Top 10 Property Investment Strategies You Should Consider in the UK (With Pros and Cons for 2023)

What Are the Best Property Investment Strategies UK? 

When it comes to investing in the UK property market, property investors have three main choices. 

1. They can invest in a rental property and rent to tenants for a profit. 
2. Property investors can buy an investment property and sell for a profit. 
3. A property investor can own a share of a company that owns property on their behalf. 

However, it can get a bit more complicated than that, with different property strategies falling into each of these categories, all coming with their own pros and cons and varying suitability for different people. 

This is exactly what we’re going to discuss in this guide as we break down the pros and cons of the best property investment strategies UK real estate has to offer. 

1. Single Let Residential Property 

As far as rental properties go, single let is likely the most traditional and easy-to-understand example of property strategies UK. 

A single let residential property is real estate that is rented to a single ‘tenant’, which can be an individual person or an entire family. 

Single let residential property has been long considered the best property investment strategy in the UK for two main reasons. 

1. Rental Income – Those property investing can earn monthly rent each month, which recently reached an all-time high of £1,199 PCM in the residential UK market. 
2. Long Term Growth – Despite the economic pressures seen at the end of 2022, UK property prices have increased by 5.52% in the last 12 months according to the Land Registry, which is set to increase by a further 6.2% by 2027 according to predictions from Savills. 

For these reasons, you can expect a lucrative strategy when buying property. Be sure to check out our full guide to single let buy to let property to learn more information about this top house investment strategy. 

Top Tip: To make the most out of your buy to let property investment and become a successful investor, be sure to focus on areas with a high young professional population as they are the age group most likely to rent for the foreseeable future. This is because younger people are more drawn to renting, whether through choice or lack of financial ability to purchase a home of their own.  

Pros 

• With residential property in huge demand, looking at tenanted properties for sale in the UK can offer a less risky buy to let strategy. 
• Easy to get started without expert knowledge. 
• Allows investors to make consistent rental income, with high rental yields available in certain UK areas.  
• Generates two types of returns through a combination of rental returns and capital growth returns when the investor sells the property.  
• Less time-consuming than some other rental property investment strategies, with the option to hire a rental management company for a hands-off investment.  

Cons 

• Residential buy to let is considered a long term investment, so not the best choice for those looking to quickly make significant short-term returns.  
• Potential void periods if investing in an area without high rental demand.  

2.Purpose-Built Student Accommodation 

A top contender for the best property investment strategy, purpose-built student accommodation has shot up in popularity since 2019. 

Purpose-built student accommodation is another type of buy to let property investing strategy. The only real difference is that with PBSA you will rent exclusively to student tenants.  

A report from Savills in early 2021 found that over £5.77 billion was spent on student accommodation in 2020 – the highest-ever amount in one year.  

This goes alongside a thriving UK student market, which  has seen the number of 18-year-olds applying to an undergraduate course in 2023 ranking as the second highest on record – with 314,660 applying, down slightly from 320,420 in 2022 but significantly higher than the pre-pandemic figure of 275,300.

With many students seeking stylish and well-located accommodation to live in during their time at university, there’s likely never been a better time to invest in a student buy to let strategy. 

You can learn more about student property investment in our detailed ultimate guide for 2023. 

Top tip: Focus on student cities with a high student population and graduate retention rate to ensure tenant demand. Examples of top student cities include Liverpool, Manchester, Birmingham, Leeds, London and Newcastle. 

Pros 

• A good option for first-time investors due to low property prices and high yields.  
• Offers a combination of rental income and capital appreciation for maximum returns.  
• High and consistent rental demand due to booming UK student property market.  
• Hands-off investment options make student buy to let easy and hassle-free.  

Cons 

• May not see as high capital growth returns as you do with residential buy to let.  
• Limited to one tenant group.  

3. HMOs 

A top choice for any property portfolio, an HMO is another excellent example of top property strategies UK. 

An HMO, otherwise known as a house of multiple occupancy is real estate that is rented out to multiple tenants who each pay rent and have shared facilities like a bathroom and kitchen. 

Certain types of student accommodation fall under the category of an HMO, with shared student houses being an alternative to purpose-built student accommodation. 

HMOs have fallen in popularity amongst students in recent years, who are opting to live in higher-quality accommodation that can’t be provided by HMOs that tend to be older buildings. 

So, while a property investor can earn some huge returns on the HMO property market, it’s likely no longer the best property investment strategy to target students.  

You can learn more about HMOs and other student investments by reading our guide to how to invest in student property. 

Pros 

• Offers the chance to generate income from multiple different tenants at once, resulting in high yields.  
• If one tenant stops paying their rent, you’ll still have rental income from the other tenants to fall back on.  

Cons 

• This type of investment strategy comes with more complex tax rules, planning requirements, and legislation requirements. 
• Difficult to obtain a buy to let mortgage for HMO properties.  
• More management is involved, which makes this property investment strategy more time-consuming.  
• As the demand for more luxury private accommodation increases, people may be less inclined to rent shared properties.  

4. Buy to Sell / Property Development 

The first non buy to let strategy on this list, buy to sell is one of the most popular property investment strategies in the UK. 

Buy to sell, otherwise known as house flipping, is when an investor purchases a property that needs refurbishment and sells it on for a profit. 

Buy to sell is usually grouped up with property development, as investors will typically need to complete renovation work to boost the value and appeal to potential buyers. 

Unlike a buy to let strategy, this kind of property investment strategy doesn’t involve renting the property out to tenants, and doesn’t rely on a regular income. 

Instead, it relies on a strong property market and positive market conditions with high demand. This seems to be the case in 2023, with a report from Rightmove finding buyer demand to be 6% higher than that in 2019. 

Of course, you can also completely become a property developer and build one property from the ground up.  

If this is something of interest, check out our full guide to how to become a property developer to learn more about securing planning permission and making a good investment. 

Pros 

• Potential to make large rental returns if you can add value to the property with renovations and capital growth.  
• Don’t need to deal with tenants and rental property management duties.  

Cons 

• Buy to sell is a very hands-on method of property investing, requiring time and expertise to succeed.  
• Could lose money if not done right.  
• It can be costly depending on the level of renovation needed to increase property value. 

5. Commercial Buy to Let 

When it comes to property strategies UK and property investment ideas, an effective choice in 2022 is commercial buy to let.

Here, an investor will purchase a commercial building, which can include an office block or retail space, and rent it out exclusively to companies and business owners.  

While investors may struggle to find sellers for commercial property, commercial buildings tend to have longer lease periods than traditional buy to let, making it easier to secure a long term tenant and get a consistent cash flow. 

However, commercial property can be hit heavily in times of economic struggle like the financial crisis, something that a potential property investor should keep in mind before they decide to choose this alternative property investment to traditional buy to let. 

Pros 

• Lease lengths for commercial buy to let tend to be longer than residential buy to let property investment strategies.  
• There are certain tax advantages involved.  

Cons  

• Finding the right tenant can take a long time, meaning more extended void periods in between tenants.  
• Buy to let mortgages can be more costly compared to residential buy to let. 
• In times of recession or economic uncertainty, the commercial property market tends to be hit hard.  

6. Holiday Lets  

Increasingly popular amongst those searching for property investment ideas, holiday lets are another type of buy to let property investment strategy that many UK investors opt for.   

Like residential or student buy to let, investing in a holiday let involves purchasing a property – whether a house or apartment – and then renting it out for income.   

These types of properties are let out on a short-term basis as they’re rented by those seeking somewhere to stay while on holiday.   For those unsure of the difference between long-term vs short-term rent, holiday lets are a perfect example of short-term rent investments.

Also known as serviced accommodations, these properties will typically be listed on websites like Airbnb and other platforms to showcase holiday rentals.  

Pros 

• Holiday lets allow investors to make attractive rental income depending on the quality and popularity of the property.  
• Better tax benefits compared to traditional buy to let.  

Cons  

• Finding a buy to let mortgage can be tricky.  
• A lot of work is involved in maintaining and marketing the property.  
• The property could go empty for long periods, especially if it’s based in an area that sees more seasonal demand, such as a seaside town.  

7. Hotel Lets 

If you’re looking for alternative property investments UK, hotel lets are an incredibly niche investment strategy you likely may not have thought of when considering a rental property investment strategy. 

Hotel room investments are when an investor purchases a room within a hotel and generates income from guest stays.   

Instead of having a full-time tenant like other buy to let strategies, an investor will gain income from those travelling for business or a holiday.   

Hotel lets are ideal for UK investors who want a completely hands-off investment when investing in property. 

Pros 

• It can be possible to make large returns if the hotel is popular and generates a lot of demand.  
• A hands-off strategy with no need to deal with tenants. 

Cons 

• Because a hotel is essentially a business, you’re at risk of the hotel failing, damaging your investment.  
• If the hotel doesn’t see a lot of demand, you will lose income due to void periods. 
• The hotel’s reputation is out of your control, and bad customer reviews could impact demand.  

8. Property Crowdfunding

Getting into more niche alternative property investments, property crowdfunding is an interesting strategy for those looking to indirectly own property.  

Property crowdfunding is when a group of investors pool together their funds to buy real estate, with each investor owning a share of the asset. 

While you can do this with friends, property crowdfunding usually refers to an online platform that secures money from multiple investors and then manages the property on their behalf. 

After the online platform generates enough money, it will then form a limited company, with investors given a share in the company representative of the cash they invested. 

As a way to buy property, crowdfunding can be an excellent tool with investors only needing to spend around £1,000 rather than the £30k you would usually need to buy affordable housing in the UK. 

Of course, the trade-off is that you will earn considerably less income than owning a single property. 

Pros 

• A more affordable way to own money generating property. 
• No need to worry about landlord duties like finding tenants and managing the property. 
• You can easily diversify your portfolio and ‘buy’ multiple properties. 

Cons 

• You will be earning far less income than if you owned a single property, with profits shared amongst investors. 
• You have no control of how the property is managed and if it is kept or sold. 
• Will need to conduct your own due diligence as property crowdfunding can be risky with no track record to know what you’re getting yourself into. 

9. Rent to Rent 

For investment ideas UK, rent to rent can be an effective and little-known strategy that can get on you on the property ladder without paying a huge price tag. 

Rent to rent is when an investor rents a property from a landlord and then rents it out to a tenant.   

The investor who rents out the property from the landlord has the responsibility of finding tenants, maintaining the property, and paying property bills, while the regular rental costs that the investor is required to pay will usually be discounted to allow them to make a profit.  

Pros 

• Quick to get started with and begin generating income. 
• Doesn’t require the purchase of a property. 

Cons  

• The number of landlords who will agree to this arrangement is limited. 
• Limited returns compared to other property investment strategies. 
• No ability to make returns through capital growth. 

10. Real Estate Investment Trusts  

The final house investment strategy in this property strategy guide is real estate investment trusts, which are quickly becoming incredibly popular amongst those looking for investment ideas UK. 

Real estate investment trusts, otherwise known as REITs, are companies that own, manage, and finance properties. 

Similar to mutual funds, REITs are publicly traded like stocks, allowing investors to buy shares in the company.  

Due to this, REITs are an incredibly liquid asset and are a fantastic tool for diversifying a property portfolio. 

Pros 

• A liquid asset so investors can quickly sell shares to earn money. 
• Allows investors to easily diversify their property portfolio. 
• Can earn regular income through dividends.  

Cons 

• Low capital growth potential. 
• Fewer returns than traditional real estate investments. 

What Is the Best Way to Invest in Property? 

To work out which of these investment strategies is right for you, you need to think about what you want to get out of your property investment project.  

Ask yourself the following questions when contemplating a property investment strategy: 

• Are you focused on making regular returns from rental income, a large sum of money from a property sale, or both? 
• How much risk are you prepared to accept with your investment?  
• Is the property investment strategy you’re interested in capable of generating a high influx of demand?  
• Do you want a long-term property investment or do you want quicker short term returns? 

If you want the best type of property investment, a buy to let strategy will likely be your best choice. 

This is because buy to let strategies, most notably residential and student buy to let, can offer two types of return on investment – rental returns and capital growth.   

However, if you’re more focused on making a lump sum of money rather than a long-term cash flow, then property investment strategies like buy to sell may be better suited to your needs.  

To fully understand which property investment strategy is right for you, it may be a good idea to speak to a financial advisor who can provide clarity on what each investment strategy involves.