How to Invest in Property?

So you’ve decided to invest in property, one of the most popular assets across the world for the flexibility and stability it offers as an investment vehicle.

In the following blog we’ll outline the steps to investing in property, giving you a clearer picture of the strategies, assets and risks that you’ll find within property investment.

Getting started and your deposit

As with any investment, the most important first steps revolve around planning. Essentially, you’ll want to ensure that you have clear goals in mind, a strategy that you’re looking to adopt and, in the majority of cases, money that you can put towards a deposit.

If we break these down into stages, figuring out your goals should be your first step. This is vital as these goals will influence all of your decisions down the line.

For example, if you’re looking to retire early, you’ll be looking to achieve financial freedom as soon as possible. The passive income that property can deliver is excellent for supporting this goal but realistically, you’ll need a long-term investment (or even portfolio) that can generate enough returns by the time you retire.

While setting this goal may seem daunting, it’s actually very positive. You now know that you’re looking for a long-term investment that can be maintained and even scaled in the future. You also understand that you’re focusing on long-term rental income over short-term capital gains and that you can afford to invest in a location that has plenty of future potential, helping you take advantage of growth.

With a clear goal in mind, whatever that may be, we’re off to a good start, setting ourselves up with a solid plan ready to be expanded. It’s also important to perform plenty of research, not just into the property you want to invest in but the surrounding location.

Once you know where you’re looking to invest, you’ll need to put together your deposit. While some investors may consider buying outright, the majority of investors will take out a Buy-to-Let mortgage and utilise a cash deposit.

Buy-to-Let (BTL) mortgages are similar to traditional mortgages but typically have higher interest rates and require higher minimum deposits – usually between 20% and 40% of the property value depending on the lender. Investors will also usually be required to pay a reservation fee at this point.

Fees to Expect When Investing in Property

As you’d expect, there are several fees that are associated with a property investment – while not all of these will be applicable to you, it’s good to understand what you could experience during your investment.

Research Fees – Research is vital at every step of the investment journey and understanding the intricacies of the UK market can mean the difference between success and failure. There’s no set way to research but you may find some that companies charge for using their research. Alternatively you can visit our Investor Resources hub where we cover a wide range of markets and concepts around property investment.

Building Inspection and Valuation Fees – If you’ve found the ideal property for you, you may want to have the building inspected as this can reveal any issues that could cause trouble down the line. Additionally, many lenders will insist on having the property valued so they can ensure that the building is worth enough to repay the loan should you not be able to. Depending on the lender you may either pay this up front or see the cost added to the mortgage.

Stamp Duty Land TaxOne of the compulsory payments on this list, Stamp Duty (or SDLT) is payable on properties over a certain price point. It rises in bands depending on the price of the property and can be subject to increases if you’re an overseas buyer. You can find out more about SDLT here.

Admin FeesDuring most property investments, especially an Off-Plan Property Investment, you’ll need legal assistance. Solicitor fees or conveyancer fees will come into play at this point but are vital in ensuring that both you and the developer are protected.

Property Management Fees – Applicable after you’ve completed on the property, property management fees will occur if you’re looking for help with tenant screening, collecting rent and other day-to-day running of the property.

Risks of Investing in Property

Any investment will carry inherent risks – from stocks and shares to classic cars or real estate. What separates property in the minds of many investors is a proven history of stability. Property investment has outperformed stocks at a rate of 2:1 over the last 20 years and has always shown itself to be much more resilient than other investment assets.

Typically, property prices and rental yields will go up and down over time, meaning property investment is much more suited to longer holding patterns – if you’re willing to wait, you can benefit from compounding and natural market growth, despite any dips you experience.

It’s also important not to be over-invested in a single asset. Diversification can guard against this and property’s natural adaptability means you can have different types of property in different locations to spread risk.

Investment Types for Beginners

There are a huge number of different property types and associated strategies that you can invest in but below we’ve laid out the most popular:

Rent a Room

If you let out furnished accommodation within your home, you’re known as a Resident Landlord. This is a common way of raising extra money on the side without fully-investing in a new property and offers the chance to earn £7,500 per year tax-free under the Rent a Room Scheme.

As a resident landlord, you’re responsible for keeping the property in good repair and can give less notice for ending a letting than if you rented the property as a whole. Typically, tenants and lodgers under a resident landlord also don’t have the right to challenge the agreed rent.

As you’d imagine, returns through this method are much less as you’re typically renting out a single room rather than a whole property.


The most popular form of Buy-to-Let, a Single-Let investment revolves around three key steps: find the perfect location, find the perfect property, find the perfect tenant.

While this is a huge oversimplification of a single-let investment, it does demonstrate that fundamentally you’re looking to offer a key service in a popular area, which can quickly translate into consistent rental income.

There’s a lot to be said for the classics and it’s little surprise that many landlords have generated incredible wealth simply by having a portfolio of Buy-to-Let properties delivering passive income over the long-term.

House in Multiple Occupancy (HMO)

HMO’s are defined as a property where each room is rented out on an individual basis. HMO’s are popular as they allow for higher rental income – the bigger the property, the more rooms can be converted into bedrooms.

As you’d imagine, this comes with some caveats. The possibility of property management is much higher with a HMO as more tenants cause more wear and tear. Similarly, you’re having to find multiple tenants that are happy to live together which can cause issues.

That said, HMO’s can deliver incredibly high rental yields, especially in university cities and towns where students are looking to live together and need multiple rooms.

This is just a taste of how you can get started in property investment – a subject that is far-reaching and potentially overwhelming for new investors. If you’re looking to take your investments to the next level or need help with further research, visit our landlord hub to find out more.

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