Vesta Property Glossary | Property Jargon Buster | Rental Terminology

Property Glossary

Endless abbreviations, confusing acronyms and ever-changing buzzwords! Let us bust the jargon

Administration Fee

A payment charged to the new tenants of a property for the processing of the rental application.

Agreement in Principle (AIP)

This is an agreement from a mortgage provider that states that they would be prepared to lend you an agreed amount of money. It is made after the provider has completed all necessary credit checks and is happy to proceed to the next stage of an official mortgage offer. Please note that both the terms ‘Decision in Principle’ and ‘Agreement in Principle’ are used interchangeably. Some lenders prefer to use one over the other, but both mean the same.

Annual Percentage Rate (APR)

The total cost of a mortgage, including interests rates, arrangement fees and other associated costs. Typically used to help consumers compare products from different mortgage providers. Find out more

Annual (pre-tax) Profit

Is your annual net cash flow calculated by subtracting operating costs and mortgage interest payment costs.


A property that is bought with the sole intention of letting it out to tenants. Find out more

Capital Gain

The amount of profit made on the sale of an asset (i.e. property) when compared to the price it was purchased for. Find out more

Capital Gains Tax (CGT)

The tax paid on the profit made by the sale of an asset (i.e. property) when compared to the price it was purchased for. CGT typically doesn’t apply to your main place of residence but will likely apply to investment properties. Find out more


Happens after the exchange of contracts and is a fixed date that has been agreed during the exchange. On the date of completion the full purchase price of the property (less the deposit) will be sent by the buyer’s solicitor to the seller’s solicitor. After that the property legally changes owners and the seller’s solicitor releases the keys to the buyer.


The various legal processes involved in transferring the ownership of a property from one owner to another. These administrative procedures are carried out by a solicitor or qualified conveyancer on behalf of the buyer.

This includes establishing the legal boundaries of the property, the certified ownership of the property and any planned local developments that may affect the property. Find out more

Decision in Principle (DIP)

This is an agreement from a mortgage provider that states that they would be prepared to lend you an agreed amount of money. It is made after the provider has completed all necessary credit checks and is happy to proceed to the next stage of an official mortgage offer. Find out more


A sum of money that is paid on exchange of contracts, showing an intention to buy the property and give the seller protection if the buyer withdraws from the conveyancing transaction. Typically this 10% of the purchase price of the property.


In relation to property, equity is the difference between the market value of your property and the amount of money you still owe on your mortgage.

For example, if you have a house that is worth £500,000 of which you still owe £400,000 in mortgage repayments, then you will have 20% equity (£100,000) in that property. Find out more


Or exchange of contracts means when the legal representatives of the buyer and the seller swap signed contracts and the buyer pays the deposit. The agreement to buy or sell then becomes legally binding once all parties have exchanged and no one can cancel it.


The term used to describe the outright ownership of a property, including the land that it’s built on. The property belongs to the owner without a time limitation (as opposed to leasehold which is time restricted). Find out more


When a property seller accepts a higher offer from a third party even though they have agreed a certain price with a second party. Find out more

Gross Rental Yield

Is the annual rent as a percentage of the purchase price or value of a property. Find out more.

Gross Rent per annum

The total amount of rent received over the course of 12 months.

Ground Rent

Rent paid under the terms of a lease by the owner of the building to the owner of the land on which it is built.

House of Multiple Occupancy (HMO)

Is a property where rooms are rented out individually to unrelated people, rather than renting out a dwelling on a single tenancy, such as to a family or couple. HMO tenants rent their room and share communal spaces such as the kitchen and sometimes the bathroom and lounge. They pay an “all inclusive” rent that includes utilities and council tax.

House Price Index (HPI)

Shows changes in the value of residential properties and indicates whether house values increase or decrease. The index is published every month and is calculated by the Office for National Statistics and Land & Property Services Northern Ireland using data from HM Land Registry, Registers of Scotland, the Land & Property Services/Northern Ireland Statistics & Research Agency and the Valuation Office Agency.


The term used to describe the ownership of a property and its land for a limited amount of time (also known as its tenure which is agreed with the property’s freeholder). This timeframe can vary but is typically 99, 125 or 999 years. Find out more


A property that is bought with the intention of being moved into while you let out your original property to tenants. Find out more

Loan to Value (LTV)

The size of a loan relative to the purchase price of your property. So for example, if your property cost £500,000 and you took out a mortgage of £450,000 to buy it, the LTV would be 90%.

Negative Equity

Occurs when the market value of a property falls below the outstanding amount on the mortgage. Find out more

Net Rental Yield

Is the annual rent as a percentage of the purchase price or value of a property less any potential expenses. Find out more.

Net Rent per annum

Is the true rental income over the course of 12 months. It is calculated by deducting all incurred running costs from the gross rent per annum. These costs typically include management costs, maintenance and repairs, refurbishment and tax.

Red Book (RICS) Valuation

A book of professional standards published by the Royal Institution of Chartered Surveyors that contains mandatory rules and best practice guidance for anyone undertaking asset valuations.

Rental Yield

The measure of how much annual rental income is generated as a percentage of the property’s value. Find out more.

Return on Investment (ROI)

How much money you get out of an investment in comparison to how much money you put into it.

Service Charge

A charge made for maintenance and repair work in communal areas on a property which has been leased. This applies to rental property within an apartment block or housing development.

Share of Freehold

Means that the freehold title relating to the building is shared with other owners. There are two ways this can be done. The freehold is split jointly between several flat owners within the building (up to 4 owners), whereby the freehold is held in their personal names. Or the freehold is owned by a company and each of the tenants holds a share of that company. This is done by having your name on the deeds of the property or receiving a share in the company.

Stamp Duty Land Tax (SDLT)

A progressive tax paid by the buyer of a property where the purchase price exceeds £125,000. The tax rate is 2% from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% from £925,001 to £1.5 million and 12% on any property over £1.5 million. Use the SDLT calculator to see how much tax you will pay.


A professional report carried out by a qualified surveyor that inspects the property’s structural soundness and general state. Find out more.


A qualified building expert who carries out an instructed survey of a property.


The conditions under which land or a property is held, i.e. freehold or leasehold.

Vacancy Rate

The proportion of vacant properties in an area relative to occupied properties. This is a useful measurement for investors to assess the rental demand of a particular area.

Important Note

All information contained in this website is provided as a guideline only, is based on estimates and assumptions, may not be accurate or complete, and is subject to change. We make no representations or warranties with regards to this information, expressed or otherwise. A buyer who relies on such information does so at their own risk. Buyers are advised to seek independent financial advice and should undertake their own due diligence.

Your capital is at risk. Property values may decline and the property might not be able to be rented at amounts sufficient to cover debt interest costs, operating expenses and liabilities, and might not result in a positive cash flow. Property is an illiquid asset and should not be viewed as a short-term investment.

In no event will we be liable for any loss or damage, including without limitation any loss or damage arising directly or indirectly out of or in connection with the use of this website and the information contained therein.

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