A-Z Glossary

A. Agreement in Principle

The mortgage amount that a lender would “in principle” be able to offer a buyer. Decision made based on a credit search and basic personal information.

B. Buy-to-let

Property purchased for the sole purpose of being rented out to tenants. Strategy opted for by investors wishing to generate profit by charging more in rent than the outgoing mortgage repayments, before achieving capital gains when selling in the future.

C. Capital Gain

An increase in the value of a capital asset (in this case, property), that gives it a higher value than the original purchase price.

D. Deposit

The initial sum payable to secure a property, the balance is payable later in the purchase process.

E. Equity

The value of a property, minus the amount of money owed for said property. If you owe £100,000 for a property that’s valued at £500,000, you have £400,000 equity.

F. Fixed Rate Mortgage

A mortgage in which the interest rate on the mortgage loan is fixed. A low, fixed rate usually available for a fixed amount of time and is used to attract new custom.

G. Guaranteed Rental Period

A period of 12 months or more that a property developer will guarantee your rental payments regardless of void periods or non-payments.

H. HMO – House in Multiple Occupation

A house being occupied by more than two persons, not of the same family. A property investment type that typically generates high yields and low void periods.

I. Interest only Mortgage

A mortgage in which the borrower only pays interest on the mortgage. The term is usually around 5 – 7 years, and the original amount borrowed must then be paid off at the end of the term.

J. Joint Ownership

Term used when more than one person owns a property. There are lots of different ways to jointly purchase including joint tenants and tenants in common.

K. Key Return

An investor’s main investment and return goal.

L. Land Registry

Government department that records the owners of land and under what conditions.

M. Mortgage Redemption Figure

The figure required to repay the outstanding capital and interest of a mortgage.

N. Net Return

Income from your investment once all expenses from the gross income are deducted.

O. Off Plan Property

To buy off plan is to secure a property before completion, at times before construction. Investors are often able to secure a property with a relatively small deposit, and flip for a profit before completion.

P. Property Portfolio

A collection of property investments owned by an individual, group or company.

Q. Quantity Surveyor

Professional who manages all costs relating to building projects. They aim to minimise the costs of a project and increase value for money, while still achieving the required standards and quality.

R. Reservation Fee

The payment made to secure a property and take it off the market. Often required when investing in a new or off-plan property. This can be non-refundable, but forms part of the purchase price.

S. Stamp Duty Land Tax (SDLT)

You have to pay Stamp Duty if you buy a property costing more than £125,000 (£40,000 for additional homes) in England. Since the new regulations were introduced, Stamp Duty will not be payable on properties up to £300,000 for first-time buyers. Work out how much you may have to fork out here.

T. Tenant Type

Students, young professionals, families, The Silver Generation. Segments of potential tenants with varying requirements, that offer different benefits and drawbacks to the investor.

U. Under Offer

The term used when a sale is agreed or sold subject to contract but contracts haven’t been exchanged.

V. Vendor

Legal name to describe the seller of a property.

W. Withdrawal

Term used when buyer the withdraws their offer. Usually occurs before searches have taken place to limit money lost.

X. Generation X

Generation X is the population born after baby boomers and before Generation Y, typically considered as those born between mid 1960’s and early 1980s. Almost 50% of Gen X plan to finance retirement by investing in property, yet almost a quarter of the demographic are yet to get on the ladder.

Y. Yield

The annual return you are going to make on an investment. Calculated by dividing the annual rental income by the value of the property, expressed as a percentage.

Z. Zero Ownership Fees

Hotel investment opportunities are typically free of ownership fees such as service charge, ground rent, management fees or stamp duty. However, terms such ‘zero ownership fees’ should may vary in definition depending on the developer, so always confirm fees before going through with an investment.

Risk Warning

Property prices can go down as well as up. Homes can be repossessed if you do not keep up with payments. Properties purchased off-plan or incomplete can be open to further risks and losses to buyers. We urge buyers to seek legal advice where possible and must stress that investing in property does carry risk. Sales are conducted direct between the buyer and the vendor. Every care is taken to ensure that all marketing materials, prices, floor plans, visuals, brochures are correct at time of issue however these do not constitute property particulars for contractual purposes. Please be sure to check all final materials ahead of signing any purchase contract and conduct your own due diligence. BuyAssociation are a marketing agent that presents direct developer and owner stock to property investors and buyers. BuyAssociation never hold funds or take payments, admin fees or membership payments from investors.