Investing In the UK Housing Market: An Ultimate Guide

Investing In the UK Housing Market: An Ultimate Guide

This guide will discuss the process of investing in the UK housing market. It will show you why investing in property is an excellent avenue to explore.

Topics discussed include:

So, if you are looking for a stable avenue to invest your money, the property market could be the way to go. This guide is here to give you all the essential information you need to get started.

Let's get started.

Why Should You Consider Investing in The Housing Market?

Housing Market

Investing in property can have several great benefits. Let’s take a look at some of them below in more detail.

You Can Take Charge of Your Investment: Investing your money can be a daunting process, particularly if you feel like you have no control over where your money is going. This is one of the many great benefits of investing in property.

You have total control. For example, the properties you invest in, the tenant you rent to, the price of rent and how the property is managed will all come down to you.

Although it is a huge responsibility, you can decide how involved you want to be in the process. Some property investors prefer to put their trust in investment companies.

These companies will manage your investment, helping you source the right properties. This will typically depend on how busy your lifestyle is. If you have a full-time job, you may not have the time to be as hands-on as you would like.

Instant Gain on Investments: One reason why investors love the property market is because you can instantly add equity to your investment by buying property below the market value.

Property investments are also likely to increase in value over time. You would be surprised at how much simple renovations can add value to a property. If you enjoy DIY projects, this will undoubtedly work in your favour.

The UK Population Is Rising: Research has shown that the UK population will reach over 68 million by the end of 2022. The rise is excellent news for property investors. After all, this will affect the UK rental market by increasing the demand for rental properties. There has never been a better time to invest in the UK market.
Year Population (Million) Growth Rate
2011 63.26 n/a
2012 63.70 0.70%
2013 64.13 0.68%
2014 64.61 0.75%
2015 65.13 0.80%
2016 65.64 0.78%
2017 66.05 0.62%
2018 66.53 0.73%
2019 67.01 0.72%
2020 67.43 0.63%
2021 67.85 0.62%

Currently, it is young professionals who are dominating the rental market. However, that could all be subject to change as many older generations are now choosing to downsize and rent.

Gives You an Additional Income Stream: Property investments can give you an additional stream of income. If you own a property outright and choose to rent it out, you can then use the rent to pay off the mortgage.

This will slowly help you build equity. If you decide to rent the property out to someone you know, like a family member, you can also seek the peace of mind of knowing the property is being occupied by someone you know.

What You Need to Start Investing in Property in the UK

Market Research

Property investment is a complex process. It is advised that you do not go into this process without any knowledge of the housing market. You will also need a few things before you start investing in property in the UK. Take a look at this property investment checklist below.

Knowledge of the housing market

I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

Baron Rothschild

What type of property do you want to invest in? What are your investment options? What mortgage deals are available? These are all questions that you should know the answers to before you start investing your money in property.

Although there is the opportunity to make money from your investments, this is not guaranteed without the proper knowledge of the market.

Research is essential. It will help if you start by looking into the best areas for house sector growth. This can help you get more for your money. You should also choose how you want to invest in the property sector as there are many options both directly and indirectly. Take a look at some of them below:

  • 1. Buy-to-let
  • 2. Property Investment
  • 3. Investing in property abroad
  • 4. Real estate investment trusts (REITs)
  • 5. Property unit trusts

The list goes on!

A secure budget

To successfully invest in property, you will need to have your finances in order. Take time to consider how big of an investment you can afford. Not only do you need a deposit to secure the property you want, but you will also need funds for a long list of other expenses. Take a look at them below:

  • 1. Mortgage fees and charge
  • 2. Property survey costs
  • 3. Removals costs
  • 4. Valuation fees
  • 5. Conveyancing fees
  • 6. Stamp Duty
  • 7. Insurance
  • 8. Estate agency fees
  • 9. Solicitors' fees
  • 10. Land registry fees

Although investing in property has the potential to make you a lot of money, it can also drain you of it in an instant. For example, if you invest in multiple properties and use up all of your savings, how will you afford repairs or if something else goes wrong with the property?

It is advised that you calculate your income and expenditure before choosing to invest. Once you have a clear idea of your income and outgoings, you will be able to see how much money you have to spare each month. Using a budget planner can help with this. These are easy to find online.

Direct Property Investments: Top Tips


If you are purchasing, owning, managing, renting and selling property for profit and returns, this is direct property investment. The type of investments grouped under this category are: buy-to-let, buying a new build to sell on, property development and investing in property abroad.

Direct property investments do not always have to be residential. They can also be commercial, retail, industrial, or any other property asset. Typically, these types of investments would require you to be more hands-on with the property.

You would take full responsibility for maintaining the property. For example, if there were any maintenance issues, you would be expected to resolve them. If you are considering direct property investment, look at some of our top tips below to help you make it a total success.

Tip 1: Ensure that you have enough money for expenses.

Before investing in property, you will need to understand the different expenses involved. You don’t just need enough money to invest in the property itself. You will also need enough money to contribute to the upkeep of the property too.

For example, renovations, maintenance work and stamp duty are will all require extra funds. Without these funds available, you can quickly lose control of your investment.

Tip 2: Research the best areas to buy in.

Location is vital when searching for your next property investment, but how do you know where to find the best areas for investment? To help you with your search, there are a few factors that you will need to consider.

You should look at the key metrics: property prices, population, tenant demand, rental yields, career opportunities, transport links, BTL opportunities, tenant demographics, and regeneration.

Prioritising these key metrics will help you build a complete picture of the performance of the investment.

Tip 3: Choose a property type suitable for the area.

Is the type of property you want to invest in suitable for your chosen area? Choosing the wrong property type could end up damaging your investment.

Firstly, you will need to consider who your ideal tenant is. Think about what they will be able to afford.

Charging competitive rates on rent could make your investment a lot more attractive to future tenants. If you choose to rent to students, a house with plenty of rooms available may be a lot easier to rent than a one-bedroom flat.

Tip 4: Maintain proper insurance.

If you are renting out your property, it is essential that you maintain proper insurance. You will tend to find that your mortgage lender will insist you have the correct cover in place before letting you rent out the property. Although landlords' insurance is not a legal requirement, it will cover you if you rent out to tenants, unlike regular home insurance.

Tip 5: Look around for the best mortgage deals.

You should always shop around for the best mortgage deals. Securing the right one could save you hundreds of pounds each year.

Luckily, you can use mortgage comparison tools online to help get you started. Once you find the best deal for yourself, you can then take this to a mortgage broker who may be able to beat it.

Indirect Property Investments: Top Tips

Property Investments Top Tips

If you are looking to invest in property without getting involved in the daily maintenance and management, this would be known as an indirect property investment. This is the ideal solution for those who want to make a passive income from their property without the burden of the everyday responsibilities of maintaining it.

The type of investments grouped under this category are as follows: peer-to-peer lending, property ISAs, property unit trusts, real estate investment trusts (REITs), property investment trusts, property open-ended investment companies (OEICs), property bonds and loan notes and shares in listed property companies.

If an indirect property investment sounds the right fit for you, take a look at some of our top tips below to help you get started.

Tip 1: Reduce your risk by diversifying your portfolio

Property is a resilient investment asset. However, if you want to make a passive income, you will need to diversify your portfolio to reduce the impact of any market fluctuations. By doing this, you are helping to protect your assets. A huge benefit of diversifying your property portfolio is multiple income streams.

So, how do you start diversifying your portfolio? One of the most common ways is to invest in multiple property types. For example, you could combine two sectors such as commercial and retail. By doing this, you will soon realise that each property type appeals to a specific demographic.

You can learn more about diversifying your portfolio through some online research. Learning how to invest in different sectors can undoubtedly help you minimise your risk in the future.

Tip 2: Grow Your Knowledge

The property market is complex, and it is constantly evolving. Therefore, if you are new to investing, it is vital that you already have a depth of knowledge on the industry that will help you understand any changes that occur.

It will also help you keep up with them. Ask yourself some all-important questions: Do you fully understand what the investing process entails? Do you have the proper credentials to make you a suitable investor?

The importance of research cannot be stressed enough. If you want to make a passive income from your investments, you should constantly expand your knowledge by reading articles surrounding the UK housing market.

Tip 3: Ensure that you are eligible to invest

As well as having some industry know-how, you should also take all the necessary steps to ensure that you are eligible to invest.

As previously mentioned, there is a long list of expenses tied to property investment.

You can often seek free and impartial money advice through the internet, which can help guide you in the right direction. Property investment can be a long game. So, you want to ensure that you have enough capital to see it through.

Depending on how you choose to indirect property invest, there may also be some requirements needed to make you eligible in the first place. For example, if you wanted to invest in property bonds, you would need to fall within one of the three categories below:

  • 1. High net worth individual
  • 2. Certified sophisticated investor
  • 3. Self-certified sophisticated investor
Housing Market Trends

In recent years, the housing market has become a sellers' market, with the demand for housing increasing rapidly. However, this is likely to calm down, and soon, normal levels of activity are expected to resume.

As a property investor, it is crucial that you are constantly analysing the current UK housing market trends. This can help you make more innovative investments in the future. Below - are some of the current UK housing market trends that you should be aware of.

Average House Price Will Continue to Rise: In 2021, house prices rose dramatically for the first time in many years. Since August 2021, house prices have increased by 2.5%. This uphill climb is expected to continue throughout 2022.

Price change by region for England
Region Average price September 2021 Annual change % since September 2020 Monthly change % since August 2021
East Midlands £231,318 14.7 4.9
East of England £327,982 9.3 1.7
London £507,253 2.8 -2.9
North East £152,776 13.3 3.8
North West £203,661 16.8 5.3
South East £370,886 11.7 3.0
South West £301,327 11.7 4.0
West Midlands £231,501 11.7 3.1
Yorkshire and the Humber £192,354 11.9 4.0

It is thought that some property investors in the private sector have already started to sell properties to benefit from this. The increase in house prices will differ across all UK locations. So, it is advised that you do your research to see where you can get the most for your money.

Top Locations for Growth: Each year, there are always top locations for housing sector growth in the UK. This year, it is thought that cities like Manchester, Birmingham and Nottingham are likely to be exciting locations for investment.

Both Manchester and Nottingham offer quality yields across several city centre postcodes whilst Birmingham is praised for its affordability. Cities like these are seen as developing areas. The key is to look for areas that offer tenants a lot of opportunities and close amenities.

Renters Reform Bill Could Reappear: You may be familiar with the Renters’ Reform Bill as it was first put forward in 2019. The bills included a proposal to end “no-fault” evictions by repealing section 21 of the Housing Act 1988.

This proposal could come into effect this year, and it is advised that all tenants familiarise themselves with it, so they can start to prepare for it. By enforcing this bill, it is hoped that the rental market will be made a lot safer from unethical landlords.

Increase In Build-To-Rent Housing: The rental market currently dominates the UK property sector, which is expected to continue throughout 2022. Now, it is thought that tenants are looking for more long-term rental options.

They want a property that has more to offer than a standard buy-to-let. There is now a demand for these properties, so it is considered a great time to invest in build-to-rent so investors can get a slice of the action and keep up with this growing demand.


Property investments can help you generate an ongoing passive income with the right knowledge. If you are looking for a long-term investment, the property market can certainly tick all the boxes as the value of most properties will increase over time.

However you choose to invest your money, whether that be in direct or indirect property, it is a decision that lies solely with you. The critical thing to remember is that you should go into the investment with as much knowledge of the market as possible.

This will help you to make wise investment decisions moving forward. Research is vital to help you invest in the areas with the most potential. As well as doing your own research, you can stay up to date with the latest business and financial news by signing up for our regular newsletter.

In it, we share up-to-the-minute insight and tips to help you enhance your business knowledge and grow your organisation.

Author Bio

Rafael W.

Head of the content. Rafael is an entrepreneur, investor, software developer, SEO specialist, natural problem solver and startup enthusiast.


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