Definitions

UK Institutional Property Investment Glossary

The terms that actually decide UK real estate outcomes, defined plainly and sourced where a statutory rule is involved. 20 entries.

Tax Structure Underwriting Leases Development

Tax

Non-resident SDLT surcharge: A 2% Stamp Duty Land Tax surcharge charged on purchases of residential property in England and Northern Ireland by buyers who are not UK resident for the purposes of the statutory day-count test. It applies on top of standard SDLT rates and any additional-property surcharge.Residence for the surcharge is tested by days spent in the UK around the transaction, not by nationality or immigration status.GOV.UK — SDLT rates for non-UK residents
ATED: The Annual Tax on Enveloped Dwellings: an annual UK charge on residential dwellings above a value threshold held by companies, partnerships with a corporate member, and collective investment schemes. Reliefs exist for genuine property rental and development businesses but must be claimed each year in an ATED return.GOV.UK — ATED: the basics
Non-resident Capital Gains Tax (NRCGT): UK Capital Gains Tax charged on disposals of UK land and property by non-UK residents. Residential disposals have been within scope since 6 April 2015 and all UK land since 6 April 2019. A disposal must be reported to HMRC within 60 days of completion, even when no tax is due.GOV.UK — CGT for non-residents
Non-resident Landlord Scheme (NRLS): An HMRC scheme requiring UK letting agents, or tenants where there is no agent, to deduct basic-rate tax from rent paid to a landlord whose usual place of abode is outside the UK. Landlords may apply to HMRC to receive rent gross and settle liability through self assessment.HMRC — Non-resident Landlord Scheme
Double taxation treaty: A bilateral agreement allocating taxing rights between two countries. For real estate, treaties generally give primary taxing rights over income and gains to the country where the property is located, so UK property is normally taxed in the UK first, with relief claimed at home.GOV.UK — UK tax treaties

Structure

Register of Overseas Entities: A Companies House register on which overseas entities owning or buying UK property must record their beneficial owners. Registration is required before HM Land Registry will register the entity as proprietor, so it sits on the critical path of any corporate overseas acquisition.GOV.UK — Register an overseas entity
JV waterfall: The contractual order in which cash from a joint venture is distributed: senior debt, then any preferred return, then return of equity, then a profit split that often steps up above a hurdle. Two joint ventures with identical headline profit splits can produce very different investor outcomes.
Reserved matters (JV): Decisions a joint venture cannot take without the funding partner's consent — typically budget variation above a threshold, changes to the contractor or professional team, material design change, sale terms and further borrowing. Strong reserved matters protect a minority holder better than a larger equity stake.

Underwriting

MEES: The Minimum Energy Efficiency Standard. Since 1 April 2023 it has been unlawful in England and Wales to continue letting a non-domestic property with an EPC rating below E unless a valid exemption is registered, which converts an energy rating into a capital expenditure obligation with a legal deadline.GOV.UK — MEES landlord guidance
Reversion: What an asset is worth, and what rent it achieves, once the current lease ends. Reversionary value depends on the realistic re-letting period and achievable rent in that specific sub-market, not on the passing rent or the valuer's assumed market rent.
Gross-to-net leakage: The gap between gross rent collected and net operating income, after management, staffing, voids, bad debt, letting costs, common-part utilities, insurance and maintenance. In operational residential such as build to rent, it is the single line most responsible for models missing their return.
Rent cover: The ratio of an operating business's profit to the rent it pays, used in operationally intensive assets such as care homes and hotels. It measures how far trading can fall before rent becomes unaffordable, and matters more than the unexpired lease term in those sectors.
Concentration risk: Exposure that appears only at portfolio level, when several assets share the same tenant, sector, local economy, lease expiry year or debt maturity window. Asset-by-asset diligence does not surface it, which is why portfolio acquisitions require a separate correlation review.

Leases

Covenant strength: The financial ability of the entity contractually obliged to pay rent to keep paying it for the lease term. It is assessed from the filed accounts of the contracting entity, not the trading brand or the parent group, unless the parent has given an enforceable guarantee.
Unexpired term to break: The period until a tenant can lawfully end a lease, as opposed to the period until the lease expires. Income security should be underwritten to the break, because breaks are exercised more often than acquisition models assume, particularly in weaker markets.
Nomination agreement: An agreement under which a university takes responsibility for filling beds in a student accommodation scheme. It transfers occupancy risk for its unexpired term only, so underwriting should be based on the years remaining, the break rights and the rent review mechanism rather than the original headline term.

Development

Yield on cost: Stabilised net operating income divided by total project cost including land, construction, fees and finance. It is the honest development metric because it cannot be improved by an optimistic exit yield, and it is what the profit-on-cost margin is measured against.
GDV: Gross Development Value: the expected total value of a scheme on completion, before costs. Lenders size development facilities against both loan to GDV and loan to cost, so an inflated GDV inflates apparent headroom without adding any real equity cushion.
Loan to cost (LTC): Development debt as a proportion of total project cost. Lenders test it alongside loan to GDV, because a facility can look conservative against an optimistic end value while representing a very high share of the money actually being spent.
Forward funding: An arrangement where an investor buys a development before completion and funds construction in stages, usually at a discount to the standing investment value. The investor takes delivery and, unless a lease is pre-agreed, letting risk in exchange for that discount.

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