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How to invest in Property and Real Estate in the UK

Investing in property is a popular choice with many British investors. However, if you are new to investing and still need to learn how to invest in property here in the UK, you’ve come to the right place. This Moneyfarm blog will not only teach you the basics of how to invest in UK real estate but also discusses the different types of property investment vehicles currently on the market.

🏠 Is property in the UK a good investment?It depends on your goals.
🤯 What is the biggest advantage of investing in UK property?Capital growth
💰 Can I invest in property in the UK as a foreigner?Absolutely, it is not illegal
🤔️ How can I earn a monthly income from property investing in the UK?By renting out your property to earn a monthly rental income

Property investment explained

Investing in property can be defined as purchasing real estate with the aim of receiving a return on your investment either through letting the property in return for rental income, selling the property at a later stage, or a combination of both.

How to start investing in property UK

There are several ways how to get into property investment in the UK. You can invest as an individual, as part of a group of investors, or as a business or corporation. Also, depending on your investor profile, you can decide to invest in property either on a short- or long-term basis.

Like all investments, there is a risk. Prices can also fall and rise, and you could find yourself in a negative equity situation. Also, when you’re considering how to invest in property in the UK, you need to appreciate that compared to investing in the stock market, for example, investing in real estate has a significantly higher start-up cost.

There are different alternative property investment opportunities, and you can purchase different types of property or real estate. You could, for example, opt to buy a house, home, or commercial property, or you might decide to put your money into a property investment fund. You must evaluate all available options first to establish which best suits your aims and circumstances.

Different ways of how to invest in a UK property

You can adopt various property investment strategies, including what to do if you are wondering how to invest in property with no money here in the UK. But first, let’s look at the buy-to-let option.

Buy to let investing

Buy-to-let investments have been a popular investment option in recent years. It’s great from the point of view that the rent you charge will generate a passive income.

However, becoming a buy-to-let property landlord is not a passive occupation. As well as keeping the rental property in a decent state of repair, you also have to ensure it is safe in terms of fire hazards, carbon monoxide emissions, etc. Of course, you can hire someone to manage the running side of the property, but that costs money that can eat into any potential profits.

Most buy-to-let investors need to take out a buy-to-let mortgage. Although there are not as many products available as there were before the financial turmoil began, buy-to-let mortgages are still available under certain conditions.

  • You may have to already own your own home.
  • You will need a good credit history.
  • You might be asked to prove your earnings.
  • You’ll likely have to be under 75 years of age – variable from lender to lender.
  • You will probably need to be able to deposit 25% of the purchase price.
  • If you are relying on rental yields to repay the mortgage, you’ll probably have to show they are 125% of your mortgage repayments.

Another problem you should consider if you are anticipating how to buy a rental property in the UK is the recent tax changes. As reported on the FTadviser, in the November 2022 budget, the Chancellor advised that the capital gains tax threshold will be reduced from £12,300 to £6,0000 in April 2023 and will drop further, to £3,000, in April 2024. Also, the reduction in stamp duty announced in the previous mini-budget won’t stay in place beyond May 2025.

There is also legislation in the wings that will make it more difficult for a landlord to evict problem tenants without just cause.

If you were thinking about how to invest in the UK real estate buy-to-let arena, you might need to re-evaluate your position.

Investing in the property development market

Investing money in property development can be a precarious business. For all of the success stories you hear in TV programs like “Homes under the hammer,” there are just as many, if not more, disastrous stories. So, if you are considering how to invest in real estate in the UK from a property development angle, here are a few things you need to be aware of.

  • Timeline: How long it takes to buy a property
  • Choose the location and condition of the property with great care.
  • Bear in mind it takes weeks and even months, sometimes years, to refurbish the property if there are planning permission delays.
  • It is essential to stay within budget, or you will erode your profit.
  • Renting or selling the property may take longer than anticipated, and if you have mortgage repayment to keep up with, that could present a problem.
  • If property prices plummet while you refurbish the property, you could be in serious trouble.

When considering how to invest in real estate in the UK, it is also worth checking out how to invest money in other ways. While there will always be a risk present with any investing, you might find alternative investments with which you feel more comfortable.

Investing in the new build property market

Another consideration is how to invest in the real estate UK new build market. People often buy property off-plan. The hope is that by the time the property is completed and ready for sale, you will be able to sell for more than the amount you paid. However, there is also another risk. The builder could go bust before the project is complete.

Investing in REITs – How to invest in real estate UK with little money

If you are looking for how to invest in property here in the UK with little cash, it is through REITs. The initials “REITs” stand for “Real Estate Investment Trusts.” There are several types of REITs. The two most common are equity REITs and mortgage REITs. Although not as popular, there are several others, including:

  • Healthcare REITs
  • Industrial REITs
  • Infrastructure REITs
  • Office REITs
  • Residential REITs
  • Retail REITs

REITs are issued by companies whose business is to invest in properties. These companies get the majority of their money from rental income. You buy shares in these companies and stand to make money when the share price goes up. But, of course, the shares can also depreciate.

The other good thing about owning these shares is that they pay dividends. REIT companies are legally bound to pay out 90% of their income to their shareholders. Not only that, but they do not have to pay either corporation or capital gains tax, which potentially means bigger payouts.

Lastly, if you are worried about investing in real estate with little money, some UK REITs ETF (Exchange Traded Fund) platforms allow you to start your investment with as little as £10,000 or even less.

Some REIT ETFs to check out

If you like the sound of an ETF, here are some UK REIT ETF funds on the Moneyfarm website and others listed on

  • iShares Core US REIT ETF (USRT)
  • iShares Global REIT ETF (REET)
  • iShares European Property Yield UCITS ETF (IPRP)
  • iShares MSCI Target UK Real Estate ETF (UKRE)
  • iShares UK Property UCITS ETF (IUKP)
  • iShares US Real Estate REIT ETF (IYR)
  • Vanguard Real Estate ETF (VNQ)
  • Xtrackers FTSE EPRA/NAREIT – Europe from UK Real Estate UCITS ETF (XREA)

The iShares MSCI Target UK Real Estate ETF (UKRE) is particularly interesting if you are looking for alternative investment vehicles as it can be included in stocks and shares ISAs and SIPPs.


How much money do I need to invest in property in the UK?

The amount you will need to invest in a property in the UK will vary on several factors, such as the type of property investment, type of buyer (first-time), the cost, and the deposit requirement. Property investment types include buy-to-sell, student accommodation, residential buy-to-let property, holiday home investments, etc.

Also, there are upfront and ongoing costs involved. Upfront costs include stamp duty land tax, legal fees, cash buffer and cost of the property, while ongoing fees include mortgage repayments, maintenance costs and service charges.

For example, a buy-to-let can require at least 25% of the property price. This means that a £100,000 property will require at least £31,200 upfront (£25,000 for a mortgage deposit, £3,000 in stamp duty, at least £1,000 in legal fees, £200 in land registry fee, and £2,000 cash buffer). With REITs, you can invest as little as £500, while some REITS ISA require as little as £100 to open an account.

Is property the safest investment in the UK?

Property investing is not the safest investment in the UK. However, it is a safe way to invest, and real estate is considered the best long term asset for most people because it tends to perform better than stocks during uncertain economic times. The advantages of property investments in the UK include long-term capital growth, rental income, and high rental demand.

How can I invest in property in the UK?

There are several ways to invest in property in the UK. You can invest in direct property investments such as buy-to-let, property development, and buy-to-sell later. Also, you can have indirect property investments such as real estate investment trusts (REITs), property (REITs) ISAs, peer-to-peer lending, property investment trusts, property bonds and loan notes, and property unit trusts.

Please note that property investing is not for everyone. As an investor, you should consider the pros and cons of property investments and how your investment strategy with property investing in the UK fits your financial goals.

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*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.