or put towards the deposit or first rent.
ICRInterest cover ratio: How many times the rent covers the mortgage interest, tested at a stressed rate. Buy to let lenders commonly want 125% for basic rate taxpayers and companies and 145% for higher rate taxpayers. Buy to let borrowing calculator
Interest only: A mortgage where the monthly payment covers only the interest, so the full loan is still owed at the end. Common for buy to let because it maximises cash flow.
IRRInternal rate of return: The yearly return that makes all the cash in and out of an investment, including the eventual sale, add up to zero in today's money. It rewards getting money back sooner. Buy to let investment calculator
LBTTLand and Buildings Transaction Tax: Scotland's equivalent of stamp duty, with its own bands and an additional dwelling supplement.
Leasehold: Ownership of a property for a fixed number of years under a lease from the freeholder, usually with service charges. Short leases are harder to mortgage and sell.
LTCLoan to cost: A loan as a percentage of the total cost of a project, purchase plus works, rather than its value. Used by bridging and development lenders.
LTTLand Transaction Tax: Wales's equivalent of stamp duty, with its own bands and higher rates for additional properties.
LTVLoan to value: The mortgage as a percentage of the property's value. Buy to let lenders usually lend up to 75%, sometimes 80%. Buy to let borrowing calculator
MIMOMoney in, money out: A deal where the refinance returns all the cash put in, leaving none of your own money in the property. Maximum offer calculator
Net yield: Rent after voids and running costs, divided by the total invested. A truer picture of what the property earns than gross yield. Rental yield calculator
Portfolio landlord: For lending purposes, a landlord with four or more mortgaged buy to let properties. Lenders then look at the whole portfolio, not just the new property.
Product fee: A fee charged by a lender for a particular mortgage deal, either paid upfront or added to the loan. Often a flat amount or a percentage of the loan.
Refinance: Replacing one loan with another, often to release money after a property has gone up in value. For buy to let, many lenders want you to have owned the property for six months first.
Rental cover: See ICR. The test buy to let lenders use to decide how much the rent will support.
Repayment mortgage: A mortgage where each payment covers interest and part of the loan, so it is paid off by the end of the term. Payments are higher than interest only.
Return on cashCash on cash return: Yearly cash flow after the mortgage divided by the cash you put in. Shows what your own money is earning.
Right to Rent: In England, landlords or their agents must check that adult tenants have the right to live in the UK before the tenancy starts.
SDLTStamp Duty Land Tax: Tax on buying property in England and Northern Ireland, charged in slices of the price. Additional properties and company purchases pay a further 5% of the whole price. Buy to let investment calculator
Section 24: The rule that stops individual landlords deducting mortgage interest from rental profit. Instead they get a tax credit of 20% of the interest, which raises the tax bill for higher rate taxpayers. It does not apply to companies.
Service charge: A payment by leaseholders towards the upkeep of shared parts of a building, such as the roof, lifts and communal areas, plus buildings insurance.
SPVSpecial purpose vehicle: A limited company set up only to hold property. Mortgage interest is a deductible cost for a company, but money taken out of it is taxed again as dividends or salary.
Stress rate: A higher interest rate used to test whether the rent would still cover the mortgage if rates rose. Lenders set their own; you can use any rate you think realistic. Buy to let investment calculator
Tenancy deposit cap: In England a tenancy deposit cannot be more than five weeks' rent where the annual rent is under £50,000, or six weeks' rent above that.
VoidVoid period: Time when a property is empty between tenants and earns no rent, while the bills and mortgage still need paying.

General information, not advice. Rules differ between England, Wales, Scotland and Northern Ireland, and they change. Check gov.uk or a professional before relying on any of these for a decision.