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.

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

Buy-to-Let

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

Conveyancing

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

Equity

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

Freehold

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

Gazumping

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

Leasehold

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

Let-to-Buy

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

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.

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.

Survey

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

Surveyor

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

Tenure

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.

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