How to Invest in UK Property?

Considering UK property investment but don’t know where to start?

Well, look no further!

There are many options for new investors, with different types of property investment, including:

  • Property Funds,
  • Investment Platforms,
  • Property Crowdfunding,
  • Real Estate Investment Trusts (REITs).

If you’re looking at property investment as a total beginner, though, the best (and most simple to understand) options are:

  • Buy-to-Let,
  • Student Accommodation,
  • Off-Plan Property.

Let’s take a closer look at these!

Buy-to-Let Investment

A buy-to-let property is one that has been purchased by an investor in order to be let out to tenants.

Essentially, a buy-to-let investor will buy a property and then make money from the rent paid by their tenant.

When/if everything goes smoothly, you can have a solid stream of long-time, reliable income on your hands with often minimal pressure.

The perks of buy-to-let are:

  • The UK property market is performing well, with Savills predicting that price growth in the next four years (2023-2026) will average a total of 5.1% across the UK as a whole, with markets in the North of England growing most strongly.
  • Buy-to-let property investment is considered lower risk than other investment strategies due to the property market’s proven resilience.
  • Owning a buy-to-let investment property gives investors returns from both rental income and capital growth.
  • Demand for housing is high, meaning you should have a steady stream of tenants available.

No investment, however, is without its risks.

Some of these may include:

  • Property prices fluctuate depending on housing market performance,
  • Some taxes, such as stamp duty tax, are higher with buy-to-let property purchases,
  • Void periods, where you lose rental income due to a property not being tenanted, are also possible if you don’t invest in the right area.

It’s important to remember that research is your number one tool when looking at an investment opportunity.

When weighing up the pros and cons of buy-to-let properties, it’s important to remember that while things like possible void periods and market changes could negatively affect your investment for a short period, the benefits of buying a buy-to-let property far outweigh these risks.

So long as you employ proper research and seek up-to-date and accurate knowledge, you should be able to minimize any potential risks and boost the likelihood of a profitable and successful venture.

Student Accommodation

Another option for investing as a beginner is through student property.

This has shot up in popularity in recent years, owing to some serious benefits.

Such as:

  • It is far more affordable than residential property, helping to deliver investors far higher returns than they normally would.
  • Most student accommodations also have their own dedicated property management company, meaning investors can usually have a completely hands-off investment.

There are two main ways to invest in student property.

  • HMOs – A property that is home to at least three tenants who share facilities like bathrooms and kitchens.
  • Purpose-built student accommodation – Property that has been specifically built for students.

It’s important to note, though, that student accommodation investments don’t usually see large capital growth.

So, if you’re looking for capital appreciation as a major investment goal, residential property is likely the better option for you.

Off-Plan Property

Investing in property ‘off-plan’ involves purchasing a property while still in the planning or construction stages.

There are many benefits to buying off-plan, such as:

  • Below-market value rates – investors looking to get more for their money typically explore off-plan investments due to the lower-than-usual property prices available.
  • High demand from UK renters that want a brand new property with contemporary designs and features.
  • Property investors who buy off-plan property can choose to invest in a wide range of units in one development – a luxury not usually available to investors, allowing many to enjoy the freedom of off-plan and cherry-pick the best units.

Some of the cons of investing in off-plan property are:

  • The development could fail to complete due to inexperienced developers.
  • The property price of your investment could fall in value by the time it’s completed if you invest in a low-performing area.
  • You can’t take a physical tour of the property before buying it, which is an issue for some investors.

What’s The Best Way to Invest?

Well, unfortunately, there’s no clear-cut answer to this question.

As you can see, there are both pros and cons to all of the items included in this list.

Again, you must utilise some due diligence – research your options thoroughly, and spend some time exploring different property investment strategies to find the best fit for your lifestyle and budget.

If you put the time in, then success in the property investment world may just be around the corner!