Property investment glossary

Tenancies


The length of time a tenant is in the rental accommodation

Tenancy Agreement


A legal document signed by the tenant governing their time in the property.

Tenant


A person who occupies a rental property, as per the conditions of the Tenancy Agreement

Triple Lock Guarantee


A recent introduction to UK pension law in 2010 whereby the State Pension will increase every year by the higher of either: UK inflation, average earnings, or 2.5%.

UCAS


Abbreviated from The Universities and Colleges Admissions Services, UCAS provides the application process for those applying to university in the UK.

Value-Added Tax (VAT)


A form of consumption tax similar to Corporate Income Tax or the Personal Income Tax. As a buyer, VAT refers to the tax you pay on the purchase price of a product but if you are a seller it is the tax you pay on the value that you’ve added to a product or service. The current standard VAT rate stands at 20%.

Void Period


Void periods are the time periods in which properties stand empty. They often occur between different tenancies.

Yield


Yields are, in percentage terms, the amount of profit an asset provides. There are two main types of yields: Gross yields are the property’s value divided by its rental income with costs still calculated, whereas NET yields refer to the property’s value divided by its rental income once costs have been deduced. NET yields are generally seen as a more accurate portrayal of expected returns, as costs have already been deducted.

Zero-bound Interest Rate


The lowest percentage of owed principal that a central bank can set. In monetary policy, the use of a 0% nominal interest rate means that the central bank can no longer reduce the interest rate to encourage economic growth. As the interest rate approaches the zero bound, the effectiveness of monetary policy is reduced as a macroeconomic tool. A zero-bound interest rate typically refers to the process where, by gradual steps, the interest rate approaches zero.

Zoning


Municipal or local government laws that dictate how real property can and cannot be used in certain areas. Zoning laws limit commercial use of land in order to prevent oil, manufacturing or other types of businesses from building in residential neighborhoods. However, these laws can be modified or suspended if construction of the property will serve to help the community advance economically.

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