Property investment glossary

Capital


An accumulation of a person’s financial assets that are at their disposal such as cash, as well as assets like cars or properties that, if sold, could be liquidated into disposable capital.

Capital Appreciation


Capital appreciation describes an increase in the price/value of assets such as properties, which could take place gradually over the lifecycle of an investment. Essentially it is the difference between the purchase price and the sale price of your asset.

Capital Gains Tax


Capital Gains Tax is the tax you pay on the profit you make when you dispose of an asset which has increased in value. You can dispose of an asset by selling it, giving it away as a gift, swapping it for something else or receiving compensation for it, e.g. through the insurance pay-out if it has been lost or destroyed.

Capped Drawdown


A capped drawdown is a form of making withdrawals from your pension pot, with a limit on the amount of money you can take out from your pension scheme each year.

Cash Lump Sum


A one-off payment for either the partial value or the sum total of an asset (in this case, a pension fund) usually taken in lieu of recurring payments that would have been received over a period of time, like an annuity.

Chain


A line of buyers and sellers linked by a series of sales and purchases (an example of a chain is if a property’s seller may need to buy a new property before the purchase completes, while a buyer may need to sell their own property).

Commercial Property


Commercial properties are buildings or lands that are intended to generate a profit for you as an owner from capital gains or rental income from businesses occupying or making use of the properties.

Company Pension


A company pension is the pension scheme that your employer set up for you, to which you may or may not contribute.

Completion


Refers to the date in which the property is legally transferred to the buyer, as outlined in the exchange of contracts. For off-plan properties, this could also refer to when construction has completed and the building is ready to accept tenants.

Compound Interest


Interest added to the principal sum so that the added interest also accumulates interest, often known as ‘interest on interest’.

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