Glossary

Commonly used terms and their definitions.

 A |  B |  C |  D |  E |  F |  G |  H |  I |  J |  K |  L |  M |  N |  O |  P |  Q |  R |  S |  T |  U |  V | W | X | Y | Z

C

Capital Gain / Loss

Gain / Loss is the difference between the sales proceeds from an investment and the Investment Cost. If sales proceeds are lower than the Investment Cost, then the difference is a loss. If the sales proceeds are higher than the Investment Cost then the difference is a gain. Capital Gain/Loss does not take into account any Dividends Received.

D

Deferred Tax

Is the corporation tax within the SPV resulting from an increase in the value of the property since purchase (i.e. the corporation tax rate multiplied by the valuation increase). Deferred Tax only becomes payable if and when the property is sold, and is considered a potential “liability” until that point.

Dividends

Dividends are the amounts paid, on a quarterly basis, to all investors Amounts available for dividend distribution are calculated as Gross Rent, less deductions for:

  1. Property related costs (including property management, maintenance and insurance)
  2. Estimated likely void periods (i.e. when there are no tenants paying rent).
  3. Costs of running a company (accounts and bookkeeping, filing fees)
  4. Corporation tax.
Dividends Received

Dividends Received are the cumulative Dividends received by a specific investor. The investor can see the amount on their personal dashboard.

Dividend Yield

Dividend Yield is a measure of the income from a property investment. Dividend Yield is: the annual Dividends from an SPV, expressed as a percentage of the Investment Cost.

F

Forecast Dividends

Forecast Dividends are the expected monthly amounts that an investor will receive from their investments.

For example, if the forecast annual Dividends for an SPV are £9,450 and you own 2% of the shares, then your Forecast Dividends are £15.75 per month (i.e. the annual figure of £9,450 divided by 12 and multiplied by 2%).

G

Gross Rent

The forecast or actual rental income received, before any deductions. For example, if we can let a property for £1,000 per month, then forecast Gross Rent is £12,000 per annum.

Gross Rental Yield

The forecast Gross Rent (presented after building service charges for leasehold properties), expressed as a percentage of the Latest Property Cost.

H

House Price Index

(HPI) is an official statistic that captures changes in the value of residential properties in England and Wales. The HPI is used as a representative estimate for the value of the properties on a monthly basis. HPI is based on the data for a particular borough or region. The HPI contains details on over 19 million sales and the data is analysed on ‘like for like’ comparisons between properties. For more information please see the HPI website -landregistry.data.gov.uk/app/hpi.

I

Investment Cost

Investment Cost is the price paid for your investment.

L

Latest Property Value

The Latest Property Value is the most recent estimated valuation of the property.

For New Listings this will be the proposed purchase price, which in turn is supported by a Chartered Surveyor’s physical inspection and valuation.

Prior to selling the property, which is envisaged to be after 5 years, a further Chartered Surveyor’s valuation of the property will be obtained. This valuation will support the exit process.

Latest Share Valuation

The Latest Share Valuation is the Latest Valuation expressed on a per share basis.

Latest Valuation

The Latest Valuation of any investment consists of the Latest Property Value, plus the Unamortised Purchase Costs, less Deferred Tax, and less any other liabilities.

Latest Valuation Gains

Latest Valuation Gains are an estimate of gains or losses based on the Latest Share Valuation.

Specifically, they are the difference between the Latest Share Valuation and the valuation at the time of purchase.

N

Net Rent

Net Rent is the Gross Rent less all property and SPV related costs (e.g. maintenance, void periods, insurance, letting & management of the property) but before corporation tax and dividends.

New Listing

“New Listing” opportunities are properties that are available to purchase at an agreed price. The funds to purchase these properties are then crowdfunded on our platform within a specified time period.

In some instances the SPV may enter into a binding commitment to purchase a property prior to presenting it on our platform for crowdfunding, to provide surety to the property vendor that the transaction will complete. In those instances IRIS Shared Property Investment ensure that the SPV will have sufficient capital to complete the transaction.

New Listing opportunities are presented on the platform along with a Chartered Surveyor’s valuation and survey, solicitor’s conveyancing report and forecast rental information.

When you commit funds to a “New Listing”, your IRIS Shared Property Investment account balance will decrease but no money will actually leave the client monies account until the crowdfunding target is reached. If the crowdfunding target is not reached, your IRIS Shared Property Investment account balance will be restored accordingly.

P

Purchase Costs

Purchase costs for a property include Stamp Duty Land Tax, third party professional fees (e.g legal and surveyor), pre-letting expenses (including furnishing) and other third party costs relating to purchase.

These purchase costs are unavoidable and are incurred by all individuals and companies that acquire buy-to-let properties in the UK.

S

Share

Each SPV has 1,000,000 shares, and each share has an equal standing in terms of rights and economic benefits.

SPV

Each property listed on the website is owned by a special purpose vehicle (“SPV”), which is a UK Limited Company. You hold the beneficial interest in shares in the SPV.

Property investments are acquired through a SPV for general ease of administration and to provide flexibility for investors to transfer their shares.

Stamp Duty Land Tax

Stamp Duty Land Tax is an amount payable to HM Revenue & Customs on the purchase of property or land in the UK. The tax payable is dependent on the purchase price of the property.

Stamp Duty Reserve Tax (SDRT)

Stamp Duty Reserve Tax is an amount payable to HM Revenue & Customs by the purchaser when shares are sold from one owner to another. At current rates, SDRT is payable at 0.5% of the sale value of those shares. Shares bought initially by investors will be new shares issued by the SPV on which no SDRT is payable.

T

Total Return

The Total Return of an investment is the total gain or loss generated from holding an investment. The Total Return includes all Dividends Received and Capital Gains generated by the SPV and less Transaction Costs paid.

It is expressed as a percentage or a total amount. For example, if £10,000 was invested in a property and the Total Return 3 years later was 20%, then the investor would have generated a Total Return of £2,000 from holding the investment.

Transaction Costs

Comprise Stamp Duty Land Tax and third party professional fees (e.g legal, surveyor and valuation), and any other third party costs relating the acquisition and sale of the property by the SPV and the return of monies to investors, all of which are paid for by the SPV.

In addition, assuming the SPV makes a Capital Gain on the property, then there is an additional cost equivalent to 15% of that Capital Gain paid to IRIS Shared Property Investment by the SPV.

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