Property Investment Glossary

A quick, rough comparison metric.

Annual rent ÷ purchase price × 100

Example: £10,000 rent on a £200,000 property = 5% gross yield.

Useful for scrolling listings — not useful for real decision-making.

A more realistic yield that accounts for costs.

(Annual rent − annual costs) ÷ purchase price × 100

Insurance, maintenance, voids, agent fees… they all matter.

It's common for a "nice" gross yield to shrink dramatically once reality shows up.

This is the number serious investors care about.

Annual profit ÷ cash you actually invested × 100

It measures what your money is doing — your deposit and costs — not the full property price.

Example: You invest £50,000 cash and make £3,000 profit = 6% ROI.

You'll also hear this called:

• Return on Cash (ROC)
• ROCE (Return on Capital Employed)

Different names, same idea.

Essentially ROI, usually focused on pre-tax cash flow. If your goal is income, this is one of your best dashboard metrics.

Your rental profit + capital growth combined.

Example: £3,000 profit + £10,000 growth = £13,000 return.

On a £50,000 cash investment that's 26% total return.

Important note: growth isn't guaranteed, and you can't spend capital growth unless you sell or refinance.

How much of the property value is funded by the mortgage.

Mortgage ÷ property value × 100

Example: £150,000 mortgage on a £200,000 property = 75% LTV.

Lower LTV often means better rates — but ties up more of your cash.

You pay interest monthly, not the loan balance. Lower monthly payments, better cashflow — but you still owe the full capital at the end.

Monthly payments reduce both interest and capital. Higher payments, lower cashflow — but you gradually clear the debt.

A fancy word for using borrowed money to increase returns. It can boost gains when things go well — and amplify pain when they don't. Use it strategically, not emotionally.

Lenders test affordability at higher interest rates than today. This is why you may not be able to borrow the "maximum" you think you should.

Your rate stays the same for a set period (often 2–5 years). Predictability is why many landlords prefer fixed deals.

Your rate can change. Includes trackers (linked to base rate) and SVRs (set by lenders). Potential upside if rates fall — less certainty if they rise.

Switching to a new deal with your existing lender at the end of your term. Usually simpler than remortgaging, not always the cheapest.

Moving your mortgage to a different lender — commonly to:

• improve the rate
• release equity
• restructure borrowing

Often used to recycle capital for further purchases.

Buy a property, rent it out, build income and/or growth. BTL mortgages typically require bigger deposits (often 25%+) and have stricter rules than residential.

Generally: 3+ unrelated people sharing facilities.

Often higher income, but:

• licensing
• compliance
• management intensity

Not beginner-friendly, despite what some courses claim.

Buy, refurbish, sell for profit. Can be lucrative — but it's an active business requiring skill, project control, and timing.

You keep your current home, rent it out, and buy a new home to live in. Often involves switching your residential mortgage to BTL (with lender approval).

You own the property and the land it sits on. No ground rent. No service charges (generally). Fewer restrictions.

You own the property for a set lease term, not the land. Common with flats. Often includes:

• ground rent
• service charges
• rules/restrictions

Lease length matters: under ~80 years can affect value and mortgageability.

The legal record of ownership held by the Land Registry (usually digitally). Not glamorous — extremely important.

The tax paid when buying property in England/Northern Ireland (Scotland: LBTT, Wales: LTT).

If you already own a property and buy another, there's typically an additional surcharge. Always budget for this upfront.

Tax on profit when selling an investment property (as an individual). Companies generally pay Corporation Tax instead.

A major tax change restricting full mortgage interest relief for individuals. Instead of deducting all interest, landlords get a basic-rate tax credit. This hit highly leveraged landlords hardest and is one reason some invest via limited companies.

The standard tenancy type in England and Wales (historically). Usually starts as fixed term (6–12 months) then becomes periodic. Provides a legal framework for possession — if procedures are followed properly.

Rates energy efficiency from A (best) to G (worst). You need one to sell or rent, and there's a minimum rating requirement. Future minimums may rise, so factor upgrades into your planning.

Local tax on residential property. Usually paid by the tenant — but your tenancy agreement should clearly state responsibility.

Landlords must verify that adult occupiers have the right to live in the UK before renting. Requires document checks and record keeping. Penalties apply for non-compliance.

Some councils require landlords to hold a licence for certain properties in certain areas — even if not an HMO. Always check local council rules before you buy.

A planning control that removes certain permitted development rights in a defined area. Common impact: converting a house to an HMO may require planning permission. If you're investing in conversions, check this early — it can derail a deal.