Property investment glossary
Common terms you will meet when investing in UK property.
- Capital growth
- An increase in a property's value over time.
- Distribution
- A payment of profit from the property company to its shareholders, usually as a dividend.
- EPC
- Energy Performance Certificate, rating a building's energy efficiency from A to G.
- Exit
- The point at which a property is sold and investors receive their share of the proceeds.
- FCA
- The Financial Conduct Authority, which regulates financial services firms in the UK.
- FRI lease
- A full repairing and insuring lease, where the tenant pays for repairs and insurance.
- Freehold
- Outright ownership of a property and the land it stands on, with no time limit.
- FSCS
- Financial Services Compensation Scheme, the UK's compensation fund for some financial products.
- Gross yield
- Annual rent divided by property value, before costs.
- HMO
- A house in multiple occupation, let to three or more people forming more than one household.
- Leasehold
- Ownership of a property for a fixed number of years under a lease from the freeholder.
- Loan to value (LTV)
- The size of a loan as a percentage of the property's value.
- The value of a company's assets, mainly the property, less its debts and liabilities.
- Net yield
- Annual rent less running costs, divided by property value.
- Red Book
- The RICS Valuation Global Standards that govern formal valuations by RICS Registered Valuers.
- RICS
- The Royal Institution of Chartered Surveyors, the professional body for surveyors.
- Secondary market
- A facility where existing investors can sell shares to new investors before exit.
- SPV
- Special purpose vehicle: a company set up to own a single property or project.
- Void period
- Time when a property is empty and earning no rent.