Property Investment UK: A How-To Guide

Amy Jackson
Amy Jackson
Property Editor
Updated 27 January, 2022
6 Min Read

Interested in property investment UK and looking for tips on how to invest in property in the UK in 2022? 

With property investment being one of the UK’s most popular ventures for those who want to grow their income and secure their financial future, we wanted to provide a straightforward, easy-to-read guide to help you get started. 

And that’s exactly what we’ve done. 

Keep reading our UK property investment guide for tips on researching your investment in UK property, figuring out whether property investment in the UK is right for you, and learning about the different steps and considerations along the way. 

Aerial view of UK property Aerial view of UK property

Research the Different Ways To Invest in UK Property 

If you have a basic understanding of property investment already, you’ll know that the main way that people in the UK invest in property is by purchasing a property and renting it out to tenants. 

This is certainly a great way to get involved with property investment in the UK, but be sure to also research the various types of investment property. 

Knowing about the different ways you can invest in UK property helps you understand more about the property market as a whole and ensures you’re on the right path with your venture. 

So, what are the different ways to invest? There are more direct investments and more indirect strategies. Examples of direct property investments in the UK include: 

  • Buy-to-let (residential, student, or commercial). 
  • Buy-to-sell (also known as property development or buying a ‘fixer-upper’). 

Within these two strategies, there are other points to consider. Such as: 

  • Buying a new build property for your investment. 
  • Buying a house that needs renovation work at a lower cost. 
  • Buying a house or an apartment. 

For the majority of buy to let investors, buying a new build apartment is the preferred choice.  

This is because the most popular tenant groups for this property type (young professionals and students) are more drawn to flats than houses, and usually prefer their rental property to be modern and up to date. 

Buying a house in need of renovation work is most common for those embarking on a buy-to-sell UK property investment 

However, it’s not uncommon for buy-to-sell investors to buy a more run-down property for investment and renovate it before putting it on the rental market. 

Examples of more indirect types of property investment in the UK include: 

  • Real Estate Investment Trusts (REITs). 
  • Property ISAs. 
  • Having shares in listed property companies.  

These UK property investment opportunities allow people to invest in the UK market without actually buying a property.  

With these kinds of investment methods, you don’t own a physical asset which makes them more of a stocks and shares investment. 

Now: 

What is the best way to invest in property in the UK? 

If you’re just figuring out your real estate investing strategy, you may be wondering this. The truth is that there’s no straight answer to the best type, but the following questions should be considered. 

  • Do you have a low-risk tolerance, or are you prepared to invest in a more high-risk venture? 
  • Do you want to maximise your return on investment as much as possible? 
  • Do you have a lot of time to put into your investment, or would you rather make passive income alongside your usual day-to-day life? 

If your answers to these questions are that you’d like a low-risk investment with maximum returns and the ability to make passive income, buy to let property investment may be your best option. 

Find out more about buy to let and the other types of property investment strategies with our detailed guide. 

Is UK Property Investment Right For You? 

Property investment can be a great way to meet certain financial goals and certainly comes with a lot of benefits. Nonetheless, it’s not for everybody. 

You need to really think about whether the choices of property investment UK areas offer are right for you or if you should explore different options. 

Here are some of the key things you should consider: 

Are You Prepared For the Risks?  

Every investment comes with an element of risk.  

And while the risk level involved with property investment is lower than that of stocks and shares investments, it’s still something to factor into your decision.  

The main risk that comes with UK property investing is the fact that your property could decrease in value depending on market conditions at the time.  

The good news? 

The property market in the UK has proven to be highly resilient and has quickly bounced back in times of uncertainty.  

Take the Covid-19 pandemic as a prime example, following which average property prices have broken multiple records. Just look at recent UK property investment news as evidence of this. 

Nonetheless, the threat of temporary market drops is something that every property investor in the UK has to accept.  

If you’re not ready to accept some level of risk in order to get your rewards, then maybe you should reconsider a UK property investment venture. 

Can You Afford a UK Property Investment

Perhaps the most important question of all when considering how to get into property – can you actually afford a property investment in the UK? 

The average property price in the UK is £270,708 as of November 2021, when it was last recorded by the Land Registry UK House Price Index 

Average house prices are even higher in London, but more affordable in cities up North such as Manchester and Liverpool in the North West 

But when investing in UK property, not only do you need to think about the cost of the property itself, but there are also additional costs to consider. 

Here are the various costs you need to think about when getting ready to buy a UK investment property: 

  • A deposit of your property price for a mortgage or payment plan. 
  • Your monthly repayments if using a mortgage. 
  • Your cash instalments if using a payment plan. 
  • Taxes such as stamp duty tax and rental income tax. 
  • Ground rent costs if you buy a leasehold property. 
  • Maintenance costs for the property. 
  • Solicitors’ fees. 
  • Survey costs. 
  • Rental management fees, if applicable. 

So, here’s how you can work out whether you’re ready for the financial commitments that come with property investment in the UK. 

Calculate Your Incomings and Outgoings 

This seems like an obvious point, but before thinking about your property investment budget, you should sit down and properly calculate all of your incomings and outgoings. 

This will help you understand how much you can afford to spend on a UK property investment venture and means you won’t end up spending above your means as a first-time investor in the UK housing market. 

Think About How Much Rental Income You’ll Need 

When it comes to building a property portfolio, ensuring that your investment properties generate enough rental income is key, particularly if you’re thinking of using a buy to let mortgage. 

You need to earn high enough income from rental yields to be able to cover mortgage repayments while still leaving you with a sizeable income of your own.  

Soon-to-be property investors can use this rental income calculator to work out how much rent they need to earn from their property investment to cover mortgage payments. 

Buy to Let Mortgages: Do You Need One? 

Throughout this UK property investment guide, we’ve talked a lot about buy to let mortgages when investing in UK property. 

But do you actually need one? 

Many people that are yet to get started with their investment will be glad to know that when investing through an investment company or a property developer, it’s often possible to purchase a property using a payment plan. 

This applies to buying off-plan properties (properties that are not yet completed) and means that the property investor can split the overall cost of the property into two or three smaller chunks of cash installments. 

Off-plan property investment is very beneficial not only for this reason but also because below-market rates are often available to off-plan investors. 

The final payment is usually made when the property has been completed. 

For those who aren’t going to be buying an off-plan property, however, and who are taking the traditional route of buying property with an estate agent, a buy to let mortgage may be needed if the full property amount isn’t available.  

If you’ll need to secure a buy to let mortgage for your property investment UK venture, keep in mind the following points: 

  • Compare mortgage deals to find the best interest rates and work out loan-to-value (LTV). 
  • Prove to the mortgage lender that you can cover repayment costs with the expected rental income from your new venture. 
  • Put down as much as possible for your buy to let mortgage deposit. Lenders usually require at least 25% for a BTL mortgage down payment, but it’s a good idea to put down more if you can.

Read our buy to let mortgage guide for more information on this side of a UK property investment venture.  

How to Invest: Step by Step 

Now that we’ve reached the end of our property investment UK guide, let’s cover some of the steps you’ll take when investing in the UK property market in 2022 and beyond. 

Research Areas and Tenants 

Research different cities and towns in the United Kingdom and pay attention to things like rental yields and capital growth to ensure you’re investing in the best area. 

Check out our guide to the best places to invest in UK property for essential information.

Select Your Property 

Find the right property for you and your investment goals, deciding between the many different investment property types in the UK.  

Torn between a residential vs a student investment? Then check out our helpful guide now. 

Make An Offer and Complete the Purchase 

Once you’ve found the best property for your investment, make an offer to secure the property. The UK property market is competitive right now, but you may still be able to haggle for a lower price. 

If all goes well and your offer is accepted, you will begin the process of completing your property investment purchase. 

If you invest through a property investment company, you’ll usually get help along the way with every step of this process. Read about our support and aftercare service at RWinvest.

Make Sure Your Investment Is Profitable 

You’re making a long-term investment, so you want to make sure your UK property investment is profitable for a long time. 

This may mean thinking ahead on ways you can increase the value and rental value of your property with renovations.  

Home Building has a guide with useful tips on some of the best ways to add value to a property. 

Create a Property Management Plan 

Have you thought about whether you plan to be a hands-on or hands-off investor?  

If you have a lot of free time to carry out landlord duties, then being a hands-on investor may be perfect for you. However, if you want to make passive income while you work or go about your day to day life, you’ll want to hire a rental management company. 

Rental managers look after your property on your behalf and deal with tasks like finding tenants, collecting rent, and responding to tenant issues and queries.  

Read about Nexus Lettings, a top rental management company chosen by many of our clients. 

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If you’re ready to start your property investment UK journey, contact us today. We have UK property investment opportunities with rental yields of up to 8% and predicted five-year capital growth of 18.8%. Get in touch to secure your perfect investment in UK property today. 

Amy Jackson
Amy Jackson
Property Editor

Amy Jackson is the property editor at RWinvest. Amy has over three years of experience working in the property content sector and has a keen eye for finding the latest news, statistics, and must-have property investment information.