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Property finance terms for landlords
How you finance and hold a rental property affects your cash flow, your tax and what a lender will offer.
These terms explain the numbers lenders and landlords use, and the ownership structures behind them. Where a term has a tax side, it links to the HMRC guidance.
25 terms
- Accidental landlord
An accidental landlord is someone who becomes a landlord without planning to, for example after inheriting a property, moving for work and renting out their old home, or being unable to sell.
- Bank feed
A bank feed is a connection that imports transactions from your bank account into your accounting software automatically, so you do not type or upload them yourself.
- Bridging loan
A bridging loan is a short-term loan, usually secured on property, used to cover a gap until longer-term funding or a sale completes.
- Buy-to-let mortgage
A buy-to-let mortgage is a loan to buy property that you will let to tenants.
- Buy, refurbish, refinance (BRR)
Buy, refurbish, refinance, often shortened to BRR, is a strategy where an investor buys a property, improves it, lets it and then refinances on the higher value to take money out for the next purchase.
- Capital growth
Capital growth is the increase in a property's value over time.
- Consent to let
Consent to let is the permission a mortgage lender gives a borrower to rent out a home that is financed with an ordinary residential mortgage.
- Consumer buy-to-let
Consumer buy-to-let (CBTL) is the part of buy-to-let lending that the government brought under a conduct framework from 21 March 2016, where the borrower is a consumer rather than someone acting for business purposes.
- Full management service
A full management service is a package where a letting agent or property manager runs the tenancy day to day for a fee, normally a percentage of the rent.
- Interest coverage ratio (ICR)
The interest coverage ratio (ICR) is a buy-to-let lender's test that the rent comfortably covers the mortgage interest, worked out at a stressed interest rate.
- Interest-only mortgage
An interest-only mortgage is a loan where your monthly payments cover only the interest, so the amount you borrowed stays the same until you repay it.
- Joint ownership and Form 17
When a rental property is jointly owned, each owner reports their own share of the income and expenses.
- Landlord insurance
Landlord insurance is a set of insurance policies designed for let property.
- Limited company buy-to-let
Limited company buy-to-let means holding rental property in a company, often a special purpose vehicle (SPV), rather than in your own name.
- Loan to value (LTV)
Loan to value (LTV) is the size of your mortgage as a percentage of the property's value.
- Mortgage broker
A mortgage broker is an intermediary who arranges mortgages between borrowers and lenders, and in many cases also advises on which product to take.
- Net yield
Net yield is your annual rent minus the yearly running costs of a property, shown as a percentage of the property's value or purchase price.
- Open banking
Open banking lets consumers and small businesses securely share their bank and credit card transaction data with trusted third parties.
- Portfolio landlord
A portfolio landlord is a landlord who owns several rental properties rather than one.
- Product transfer
A product transfer is when a mortgage borrower stays with the same lender and moves to a different product, or renews their existing one, usually with no extra borrowing.
- Remortgage
A remortgage is replacing an existing mortgage on a property with a new mortgage, either with your current lender or a different one.
- Rent guarantee insurance
Rent guarantee insurance is a policy that covers a landlord's loss of rent, usually when a tenant stops paying.
- Rental yield
Rental yield is the annual rent as a percentage of the property's value or price.
- Self-managing landlord
A self-managing landlord lets and runs a property without a letting agent, dealing directly with tenants, repairs, paperwork and rent collection.
- Special purpose vehicle (SPV)
A special purpose vehicle (SPV) is a limited company set up only to buy, hold and let property.