How to Get Into Property Investment: Your 9-Step Guide

For many, property investment is more than just owning assets—it’s a practical and rewarding way to build wealth and achieve long-term financial freedom.

For many years, the UK property market has offered a unique combination of stability, growth potential, and multiple income avenues that make it an attractive option for anyone starting out or building on years of experience. From investing in HMOs or buy-to-lets, unlike abstract investment platforms, property provides a concrete asset that can be managed, improved, and developed to create steady revenue streams.

Whether you’re looking to supplement your current income, build up a pension pot, or put a reliable long-term investment strategy in place, property offers unparalleled opportunities for financial growth. The following guide explores why the UK property market continues to be a compelling choice for savvy investors and several steps to consider.

WHY INVEST IN UK PROPERTY?

In spite of some uncertainty with an incoming Labour Government, the mantra of being as ‘safe as houses’ looks set to ring true into the new year. For anyone hoping to start a portfolio, the rental market in the UK remains buoyant. Historically, high-value residential properties in many parts of the UK attract a mix of domestic and international buyers. Different types of properties are not just homes but viewed as investment assets, influenced by factors like economic stability, Brexit, currency fluctuations, and tax regimes

The recent Autumn Labour Budget increased national insurance contributions and raised stamp duty to make investors stop and think, although the upside of investing doesn’t appear to have dented the positive gains that come from property investing overall. Investing in the UK remains attractive since the recent Budget as the market sector has always seemed to be a resilient industry. Despite the introduction of higher stamp duty rates on second homes, changes in capital gains tax, and a slight cooling off in overinflated locations, the UK has a shortage of property meaning buying potential investment remains a profitable proposition.

1. GETTING INTO PROPERTY INVESTMENT

Starting a property investment business can be an exciting and potentially lucrative venture but before you get started it’s important to do some research and be aware of what investing in property involves. While you might want to research the options you have, think about whether you’re going to buy in an area you know, invest in a property abroad, inject money into an Airbnb, or formal property open-ended investment companies (OEICs). 

For some people, flipping a property that you’ve bought from new to make a quick profit might be a good strategy, perhaps you’ve discussed getting together with friends to invest together in a property syndicate, or start your own limited property investment company. Whatever investment strategy you’re considering, understanding the UK’s fluctuating housing market, the personal financial considerations, the legal requirements, and any investment strategies are all key to your success.

2. STARTING A PROPERTY INVESTMENT COMPANY

With several ways to get into property investing, it’s important to choose the strategy that is right for you, your personal circumstances, finances, and long-term plans. There are five strategies to consider, including:

3. STARTING A BUY-TO-LET BUSINESS

Selecting the right investment strategy requires careful research and strategic planning. Recent research suggests that in the UK, the buy-to-let investment option is the most popular with 24% of investors selecting that strategy when starting on their property investment journey. This is followed by investors who choose student accommodations (18%) and holiday lets (16%). 

When considering a buy-to-let business, calculate any returns beyond simple rental income and also factor in mortgage costs, insurance premiums, maintenance expenses, and potential income losses during empty periods. Certain locations might yield different ROIs and the expected percentage of returns does fluctuate each year. Analyse local market trends and property values so look at current high-yield rental locations in the UK with strong rental demands and those properties that are close to stations, amenities, schools, hospitals, and transport links. 

4. FUNDING A PROPERTY INVESTMENT COMPANY 

When it comes to funding, there are several approaches if you’re starting a property business with limited funds. The diverse range of financing options include traditional buy-to-let mortgages and commercial mortgages if you’re looking to expand your property company. You can also explore joint venture partnerships, where you combine resources with other investors. 

While there’s no universal minimum investment amount, you’ll typically need a substantial financial foundation to get into property investment and you’ll need to:

Most buy-to-let mortgages require a deposit ranging from 25-40% of the property’s total value, which represents a significant upfront investment. You’ll also need to budget for additional expenses, such as stamp duty, legal fees, and maintenance costs. If you’re scaling up, consider the cost of seeking digital marketing advice. Paying for this kind of online expertise becomes significant the more established your property business becomes in a current location, and as you invest in different parts of the UK and want to extend your reach.

Bridging loans can offer short-term financing solutions for investors looking to move quickly on property opportunities. Some investors might also explore private investor funding or even leverage their Self-Invested Personal Pension (SIPP) to invest directly in property, providing a potentially tax-efficient investment strategy.

Furthermore, it’s important to think about the complex tax implications of investing in UK property. All rental income must be declared for tax purposes, and potential capital gains tax should be considered if you’re planning to sell. Choosing a tax-efficient investment structure can help minimise your tax liability, and maintaining meticulous financial records will assist with tax reporting while providing valuable insights into the performance of your property portfolio after expenses.

5. PROTECTING A PROPERTY BUSINESS

Successful property investment requires a comprehensive approach to risk management and new investors, in particular, should be aware of a fluctuating market and the local drivers or changes in your locality. 

Meanwhile, as well as protecting your property assets, ensure that you have robust insurance in place that provides comprehensive coverage for any potential damages and legal issues. You’ll also want to have a dedicated emergency maintenance or ‘sinking fund’ so you can address any issues quickly when they arise. Financial buffers can also help to cover potential periods when the property might be vacant between tenants. 

It’s also important to remember that HMO investments or buy-to-lets might be a better investment for you when you compare the returns from stocks or shares, but make sure this remains the case going forward. Diversifying your portfolio across different locations and property types can help mitigate risks associated with local market fluctuations. Staying informed about local and national property market trends will enable you to make more strategic investment decisions.

6. BUILDING UP A PROPERTY PORTFOLIO

Although you may want to grow your property company once it’s up and running, start small and scale up gradually. Successful property investment is typically a gradual process. Avoid overextending yourself, by:

Gradually build your property investment company and stay connected and well-informed with mortgage advisers, lawyers, and like-minded investors in your area. Most property investors recommend starting with a single property to gain practical experience and understand what the management process entails, as you generate profits, reinvest any profits into expanding your business. 

This might mean exploring different property types available or new locations where the yield might be better when you’re able to diversify your investment strategy. This can include residential properties, student accommodations, commercial spaces, or emerging property markets that offer potentially higher returns.

7. KEEPING AHEAD IN AN EVOLVING MARKET

Staying competitive in the property investment market requires a commitment to ongoing education and professional development. Attending property investment seminars and workshops can provide valuable insights and networking opportunities. Joining property investment networks allows you to learn from experienced investors and stay informed about market trends. Reading industry publications and following successful property investors can help you develop more sophisticated investment strategies. Consider investing in specialised property investment courses that can provide structured learning and practical skills.

8. FUTURE-PROOFING PROPERTY INVESTMENTS

A successful property investment strategy requires continuous review and adaptability. Regularly assess your portfolio to ensure it continues to meet your financial goals. Understanding equity release options can provide flexibility in managing your investments as your personal circumstances change. Consider potential downsizing strategies that can help generate additional capital in retirement. Maintain a flexible approach to your investment strategy, being prepared to adjust your tactics in response to changing market conditions.

Flexibility and informed decision-making are key to navigating the uncertainties of the property market and ensuring your investments remain resilient and profitable over time.

9. SETTING REALISTIC EXPECTATIONS

While property can be a lucrative investment, it’s important to remain realistic. Property prices don’t always rise consistently, and the market is influenced by a variety of economic factors. Property investment demands significant time and financial commitment, with success often requiring patience. Diversification remains a vital strategy for managing risk and securing your financial future.

In addition to your own research in the area you’re investing in, a specialist can help you plan and finance your property business. Having a clear, realistic, and flexible investment plan in place is key before you begin building a strategic property investment business. If you’re considering getting into property investment or would like some advice on managing an existing portfolio, book a property strategy call today.

The information provided on this blog is for general informational purposes only and should not be considered legal, tax, financial or investment advice. Please note that laws, regulations, and market conditions change. Verifying the information’s accuracy and relevance before making any decisions is crucial.