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Glossary of Terms

Our glossary of terms contains a comprehensive guide to various property investment related terms to give you a better understanding of the language used when talking about investing in property. Browse our property investment glossary to cut through the technical jargon which will help you when deciding on your next property investment. 

Accrued interest

An adjustment to bond prices due to interest being paid at specific intervals, despite being earned on a daily basis.

Accumulation units

The units which roll income into the value of units but that don’t pay income.

Adjusted EPS

The earnings per share on revenue profit that is adjusted to not include deferred tax that may be associated with investment properties.

Alternative investments

Investments such as property, private equity and hedge funds, but not equities or fixed incomes.

Anchor tenant(s)

A large shop or supermarket that is brought into a specific area that will attract more shoppers, encouraging other retailers to lease units.

Annual charge

A fund’s annual fee that is calculated on a daily basis and covers the costs of running a fund.

Annualised net rents

Gross rents plus increases to estimated rental value (where rent reviews are outstanding), minus any rents payable under head leases.


Regular payments made over a specific period of time to an individual.


An increase in the value of an asset.

Asset allocation

The proportion of the investment or assets that are placed in different industries, geographic regions or types of security.

Asset class

Categories for different assets that have similar characteristics or other similarities.


A possession that has a value.

Authorised Unit Trust

A UK-based unit trust that has been given his status by the FSA, meaning that the units are able to be marketed to all types of customers.

Average maturity

The maturity of a bond relates to the time of which the principle of a bond can be repaid. The average maturity is a statistic providing the weighted-average maturity of bonds that are in a fund.


A target figure that is used to measure the performance of an investment fund.

Bid price

Any units or shares may be bought or sold at this price.

Bid/offer spread

The difference between the buying price and the selling price of shares and units.


An agreement with a company or government of a loan, where an arranged repayment is agreed and interest is generated throughout the length of the loan. These bonds are also available to be bought and sold.

Book value

Assets and liabilities are held in the accounting records at this amount.

Bottom-up approach

A method where stock selection determines a portfolio construction. The quality and future prospects of a stock are assessed, with strength of management, market share and pricing power all being analysed.

Break clauses

A clause within a contract that allows one or both parties to terminate the contract.

Buy to let

A type of property that is bought in order to be rented out.

Call option

An option that allows somebody to purchase an investment at a later date with the price that has already been agreed.

Capital allowance

A kind of benefit available to an owner against income tax or corporation tax for a qualifying buildings capital expenditure.

Capital gain

When an investment is sold at a price that is higher than the initial price that was paid.

Capital Gains Tax

The amount of tax that is payable on a capital gain.

Capital growth

A fund that seeks capital growth aims to maximise the capital sum invested rather than producing any income.

Capital value

An assets, freeholds or leaseholds value, as distinct from its annual or periodic value.


The value of an asset relating to expected future income.


An agreement between parties to exchange the difference between the closing and opening prices of a contract. Contracts for Differences allows you to trade shares or markets, which can potentially lead to you benefiting from a fall in markets of share prices as well as rising ones.

Contingent tax liability

Unprovided further taxation that can become payable if the properties of a company were sold at current market value.

Convertible bond

Issued by a company and can be exchanged for a number of shares at a conversion price that is pre-stated.

Corporate bond

Debt obligations that are issued by corporations instead of offering equity ownership by issuing stock. Most corporate bonds pay semi-annual interest and promise to return their principle when they mature.

Currency hedging

The use of currency futures and options transactions in order to protect the value of investments and cash against changes in exchange rates, relating to the relevant currency.


A decrease in the value of property, caused by different factors including obsolescence and deterioration in its condition.


Material changes made to a building or land that will affect its appearance.

Development pipeline

The combination of a development programme and proposed plans that are not yet included within the programme but are likely to be included in the future.

Development programme

A schedule of major development schemes including projects that are completed but not yet fully let.

Direct property fund

A specific fund that invests fully into direct commercial property, holding no property shares, REITs, other equities or other indirect holdings.

Discount to NAV (Net Asset Values)

The difference between the value of the assets of the company and the company’s market capitalisation. The difference is often represented as a percentage.


The extent to which the performance of two or more assets are different.


Where an individual or organisation are located for regulatory or tax purposes.

Equivalent yield

The internal rate of return that a property produces, allowing for increases in rent to market levels, voids and expenditure, but not allowing for increases in the market rent.

Flat yield

The most common yield calculation, dividing annual income paid by the market price.


The absolute ownership of land without burdens or being overshadowed by a higher form of ownership.

Ground lease

A long lease granted at a ground rent. For example, a rent disregarding building values or other improvement of land, but which does reflect any right to develop the land.

Ground rent

Rent that is paid for vacant land which is suitable for development.

Growth fund

A fund that has a main objective of capital appreciation. This contrasts with an income fund where the main aim is to provide higher than average income in the form of a dividend payment.


A transaction that helps to reduce the risk of an investment or protects an existing commitment, by covering adverse market movements by using one type of investment.

Indirect property fund

A fund investing in indirect property vehicles including property shares, REITs, limited partnerships, property investment companies or property unit trusts, rather than including direct commercial property in its portfolio.

Indirect property investment

Investing in vehicles that invest into shares, property investment companies and limited partnerships rather than directly investing in property.

Initial yield

The net rent at the date of purchase, divided by the gross purchase price, with the costs of the purchase included.

Investment portfolio

A collection of assets that are for investment purposes.

Investment property

A property that has been invested in for the purpose of generating rental income and the appreciation of its capital value.

Investment trust

A company that invests into the shares of other companies.


The owner of property or land that gives exclusive possession to an individual for a period of time through a tenancy agreement or lease.


The grant of a right to exclusive possession of another person’s land for an agreed set period of time.

Liquidity risk

The risk that a buyer may not be found with a reasonable price reflecting the value of an investor’s asset.

Listed building

A building that has particular historical or architectural features that the owner shall not do anything to without the correct consent.

Market capitalisation

The total value for a company’s stock.

Market value

The amount that is estimated to be the value that a property should be exchanged at between a buyer and a seller.

Net absorption

A decrease in the amount of available space within a particular period of time, taking into consideration the amount of space let and the amount of new space that is set to come on to the market.

Net rental income

The rental income that is generated after operating costs and other costs are deducted.


Factors affecting the economic life of the land and buildings, with types including economic, environmental, configurative, strategic and functional.

Offer price

The price in which a unit may be bought at.


A property rented at a price that is higher than the current market value.

Passing rent

Rent that is payable at present due to the terms of the tenancy agreement or lease.


A collection of the investments that are held by a fund or investor.


A legal agreement for the letting of a property that is set to take effect at a date in the future, due to the completion of a development.

Prime property

An investment that is regarded as the best within a certain location or class.

Prime yield

The yield that is used in the valuation of a prime property let at full market value.

Rack rent

The rent that represents a holdings full open market annual value.


The development of land including the removal of at least most of the structures that it holds.

REITs (real estate investment trusts)

One method of indirect property investment, including tax free distributions, and which are taxed according to the shareholders tax status.

Rent review

A section in the lease that states the rent is to be reviewed at different intervals, with the review procedure outlined in the agreement.

Rental growth

The growth of the estimated rental value of a property over a specific period of time.


The amount that an investment changes due to capital growth or interest dividend income, often displayed as a percentage.

Revenue profit

Excluding any impacts from exceptional costs or profit, revenue profit is the profit before tax.


A process whereby a right in a property transferred by a deed of trust or mortgage is returned to the initial owner after the interest held by others on the property ends.

Reversionary yield

The discount rate that is applied to the reversionary income in a valuation for a term and reversion.

Risk/return factor

The relationship between the potential growth of an investment and its exposure to loss.

Secondary units (property)

Properties that aren’t prime properties, and aren’t considered to be on the same level due to poor location, configuration or the tenants.

Speculative development

Property developments that are constructed without having any known buyers or tenants in place for the completion of the development.

Tax transparent

An investment or organisation that has non-taxable returns or where any tax that is due is imposed on the investors.


An individual or company holding a tenancy to a property.

Total development cost

All capital expenditure for a project, comprising of the cost of the property and all financial costs.

Total investment property return

A percentage that expresses valuation surplus, profit or loss on property sales and net rental income.

Total return

A share holdings growth in value over a specific period of time.

True equivalent yield

An internal rate of return that an investment brings, reflecting reversions to current market rent.

Umbrella funds

Unitised collective funds are often based offshore, but are being increasingly adopted as a structure for UK OEICs, offering investors a choice of sub funds and free switching between each sub fund.

Underlying profit before tax

The amount of profit that is generated before tax, after the exclusion of trading profits, one-off gains, profits on disposal of fixed assets and exceptional items.

Unit trust

Where the money from several investors is pooled together and collectively invested in things such as shares and bonds, with each investor owning at least one unit.

Unoccupied rate (or empty rate)

The rate that can be charged by an authority on empty non-domestic properties.

Upward only rent review

A review of rental fees where the rent payable only increases after the review.

Vacancy rate

A percentage of a portfolio that is vacant. This is calculated by dividing the total rental value of the vacant property/properties by the total rental value of the whole portfolio.


The income that the investments generate in relation to the price.

Yield curve

Shown in a graph, yield curve shows the relationship between maturities for a given issuer’s securities and individual yields.

Yield to maturity

The rate of return from cash flows in a given time period until maturity.

Zoning method/Zone A

A method used for the analysis of rental value of retail space, by dividing into strips of equal depth parallel with the frontage. The front of a shop is the most valuable area within the shop, and each zone following is ‘halved back’ in value. For rental purposes attributed to the front zone, zone A is the unit of comparison.

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Glossary of Terms

Our glossary of terms contains a comprehensive guide to various property investment related terms to give you a better understanding of the language and terminology used when talking about investing in property.

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