If you’re new to property investment, the terminology can feel overwhelming at first. While some terms overlap with standard house buying, many phrases and acronyms are unique to the investment world and may be unfamiliar to first-time investors. To make things clearer, we’ve put together simple explanations of the most common property investment and lettings terms you’re likely to come across.

ROI – Return on Investment
Measures the profitability of an investment as a percentage of the money put in. It’s calculated by dividing net profit (income minus expenses) by the total invested capital. For example, if you invest £100,000 and earn £10,000 net profit, your ROI is 10%. ROI helps you assess how well your money is working for you.

ROCE – Return on Capital Employed
A broader measure of profitability that looks at how efficiently all the capital used in a project (both your equity and any debt) is generating profit. ROCE compares net operating profit to total capital employed, giving insight into overall business performance and operational efficiency.

ROIC – Return on Invested Capital
ROIC assesses the return generated on all invested capital, including both equity and borrowed funds. It’s calculated by dividing net operating profit after tax by the total invested capital. This metric helps investors understand how effectively the project or portfolio uses capital to generate profits, especially important when leveraging debt.

BMV – Below Market Value
Refers to buying a property for less than its current market value. BMV deals can provide instant equity, creating opportunities for faster portfolio growth or increased profit margins after refurbishment or improvements.

BRRR – Buy, Refurbish, Rent, Refinance (and Repeat)
A popular investment strategy where an investor purchases a property, renovates it to increase value, refinances the mortgage based on the new value to release capital, and then repeats the process with a new property. This approach allows investors to recycle their capital and grow their portfolio efficiently.

BTL – Buy to Let
A residential property bought specifically to rent out to tenants. BTL properties generate rental income and offer potential capital appreciation, often held long-term as part of a property portfolio.

GDV – Gross Development Value
The estimated total value of a property or development once all building or refurbishment work is completed and the property is ready to sell or let. GDV is a key figure for assessing project feasibility, securing development finance, and calculating potential profit.

LTV – Loan to Value
A lending metric that expresses the amount borrowed as a percentage of the property’s value. For example, borrowing £75,000 against a property worth £100,000 equals a 75% LTV. Lenders use this ratio to assess risk, with lower LTV’s generally attracting better interest rates.

SA – Serviced Accommodation
Fully furnished short-term rental properties aimed at tourists or business travellers, often marketed through platforms like Airbnb. Serviced accommodation can yield higher rental returns than traditional buy-to-lets but usually requires more hands-on management and compliance with local regulations.

SPV – Special Purpose Vehicle
A separate limited company established to hold and manage property investments. Using an SPV can offer tax efficiencies, limited liability protection, and ease of managing multiple properties within a corporate structure.

RICS – Royal Institution of Chartered Surveyors
The professional body that regulates surveyors in the UK. RICS-qualified surveyors provide trusted valuations, building surveys, and property reports that comply with industry standards, often required for financing and legal purposes.

CGT – Capital Gains Tax
Tax payable on the profit made when selling an investment property or second home. It’s calculated on the gain above the original purchase price, minus any allowable deductions, and is subject to annual tax-free allowances and rates depending on your income bracket.

Base Rate
The interest rate set by the Bank of England, which influences the cost of borrowing across the UK. Changes in the base rate affects savings, borrowing and mortgage rates; especially variable or tracker deals, and can impact investor cash flow and affordability.

HMO – House in Multiple Occupation
A property rented to three or more unrelated tenants sharing amenities such as kitchens or bathrooms. HMOs often generate higher rental income per property but come with stricter regulatory and licensing requirements.

HMO Licence – House in Multiple Occupation Licence
A legal licence required by local councils for HMOs that house five or more tenants forming multiple households, and sometimes smaller HMOs under additional licensing schemes. The licence ensures the property meets safety standards, has adequate space, and is properly managed. It usually lasts up to five years, and failure to hold a required licence can lead to substantial fines and legal action.

PRS – Property Redress Scheme
A government-approved ombudsman scheme that landlords and letting agents must join. The PRS provides a straightforward, low-cost way for tenants and landlords to resolve disputes without needing to go through the courts.

DPS – Deposit Protection Service
A government-backed scheme that securely holds tenants’ rental deposits during the tenancy, ensuring deposits are returned fairly at the end. The DPS protects tenants and landlords by preventing misuse or withholding of deposits without cause.

AML – Anti-Money Laundering
Regulations designed to prevent criminals from using property transactions to launder illicit funds. Landlords and agents must verify tenant identities and monitor transactions, keeping records to comply with the law.

CMP – Client Money Protection
A scheme protecting landlords’ and tenants’ money held by letting agents. It ensures that rent and deposits are safeguarded and will be returned if the agent mismanages the funds or ceases trading.

Client Account
A separate bank account required for letting agents to hold landlords’ and tenants’ money separately from their own business funds. This segregation protects client money and provides transparency in financial dealings.

EPC – Energy Performance Certificate
A document rating the energy efficiency of a property from A (most efficient) to G (least efficient). Landlords must provide an EPC to tenants and ensure properties meet minimum energy standards (currently rating E or above).

AST – Assured Shorthold Tenancy
The most common tenancy agreement type in England and Wales, usually lasting six or twelve months. It gives landlords the right to regain possession of their property with proper notice and provides tenants with clear legal protections.

Propertymark (ARLA)
The UK’s leading professional body for property agents, covering lettings, sales, commercial, and auctioneering. Propertymark promotes high standards in the industry through training, regulation, and accreditation.

Letting or estate agents who are Propertymark members must follow a strict code of conduct, are required to hold Client Money Protection (CMP), and undergo regular compliance checks. For landlords and tenants, using a Propertymark agent offers added assurance of professionalism, transparency, and accountability.

We hope this guide has helped make property investment terminology a little clearer. Whether you’re just getting started or looking to grow your portfolio, understanding the language used can give you more confidence when reviewing deals, speaking with professionals, or making informed decisions.

Keep this guide handy, and don’t hesitate to reach out if you need further support.