KerbioGuides · Glossary
Property investor glossary
The terms used across Kerbio, in plain English. Can't find something? Search the site.
Local Housing AllowanceLHA yieldBroad Rental Market AreaGross yieldNet yieldReturn on cashHMOSmall HMOLarge HMOArticle 4 directionPermitted developmentMandatory HMO licensingAdditional licensingSelective licensingHMO room sizesInterest cover ratio, or the rent testSection 24Stamp duty surchargeBridging loanGDVLoan-to-valueBRRRCouncil leasingRenters' Rights Act 2025
- Local Housing Allowance (LHA)
- The most housing benefit (or the housing part of Universal Credit) a private tenant can get towards rent. The Valuation Office Agency sets a rate for each Broad Rental Market Area and each size of home, from a shared room to four bedrooms. Landlords use it as a floor for what a tenant on benefits can pay.
LHA rates by area → - LHA yield
- Kerbio's measure of how a typical house pays at Local Housing Allowance rents: a year of the LHA rate divided by the price. On the yield ranking we use the 3-bedroom rate and the median terraced sale price in each postcode district over the last 12 months. It is a gross figure, before any costs.
Highest LHA yield districts → - Broad Rental Market Area (BRMA)
- The area an LHA rate covers, drawn by the Valuation Office Agency around towns and their surroundings. One BRMA can cover several councils.
Find your BRMA → - Gross yield
- A year's rent divided by the purchase price. Quick for comparing areas, but ignores empty weeks and costs.
Rental yield calculator → - Net yield
- Rent after empty weeks and running costs (letting fees, maintenance, insurance, service charges), divided by the price plus stamp duty, buying costs and any refurbishment.
Rental yield calculator → - Return on cash
- A year's cash flow divided by the cash you actually put in (deposit, stamp duty, fees and works). Also called cash-on-cash return.
Buy-to-let calculator → - HMO (house in multiple occupation)
- A home shared by 3 or more people from 2 or more households who share a kitchen, bathroom or toilet (Housing Act 2004). An owner living with up to 2 lodgers is not an HMO.
HMO licensing by council → - Small HMO (use class C4)
- An HMO with 3 to 6 unrelated residents. In England, turning a family house (class C3) into a small HMO is normally permitted development, so needs no planning permission, unless an Article 4 direction applies.
HMO Article 4 by council → - Large HMO
- An HMO with 7 or more residents. It falls outside the use classes (sui generis), so it needs planning permission everywhere.
- Article 4 direction
- A council order removing a permitted development right in an area. An HMO Article 4 direction removes the right to turn a family house into a small HMO, so planning permission is needed. Some cover a whole council, others named areas.
Check a postcode → - Permitted development
- Building work or a change of use that national rules allow without a planning application. Article 4 directions take it away in particular areas.
- Mandatory HMO licensing
- A licence from the council is needed in England for any HMO with 5 or more people from 2 or more households, wherever it is.
Licensing by council → - Additional licensing
- A council scheme that extends HMO licensing to smaller HMOs (often 3 or 4 people) in all or part of its area.
Licensing by council → - Selective licensing
- A council scheme that requires a licence for every privately rented home in a designated area, not just HMOs.
Licensing by council → - HMO room sizes
- In a licensed HMO in England, a bedroom must be at least 6.51 m² for one adult and 10.22 m² for two. Rooms under 4.64 m² can't be used for sleeping, and floor where the ceiling is under 1.5 m doesn't count.
- Interest cover ratio (ICR), or the rent test
- How buy-to-let lenders decide how much to lend: the rent must cover the mortgage interest, worked out at a higher stress rate, by a set margin. Typically 125% for basic-rate taxpayers and companies, 145% for higher-rate taxpayers.
Check a deal's rent test → - Section 24
- The rule that stops landlords who own in their own name deducting mortgage interest from rental profit. Instead they get a tax credit at the basic rate: 20%, rising to 22% from April 2027.
Own name or company tax calculator → - Stamp duty surcharge
- Extra Stamp Duty Land Tax on additional homes, such as a buy-to-let, in England and Northern Ireland: 5% on top of every band, for purchases from £40,000.
Buy-to-let stamp duty calculator → - Bridging loan
- A short-term loan, usually 6 to 18 months, to buy a property quickly or one a mortgage lender won't lend on yet. Interest is monthly and often deducted from the loan on day one (retained interest).
Bridging loans explained → - GDV (gross development value)
- What a property will be worth once the works are finished. Some bridging loans and refinance mortgages lend against it.
Bridging loan calculator → - Loan-to-value (LTV)
- The loan as a share of the property's value. A 75% LTV mortgage on a £200,000 house is £150,000.
- BRRR
- Buy, refurbish, refinance, rent: buy below value, add value with works, refinance onto a buy-to-let mortgage at the new value to pull cash back out, and keep the house.
The Deal Analyser spreadsheet → - Council leasing
- A council (or its agent) rents your home for a fixed term, often 3 to 5 years, and pays rent whether it is occupied or not. Usually at or below the LHA rate.
Letting to the council → - Renters' Rights Act 2025
- The law that ended Section 21 'no-fault' evictions from 1 May 2026, moved tenancies onto rolling periodic terms and raised the penalties councils can give landlords.
What it means for letting →
General information for England unless stated. Not financial, tax or legal advice.