Property Investing Jargon Buster

The property market is a complex beast of acronyms, jargon, and abbreviations. Whether you're new to the sector or an established investor, it's hard to keep up with the swirl of information.

It's easy to become bogged down as you try to make sense of it all. Make sure you're not walking around wearing your "Property Acronym Blindfold” on.

Avoid befuddlement and bewilderment by educating yourself on the most common property terms before investing!

Assets

Assets put money in your pocket without you having to work. The best example of an asset is a buy-to-let property that is set up properly. This is because the rental payments will pay the mortgage, cover all other costs and still put money in your pocket at the end of each month.

Other examples are a business, products like books or art, or the dividends from stock and bond investments. The opposite of an asset is a liability (see description below). ‘Rich Dad Poor Dad’ is a book that explains assets and liabilities in more detail. It has inspired countless people around the world to invest in property - have you read it? https://www.richdad.com/what-are-assets-and-liabilities

BTL or B2L (Buy To Let)

It’s when you purchase a property and then rent it out.

Chain

If you need to sell a property before you can afford to buy the next one, you are in a chain. The person you are selling to or buying from may also be in a chain therefore chains can end up being very long. If one person in the chain pulls out, the whole chain can collapse. Investors and 1st-time buyers complete chains and are therefore seen as valuable buyers.

CGT - Capital Gains Tax

If you sell your property and it has increased in value, you will be charged CGT on the uplift in value (minus allowable costs). The answer to this... never sell!

DiP (Decision in Principle) or AiP (Agreement in Principle)

A document from a mortgage lender that confirms it will provide you with a mortgage of a certain amount of money. Acquiring a DiP is one of the 1st steps you will take before investing in property. The document is used to show the seller or the agent that you are ready to move without delay.

EPC (Energy Performance Certificate)

From 1st April 2020, all existing and new tenancies. Need to have an EPC rating of ‘E’ or above, or it can not be legally let. Additionally, the government has now proposed that all new tenancies will need an EPC rating of ‘C’ or above by 2025. By 2028 all existing tenancies will also need to meet this criteria.

HMO (House in Multiple Occupation)

HMOs are residential properties rented out to more than one tenant and would share common facilities like kitchen and bathrooms. Recent legislation now requires landlords to hold a HMO license. Additionally, you will likely be required to apply for planning permission because the government has taken away permitted development rights, in many areas, that previously allowed you to convert a normal house into a HMO.

Liability

This is something that takes money out of your pocket. Great examples are cars, vacations, clothes, eating out, unused subscriptions etc. The opposite of a liability is an asset (see description above). ‘Rich Dad Poor Dad’ is a book that explains assets and liabilities in more detail. It has inspired countless people around the world to invest in property - have you read it? https://www.richdad.com/what-are-assets-and-liabilities

LTV (Loan-to-Value)

This is the percentage of the purchase price that the mortgage company is lending you. Having a high loan-to-value means you need to put down less equity to purchase the property. E.g. take a ￡100,000 purchase price with a 75% LTV, the mortgage would be ￡75,000 and your deposit would be ￡25,000. Can you think of any other assets that the bank will lend you 75% of its value? They certainly wouldn't lend you 75% of the purchase price of cryptocurrency!

PRS (Private Rental Sector)

PRS is a classification of housing in the UK. PRS properties are owned by landlords, who can either be individuals or companies and leased out to tenants.

PRS (Property Redress Scheme)

To be a fully compliant property deal sourcer you must register with the property redress scheme. This is for the protection of the client.

Property Portals

Millions of people use online property portals to help them find a property to buy or to rent. But there are loads of portals to choose from. Please see below the top 3 UK property portals.

1. https://www.rightmove.co.uk/
2. https://www.zoopla.co.uk/
3. https://www.onthemarket.com/

R2R (Rent To Rent)

Rent To Rent is a scheme whereby you let a property on a single long let basis, and then sublet the property at an increased rent. In order for this to be profitable, you must add value by refurb work, converting offices/lounges into extra bedrooms or subletting as a holiday let.

About Pat from Total Property Group

Hi, it’s Pat Harper - Director of TPG. I believe that investing in property is one of the highest returning and safest ways to invest your hard-earned money. I also believe that even the busiest of people should be able to enjoy the benefits of property investing. These are the reasons my hands-free property investing service was born… and this is how it works:

I find properties that meet your criteria, I case manage the property through legal, I project manage any refurbishments and I oversee the lettings process. Everything is taken care of to ensure your investment is as passive as possible.

If you are looking to purchase an investment property contact me now to arrange a FREE investment discovery call by clicking here: www.totalpropertygroup.co.uk/investment-discovery-call