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How Much Money Do You Need to Invest in Property in the UK?
For those looking for a reliable and lucrative way to build their finances, buying property is one of the most popular investment options in the UK.
More and more people, including those from overseas, are investing in the UK property market, benefitting from a significant return on investment thanks to rental returns and capital appreciation.
However, before jumping straight into a property investment venture, every investor needs to work out their budget and establish what they’re willing to spend.
If you’re new to investing, you might be left wondering whether or not your budget is high enough to make a successful investment.
So how much money do you need to invest in property in the UK? The good news is, whether you have a budget of £50k or £500k, there are sure to be plenty of great investment opportunities out there for you to consider.
In this helpful guide, we look at the different methods and areas to invest in UK property and offer information on the costs involved.
We also provide essential tips on how to invest money in the UK if you have a lower budget, and point you in the direction of some attractive and affordable investment opportunities to add to your portfolio.
If all of this sounds useful to you, be sure to keep reading to find out more!
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1. Why Invest in UK property?
Despite its popularity, property investment still generates some scepticism from those new to the industry.
When you think about the fact that investors are often spending large sums of money on their property venture, it’s only natural to have some questions about property investment and its effectiveness.
So, if you’re wondering what the benefits of investing money in property are, or are questioning why to invest in UK property when you can invest in other assets like stocks and shares, this section of our guide will give you some answers.
What Are the Benefits of Property Investment?
- You can earn income on a regular basis through rental returns.
- You can potentially sell your property for a much higher amount than your purchase price, benefitting from capital growth returns.
- There are properties available at every price point, from investing 500k to 50k.
- You have control over the type of investments you make, being able to view and select properties.
- There’s minimal risk involved with investing money in property compared to stocks and shares investments.
- You can hire a rental management company to take care of everyday tasks for a more hands-off investment.
Is Investing in Real Estate a Good Strategy?
Investing in real estate is considered a good investment strategy by many. This is because of the potential to make huge returns, with minimal risk when you invest in UK areas with a strong property market.
How Does Property Investment Compare to Stocks and Shares?
While stocks and shares is often a lucrative investment strategy, many people believe that investing money in property is the more effective option.
One of the most significant differences between stocks and shares and property is the fact that property comes with less risk than the stock market.
But how do both investment strategies compare in terms of the money needed to start investing?
It’s well known that to succeed in the stock market, you need to invest large amounts.
Since investing in property allows you to use a buy to let mortgage or stick to payment plans during the purchase, investors with lower budgets tend to favour buy to let investment over stocks and shares.
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View Properties2. How to Invest Money in the UK Property Market
Buy to Let
Buy to let is one of the most popular property investment strategies out there.
This strategy attracts so much investment interest due to the ability to generate returns through both rental income and capital growth.
A lot of investors will purchase a buy to let property, hold it for a number of years while building up their rental income, and then sell it when the time is right.
If you’re interested in investing money in property for maximum returns, then buy to let is likely to be your best option.
How Much Money Do You Need to Invest in Buy to Let?
So how much money do you need to invest in property in the UK if you opt for a buy to let route?
The budget you need for your buy to let investment depends on the type of property you’re looking to purchase, and the location of the investment.
Different properties will naturally cost less, and different areas also offer varying property prices.
One of the benefits of buy to let when it comes to financing your investment is the fact that you’re able to use a buy to let mortgage to help pay for the property.
This is ideal if you have a smaller budget available, as you can use your funds as a deposit for the property rather than having to pay for the investment in one go.
Bear in mind, however, that if you’re looking to use a buy to let mortgage as a strategy on how to invest money in the UK, you should know that you need a minimum deposit of 25% of the full property price.
Buy to Sell
Buy to sell is another common strategy adopted by property investors in the UK.
Unlike buy to let, where an investor tends to purchase a property which is already in good condition and ready for tenancy, buy to sell involves purchasing a house or flat that’s in need of renovation.
The investor will spend time and money refurbishing the property before putting it on the market, in the hope that the value will have increased and they’ll make a large return on investment due to capital growth.
If you’re wondering how to invest money in the UK to generate a more substantial lump sum of money, rather than building up rental income over many years, buy to sell could be a good strategy for you.
It’s worth keeping in mind, however, that unless you sell the property at a time when the market is performing well, your returns may be limited.
How Much Money Do You Need to Invest in Buy to Sell?
The costs involved with investing money in property with a buy to sell strategy can differ compared to buy to let costs.
Along with the cost of the property itself, you also need to think about the money that will need to be spent on refurbishing the property.
If you’ve purchased a property that’s in need of a lot of renovation, it’s likely that you will have paid a low amount.
However, the more renovation work that’s needed, the quicker costs can add up, and you could find that you’re spending more money than anticipated.
3. How Much Money Do You Need to Invest in Different UK Cities?
When investing money in property, one of the first steps you’ll take is to think about what area you plan to invest in, and research the best investment cities.
After all, you can’t find an answer to ‘how much money do you need to invest in property in the UK’ without knowing the area your property will be based in.
Not only do different parts of the UK offer different potential investment returns, but they also have varying property prices, which is crucial to consider if you want to know how to invest money in the UK while sticking to a lower budget.
Here are three examples of popular UK areas, with details on how much it costs to invest.
Liverpool is considered one of the best cities in the UK for property investment. With high levels of demand from young professionals and students, and rental yields of up to 10%, investors from around the globe are flocking to Liverpool for their next buy to let venture.
So how much money do you need to invest in Liverpool property?
According to the UK House Price Index, average property prices in Liverpool currently stand at £155,508.
When you look at specific areas in the city, however, and different property types, the average asking price hits a lower figure. In the city centre, for instance, average asking prices stand at £114,588 for one-bedroom apartments.
How Much Do I Need to Invest in Property in Liverpool?
If you want to invest in Liverpool property, you’ll most likely need between £50k to £200k if you wish to purchase the property outright, and a minimum deposit of £30,000 if you plan on using a buy to let mortgage.
There are a number of opportunities to purchase Liverpool property for £100,000 or less if you have a lower budget, with our City Point student property making a great example, offering prices from just £59,995.
Just a short distance from Liverpool, Manchester is another Northern city that’s increasingly being recognised for its investment potential.
With some of the strongest rates of capital growth in the country, and plenty of rental demand, Manchester makes a solid choice to invest in UK property.
When looking at UK House Price Index asking price data for Manchester, the city’s average stands at £205,067.
Again, when you narrow down the options and focus on city-centre apartments, prices become lower, with an average asking price of £182,787 for a one-bedroom flat in Manchester city centre.
How Much Do I Need to Invest in Property in Manchester?
If you’re interested in investing money in property in Manchester, it’s a good idea to aim to have at least £200k available if you wish to pay for the property in full, or £50k if you’re paying with a buy to let mortgage.
While many lucrative Manchester investment opportunities offer affordable prices, such as our Merchant’s Wharf apartments which start at £149,950, it’s always a good idea to have some extra cash available.
If you want to know how to invest in property UK with little money, and you’re set on a Manchester purchase, explore buy to let mortgage options or enquire about payment plans and available discounts.
For those who prefer prospects in the South of England to the North, London is often the first choice for many UK property investors.
While London is undoubtedly a fantastic city with a booming economy, figures suggest that the capital falls short for property investment prospects.
Due to high property prices, London generates some of the lowest rental yields in the country, while capital growth is also disappointing compared to other parts of the country.
So just how high are London property prices?
UK House Price Index data for London reveals that the current average asking price for the area is £781,788 – more than five times that of Liverpool’s average.
In Croydon, one of London’s more affordable boroughs, a 2-bedroom flat has an average asking price of £342,284, which is significantly lower but still considered high for this property type.
How Much Do I Need to Invest in Property in London?
It goes without saying that if you’re interested in investing money in property in London, you’ll need a much more generous budget than if you were purchasing a property in Liverpool or Manchester.
Investors who plan to buy a London property with an upfront payment should ensure they have around £300 to £900k available, depending on the area and property type.
Liverpool
Liverpool is considered one of the best cities in the UK for property investment. With high levels of demand from young professionals and students, and rental yields of up to 10%, investors from around the globe are flocking to Liverpool for their next buy to let venture.
So how much money do you need to invest in Liverpool property?
According to the UK House Price Index, average property prices in Liverpool currently stand at £155,508.
When you look at specific areas in the city, however, and different property types, the average asking price hits a lower figure. In the city centre, for instance, average asking prices stand at £114,588 for one-bedroom apartments.
How Much Do I Need to Invest in Property in Liverpool?
If you want to invest in Liverpool property, you’ll most likely need between £50k to £200k if you wish to purchase the property outright, and a minimum deposit of £30,000 if you plan on using a buy to let mortgage.
There are a number of opportunities to purchase Liverpool property for £100,000 or less if you have a lower budget, with our City Point student property making a great example, offering prices from just £59,995.
Manchester
Just a short distance from Liverpool, Manchester is another Northern city that’s increasingly being recognised for its investment potential.
With some of the strongest rates of capital growth in the country, and plenty of rental demand, Manchester makes a solid choice to invest in UK property.
When looking at UK House Price Index asking price data for Manchester, the city’s average stands at £205,067.
Again, when you narrow down the options and focus on city-centre apartments, prices become lower, with an average asking price of £182,787 for a one-bedroom flat in Manchester city centre.
How Much Do I Need to Invest in Property in Manchester?
If you’re interested in investing money in property in Manchester, it’s a good idea to aim to have at least £200k available if you wish to pay for the property in full, or £50k if you’re paying with a buy to let mortgage.
While many lucrative Manchester investment opportunities offer affordable prices, such as our Merchant’s Wharf apartments which start at £149,950, it’s always a good idea to have some extra cash available.
If you want to know how to invest in property UK with little money, and you’re set on a Manchester purchase, explore buy to let mortgage options or enquire about payment plans and available discounts.
London
For those who prefer prospects in the South of England to the North, London is often the first choice for many UK property investors.
While London is undoubtedly a fantastic city with a booming economy, figures suggest that the capital falls short for property investment prospects.
Due to high property prices, London generates some of the lowest rental yields in the country, while capital growth is also disappointing compared to other parts of the country.
So just how high are London property prices?
UK House Price Index data for London reveals that the current average asking price for the area is £781,788 – more than five times that of Liverpool’s average.
In Croydon, one of London’s more affordable boroughs, a 2-bedroom flat has an average asking price of £342,284, which is significantly lower but still considered high for this property type.
How Much Do I Need to Invest in Property in London?
It goes without saying that if you’re interested in investing money in property in London, you’ll need a much more generous budget than if you were purchasing a property in Liverpool or Manchester.
Investors who plan to buy a London property with an upfront payment should ensure they have around £300 to £900k available, depending on the area and property type.
4. How to Invest in Property in the UK With a Limited Budget
While it’s evident that to invest in property, UK investors will typically need a significant sum of cash available, it’s also important to note that there are things you can do to try and keep costs as low as possible.
If you have a lower budget available for your property venture, keep the following points in mind when searching for your perfect investment.
Invest in an Affordable City
As covered in our last section, property prices vary across different cities in the UK. If you’re looking to keep costs low, make sure you invest in a city like Liverpool where you can find investment opportunities for £100k or less, and avoid Southern cities like London.
Choose the Right Investment Type
If you’re wondering how to invest money in the UK without going over budget, consider the property investment type. Since buy to let investment typically involves the purchase of a property which isn’t in need of any renovations, this may be the most affordable strategy. In the case of investment opportunities sold by RWinvest, all of our properties are new builds and therefore ready for tenancy straight away, while also offering prices from as low as £59,995.
Look for Discounts
If you’re investing with a property company, you’re in a better position to benefit from exclusive discounts and deals. Be sure to enquire about any discounts available, and you could find that you’re able to spend a lot less than expected on a high-quality investment. Off-plan properties, for instance, usually come with below-market prices.
Research Finance Options
If you’re unable to pay the entire property price in full, spend some time finding out about possible finance options that are available to you. This could mean contacting a financial advisor to figure out whether you should use a buy to let mortgage, or requesting details of payment plans offered by the property business you’re buying from.
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Read Guide5. What Are the Extra Costs Involved With UK Property Investment?
Aside from the property price itself, how much money do you need to invest in property in the UK when it comes to things like fees and taxes?
To help you get a better idea of what you may be expected to pay to invest in UK property, here are some of the most common additional costs involved.
Solicitor Fees
When purchasing a buy to let property, you’ll need to work with a solicitor who will assist you with contracts and any other legal documents. Of course, working with a solicitor will incur fees that all investors need to be aware of.
Survey Fees
If you decide to get a survey done for your property, such as a snagging survey, you’ll need to incorporate these costs into your budget. Snagging surveys can cost from around £300 to £600 when purchasing an apartment.
Insurance
Many investors choose to take out insurance for their properties to cover any potential damage or loss of income. The most popular types of insurance you may need to consider are building and contents insurance, rental protection insurance, and liability insurance. You may also need to think about unoccupied property cover.
Stamp Duty Tax
Despite the new stamp duty holiday announced in 2020 and set to last up until March 2021, investors still need to pay a sum of money in stamp duty tax when buying a buy to let property. While the stamp duty holiday allows investors to save significant amounts, which is useful for those on a budget, you still need to find out how much you’re expected to owe in stamp duty costs before you invest.
Property Management Costs
If you decide to make a hands-off investment, you’ll need to hire a rental property management company to take care of the property for you. The amount you’ll pay will differ depending on the property management company you work with, but you can usually expect to pay around 10% to 15% of the rental income you receive.
Speak to Property Experts to Find the Best Deals
Are you ready to purchase your first UK investment property and after reading these tips on investing in property for beginners, are feeling ready to get started?
If you’re interested in investing in property in the UK, now is the perfect time to get started.
Here at RWinvest, we are an award-winning property investment company with over 17 years of experience in residential and student property.
We currently have some of the best deals we’ve ever been able to offer our clients, helping investors keep costs as low as possible while benefitting from huge returns.
Get in touch today, and we can help you invest in property in the UK by finding you your ideal buy to let opportunity.
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First time dealing with RWInvest and I have to say I'm very satisfied with the standards of excellence at all levels - goal-centric sales assistance, systems and documentation that were professionally and modern and Tayla provided timely, clear and above all relevant information that help move the process along. She reached out at key points to ensure all was progressing smoothly with conveyancing, etc., all of which helped make the process an enjoyable one. Will return for more!
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