Frequently Asked Questions

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Glossary

Acquisition Costs

The total costs involved in buying a property, in addition to the purchase price. These usually include Stamp Duty Land Tax (SDLT), solicitor or conveyancing fees, survey costs and related charges. For fractional investors, acquisition costs are built into the overall funding target.

Glossary

Annualised Return

Annualised return shows the steady percentage an investment grows per year, assuming compounding, even if it was held for several years. It allows fair comparison between investments of different lengths. For example, if £1,000 grows to £1,229 over three years, the annualised return is about 7.1% per year.

Glossary

Capital Appreciation

The increase in a property’s value over time, realised when the property is sold. For example, if a property is bought at £400,000 and sold five years later at £500,000, the capital appreciation is £100,000 (25% overall), which equates to an annualised growth rate of about 4.6% per year.

Glossary

Cash Flow (Net Cash Flow)

The money left from rent after subtracting all SPV/property expenses paid in that period. For example, if monthly rent is £1,600 and total expenses (service charge, management fee, insurance, maintenance) are £500, net cash flow is £1,100 for that month.

Glossary

Net Yield

The annual percentage return that the investment generates after all expenses are deducted. For example, The property is priced at £300,000. If gross rent is £24,000 a year and expenses are £6,000, net rent is £18,000. Net yield = 18,000 ÷ 300,000 = 6%.

Glossary

Purchase Price

The agreed amount paid to acquire the property, not including any acquisition costs such as SDLT, legal fees, surveys and any buyer’s premium.

Glossary

Return on Investment (ROI)

How much you actually earn on your investment overall. It’s shown as a percentage: ROI = total profit ÷ amount invested (where profit is net rent received plus any net gain at sale). Example: if you invest £1,000 and get £1,300 back in total → profit £300 → ROI 30%.

Glossary

Total Return

How much you earn overall on your investment over the whole holding period. It adds up every rental distribution paid to you during the hold (for example, quarterly over five years) plus your share of the net sale proceeds at exit. Expressed as a percentage: total return (%) = (total value − amount invested) ÷ amount invested.

Glossary

AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions)

AAOIFI is an international body that sets standards for Islamic finance. Its guidance is often used by Shariah boards when reviewing investment structures to ensure compliance with Islamic principles.

Glossary

Acquisition Costs

Glossary

Allotment of Shares

The process by which a company (the SPV) issues new shares to investors in exchange for their investment. Once shares are allotted, the investor gains rights such as voting, dividends and a proportional claim on the SPV’s assets.

Glossary

Annual Appreciation

The percentage increase in a property’s market value over one year. For example, if a flat priced at £200,000 rises to £210,000 after 12 months, it has appreciated by 5%. For investors, appreciation is one of the main drivers of potential returns, realised when the property is sold.

Glossary

Annualised Return

Glossary

Anti-Money Laundering (AML)

Anti-Money Laundering refers to the laws and procedures that prevent criminals from making illegal money appear legitimate. It includes verifying investor identity, checking the source of funds, monitoring transactions and reporting suspicious activity. In real estate investing, AML ensures all money used to buy property shares comes from legal sources.

Glossary

Appropriateness Assessment

A short test required by the FCA to check whether an investor understands the risks of higher risk products, such as fractional real estate. Passing the assessment is mandatory before being allowed to invest.

Glossary

Arrears

Arrears are unpaid rent that is overdue under a tenancy agreement. If tenants fall into arrears, it reduces rental income and can affect the dividends distributed to investors. Property managers are responsible for addressing arrears through reminders, legal notices or tenant replacement.

Glossary

Articles of Association

The rulebook of a company that sets out how it is governed, including shareholder rights, voting powers, dividend rules and the responsibilities of directors. Each SPV created for a property deal has its own articles that govern how investor rights are protected.

Glossary

Asset-Backed (Equity-backed) Investment

An investment supported by a real, physical asset. In fractional real estate, the property owned by the SPV is the asset. Unlike debt-based structures, investors hold shares in the SPV, giving them ownership linked directly to the property’s value and rental income.

Glossary

Assured Shorthold Tenancy (AST)

The most standard form of residential tenancy in England and Wales for most private lettings. It sets the tenant’s right to live in the property for an agreed period while paying rent and gives the landlord a legal framework to regain possession if required.

Glossary

Average Annual Return

Average annual return shows the simple mean of an investment’s yearly returns, without considering compounding. It is useful for a quick sense of performance but can overstate growth if returns vary. For example, if £1,000 grows +12% in the first year, +2% in the second year, and +8% in the third year, the average annual return is about 7.3% per year.

Glossary

Below-Market Value (BMV)

A property bought for less than its current market value, based on recent comparable sales or a professional valuation. Example: if a property is bought at £450,000 and the current market value is £500,000, it is £50,000 below market, i.e. 10% BMV.

Glossary

Beneficial Ownership

The person who ultimately owns or controls an asset, even if it’s held through a nominee or another entity. In UK company records this links to the “person with significant control” (PSC) regime.

Glossary

Board Resolution

A formal decision of a company’s directors recorded in minutes or passed in writing. In an SPV, resolutions authorise actions such as acquisitions, contracts or dividend declarations.

Glossary

Break Clause (tenancy)

A clause that allows the landlord or tenant to end a tenancy early by giving notice under the terms of the agreement. Breaks can affect cash flow forecasts and should be factored into yield assumptions.

Frequently Asked Questions

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How to Complete Your Real Estate Onboarding

How to Complete the Appropriateness Questionnaire

How to Consent to Marketing (and Why it Matters for Real Estate Investors)

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Why Real Estate is a Stable Investment in Uncertain Markets

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3 Shariah-Compliant Ways to Invest in Real Estate

A Muslim’s Guide to Halal Real Estate Investing

Acquisition Costs

Annualised Return

Capital Appreciation

Cash Flow (Net Cash Flow)

Net Yield

Purchase Price

Return on Investment (ROI)

Total Return

AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions)

Acquisition Costs

Allotment of Shares

Annual Appreciation

Annualised Return

Anti-Money Laundering (AML)

Appropriateness Assessment

Arrears

Articles of Association

Asset-Backed (Equity-backed) Investment

Assured Shorthold Tenancy (AST)

Average Annual Return

Below-Market Value (BMV)

Beneficial Ownership

Board Resolution

Break Clause (tenancy)

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