Glossary definition
ERV (Estimated Rental Value)
The annual rent that a property is expected to achieve on the open market, as assessed by a RICS-qualified valuer. ERV is a critical input for valuing investment properties using the yield method and for underwriting buy-to-let, BTR, and commercial mortgage facilities.
Definition
The annual rent that a property is expected to achieve on the open market, as assessed by a RICS-qualified valuer. ERV is a critical input for valuing investment properties using the yield method and for underwriting buy-to-let, BTR, and commercial mortgage facilities. Lenders will apply a stress test to the ERV — typically assuming a void period and 10–15% below market rent — to ensure the debt can be serviced even in adverse conditions.
See also
Closely related terms.
Cap Rate (Capitalisation Rate)
The ratio of a property's net operating income to its current market value, expressed as a percentage and used to value income-producing assets.
Net Yield
The annual rental income from a property expressed as a percentage of its purchase price or market value, after deducting all operating expenses such as management fees, maintenance, insurance, and void periods.
Gross Yield
The annual rental income from a property expressed as a percentage of its purchase price or market value, before deducting any expenses.
DSCR (Debt Service Coverage Ratio)
A financial metric that measures the ability of a property's net operating income to cover its annual debt service obligations, calculated as net operating income divided by total debt service.
Valuation
A professional assessment of a property's market value, carried out by a qualified surveyor for lending, investment, or transactional purposes.
Further reading
Guides that touch this term.
Guide
RICS Red Book Valuations for Development: What Lenders Require
A comprehensive guide to RICS Red Book valuations in development finance, covering what lenders require, how valuations are structured, and how to ensure your scheme is accurately assessed.
11 min read readReadGuide
Commercial Mortgages in the UK: A Complete Guide
Everything you need to know about commercial mortgages in the UK - from eligibility criteria and rental coverage ratios to how lenders value multi-let properties and what lease length matters.
4 min read readReadGuide
UK Development Finance Market 2026: Rates, Trends and Outlook
A comprehensive overview of the UK development finance market in 2026, covering current interest rates, lender appetite, emerging trends, and what developers should expect over the coming 12 months.
9 min read readRead
Where it shows up
Finance products using this term.
Ready to apply
Knowing the term is one thing.
Getting it on your term sheet is ours.
Send us the outline. We come back with indicative pricing from the right lenders inside a working day.