How to Invest in UK Property for Beginners

The property industry is a major component of the UK economy. The sector has continued to grow despite the coronavirus pandemic. This growth is made possible by a growing economy and relatively low-interest rates in the country. In this article, we will look at how to invest in UK property for beginners.

Why Invest in the UK Property Market?

The real estate sector is one of the best places you can put your money. There are three primary reasons why you would want to invest in the industry. First, you may want to invest in the industry as part of a pension plan strategy. In this, you will invest in the industry to generate income in your latter years. Second, you may want to invest in the sector as a job replacement strategy. In this, you will invest in the sector if you want to move from your 9-5 job. Finally, you can invest in the sector if you want to complement your income.

Why invest in UK property? There are several reasons you may want to do this:

  • Growth in key markets – The UK is a big country. While some places like London are slowing down, other parts especially in the north west are thriving. For example, the sector is growing in places like Liverpool and Manchester.
  • Growing demand – The conventional wisdom says that demand in UK property will decline because of Brexit. However, government and private data shows that demand in some places is increasing.
  • High rental yield – As a property investor, you need to invest in places where rent is rising. Fortunately, according to the Office of National Statistics (ONS), rental yields is growing in most places in the UK.
  • Complement your income – Another popular reason to invest in UK property is to complement the income you earn.
  • Inflation hedge – Consumer prices in the UK are rising. As they do this, the price of real estate also rises. This makes real estate a good inflation hedge.

UK Property Investment Strategies

The property industry in the UK is wide. This means that there are various strategies you can use to make money in the sector. Some of the top investment strategies are:

Property Stocks Investment

London is the financial capital of the world. As a result, the London Stock Exchange (LSE) is known for its liquidity and the thousands of companies that are listed there. As a beginner investor, it means that you likely don’t have a lot of money to build or buy properties. As such, you can start your journey by investing in publicly listed real estate companies. Some of the companies you can invest in are:

  • Hammerson
  • Shaftesbury
  • Unite Group
  • Segro
  • Land Securities

The benefit of investing in publicly listed property companies in the UK is that they are usually highly liquid. This means that you can buy shares today and sell them tomorrow with a profit. Another benefit is that you don’t need a lot of money to invest in these companies. You can invest in them if you have less than £500. Also, if you invest in good companies, you can get regular cash flow through dividends.

Invest in REITs in the UK

Real Estate Investment Trusts (REITs) are types of companies that are mandated by law to return most of their income to shareholders every year. These REITs are known for giving their shareholders good cash flow. As with stocks, these REITs are highly liquid. Some of the best UK REITs to invest in in the UK are:

  • PRS REIT
  • Real Estate Investors PLC
  • British Land Company
  • New River REIT
  • ASSURA PLC

Invest in Flipping

Flipping is the simple concept of buying a house, renovating it, and then selling it at a higher price. The secret is to scour the market for cheap and strategically-located properties, buying them, renovating them, staging them, and then selling them at a higher price. As a beginner, we recommend that you work under someone who has done flipping before. Doing this will help you give you the knowledge and expertise of identifying opportunities and maximizing on them. You can watch the video below to see how it works.

Buying to Let

Another way of investing in UK properties is to buy houses with the goal of letting or leasing them. The idea is to find a less expensive house, renovating it, and then leasing it to potential tenants. The idea has been popularized with the increasing trend of vacation rentals. You can buy a house tweak it, and then list it in one of the popular platforms like Airbnb and HomeAway. If you don’t have the funds to buy a property, you can rent one and then lease it using these platforms.

Building to Sell or Let

Another UK property investment strategy is that of building with the goal of selling or letting. The strategy is where you find a piece of land, get the required documentations, and then build a property. The challenge of this strategy is that it is often very expensive and unaffordable to many people. For example, in 2015, the average price of a hectare of land was £93 million in Westminster. This means that it is impossible for most people to afford land for building property there.

UK Property Crowdfunding

Another approach that is growing is property crowdfunding. Crowdfunding platforms enable people from around the country to pool their resources together and invest in quality properties. You can invest as little as £500 in some of these platforms. You can read our Housers, and Assetz Capital review to learn more about how you can participate in p2p investing in the UK.

UK Investment Property Tips

While investing in UK properties is a rewarding process, it has its many challenges. Therefore, you should always follow the following tips if you want to invest in the sector:

  • Research – Always do your research before you invest in any type of property. You can research in the internet or by talking to people who have been in the industry for long.
  • Stock analysis – If you are investing in property stocks and REITs, we recommend that you do a lot of analysis before you invest.
  • Teamwork – If you don’t have enough money, you can form a team and raise money together. Also, you can raise funds from your family and friends.
  • Know the risks – Real estate is a rewarding industry. Still, it has its own risks that you need to know before you invest.
  • Understand your tenant profiles – There are various profiles you need to know. These are retirement homes, students, or family homes.
  • UK property taxes – You should find out the taxes you are required to pay and how to pay them.

UK Property Investment with No Money

A common question we often receive is; how do I invest in UK property with no money? The answer is that it is often difficult to invest in the sector with no money. Still, there are various strategies you can use to invest in the sector if you don’t have enough money. First, you can invest in property stocks and REITs. You can start this by investing as little as £500. Second, you can invest in some of these peer to peer investing platforms in the UK. Third, you can invest join hands with your friends and family members and pool resources together.

How to Get UK Property Information

Having information is important if you are investing in the UK property sector. As a potential investor, there are various places where you can get quality information about the sector. Some of the best platforms you can check out are:

Summary

The UK property sector is one of the most vibrant in Europe. The challenge for most people is how to get started. In this report, we have shown you the benefits of investing in the sector, the various options of investing in UK property, and the key tips you need to follow.

Crispus is a finance professional with more than a decade experience in the industry. Over the years, Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, and Seeking Alpha. He also runs a Forex education and managed account company called WestEndFx.