Property Investment Terminology

If you're new to the property investment game - or even if you're an old hat - you can become confused by some of the most common terminology used in the industry. That's why we've put together our Property Investment Terminology. You can also view our terminology list as a handy infographic here.


A

Accumulation Units

Units which don't pay income into the value of the units.


Alternative Investments

Any investment not covered by equities or fixed income. Alternative investments include property, private equity and hedge funds.


Annualised Return

Average return annually based on the total rental income and estimated capital growth over the minimum term provided


Appreciation

The increase in value of an asset


Asset

Any 'item' that has been purchased and has a resale value, e.g. a property or unit


Asset Allocation

The grouping of assets into distinctive classes e.g. geographical location or industry sector


B

Below Market Value

Properties sold below the given market value, offered at lower costs than comparable developments or units


Bridging Finance

A short-term funding option designed to 'bridge the gap' between a debt payment and repayment, primarily used in property transactions


Brownfield

A plot of land which has previously been developed on and is available for redevelopment. Land which has previously been developed on could be contaminated and should be approached with care


Buy-to-Let

Any property or unit which has been purchased with the sole intention of renting it out


Capital Gain

A term used to describe an asset that has been sold for more than the original purchase price


Capital Growth

The amount that an asset or investment increases in value over time, measured on the current value in relation to the original cost


Capital Value

The value of an asset (freehold or leasehold)


Chartered Surveyor

A surveyor investigates the land or property before you buy it; those who are qualified members of the Royal Institute of Chartered Surveyors, either by fellowship (FRICS) or membership (MRICS) are considered Chartered Surveyors


D

Due Diligence

A comprehensive appraisal of a business or individual undertaken by a prospective buyer to ensure its assets and liabilities are positive and to evaluate its commercial potential


E

Equivalent Yield

The rate of return from a property internally which makes allowance for changes in the costs including expenditure, void periods and market values, however does not account for changes to rental income


F

Freehold

Absolute ownership of land by the purchaser


G

Greenfield

Land which can be purchased with the intent to develop which hasn't previously been developed on, e.g. agricultural land. Some greenfield land may require an archaeological inspection


Ground Rent

Rent which is paid for vacant land by the owner which is suitable for development. It's common for investors of apartments to have to pay an annual ground rent charge to the developer - which may be included in the service charge


I

Indirect Property Investment

Investment in all types of property which is done indirectly, usually by investing in investment vehicles, e.g. shares, REITs, property investment companies or property trusts


Investment Portfolio

A selection of assets belonging to an investor


Investment Property

Any property that is available to purchase as an investment opportunity, whether than be for renting out purposes or capital gains from resale


L

Listed Building

Any building protected by being places on the Statutory List of Building of Special Architectural or Historical Interest. Developers of listed buildings are not permitted to alter, demolish or extend without consent


M

Market Value

The value of a property at the current time based on evaluation by an estate or property agent determining the value that the property should be sold for


N

Net Rental Income

The income gained from rent paid by tenants after deduction of maintenance, management and any other service costs


O

Occupancy Rate

The number of units within a development that are filled with occupants or tenants. These figures are usually presented as a percentage and used by agents to demonstrate the popularity of a development


R

Redevelopment

The redesign or reconstruction of a site that has been previously developed on


Rental Growth

The amount by which (or rate that) rent increases over a specified period of time, of the estimated rental value (ERV) of the property


Return

The amount by which an investment may change, normally expressed as a percentage


V

Vacancy Rate

The number of units within a development, hotel or apartment complex that aren't filled with tenants or occupants at a particular time


Y

Yield

How much an investor can expect to gain as return on their investment, usually presented as a percentage based on annual increased based on the investments initial cost, current market trends or face value


Yield to Maturity

(YTM) The overall internal rate of return earned by an investor who buys a share or bond at today's market value, assuming that the investment will be held until maturity, often given as an Annual Percentage Rate (APR)

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