A Guide To UK Property Investment Strategies

Investors who are interested in the UK property market can explore a choice of strategies. Use this guide to property investment strategies to learn more.

Multiple strategies are available to anyone wanting to invest in property in the UK. Choosing the right strategy for your goals based on the pros and cons, as well as your own budget and location, will help you to ensure success and profit. Some of the most popular property investment strategies can be extremely lucrative if you have the guidance that you need and make the best decisions to fulfill your goals.

This rundown of some top investment strategies will help you to find the right one during a time when the market is hot.

Rent-to-Rent

Rent to rent, also sometimes called guaranteed rent, is an investment strategy where an individual or company takes an interest in a property and guarantees the landlord rent. The landlord gives permission for the renter to find tenants for the property, which could be as a whole property or individual rooms. In other words, rent to rent is subletting. The property owner benefits from having guaranteed tenants and payments, while the renter becomes the landlord, in a way, and also profits from the rental payments.

You might also hear about cases of rent-to-rent where the initial person renting the property does not have permission from the property owner to sublet it. This is much less ethical, so permission should really be sought.

HMO

An HMO is a house in multiple occupation. It's a property that is home to more than one household living together and sharing amenities such as a kitchen or bathroom. This often takes the form of houses or flats with individually rented bedrooms and shared common areas. A property is an HMO with at least 3 tenants and a large HMO with at least 5 tenants. HMOs must be licensed and large HMOs must follow certain standards.

The benefit of investing in an HMO is that they can often amass more in rent compared to single-occupancy properties. You can charge more per room compared to the market rent for the property as a whole.

Short-term Lets

Short-term let’s appeal to a range of people, including business travelers, holidaymakers, or even people who are in between permanent properties. So they can make an excellent investment due to their wide appeal, particularly in areas where they are most in demand. Short-term lets involve letting a property for a short period, usually under 3 months at a time, offering a convenient way to stay somewhere. Short-term lets might involve renting out whole properties or can sometimes mean renting out single rooms. Some of the pros of short-term lets involve not having to deal with long-term problems or evictions, the ability to charge more, and fewer rules and regulations to stick to.

Holiday Lets

Holiday lets can be seen as a subcategory of short-term lets. They are intended for the purpose of letting tourists and holidaymakers. While short-term lets could last a few months, holiday lets are much less likely to be any longer than a month. Many will only be for a few nights or even a single night.

Holiday lets can be a lucrative investment in areas where tourism is high. During busy periods, there's a high potential to make a lot of money, especially as holiday lets are priced significantly higher than long-term rentals.

Student Investments

Investing in student property is another way to benefit from renting to multiple people. Student properties can include HMOs that are rented exclusively to students, as well as student halls or purpose-built student accommodation (PBSA). HMOs can be a good option that will net you a lot of rent, but PBSA is also increasingly popular, with developers beginning to increase their involvement in the student accommodation market. One of the advantages of PBSA for investors is that they can enjoy a completely hands-off experience, rather than having to manage an HMO full of students.

UK Property Investment Rising

There's no missing that the property market in the UK has changed over the last couple of years. Demand has been high and prices have increased too. Chain-free purchases have also increased, which Hamptons attributes to a combination of first-time buyers and property investors. Both of these types of buyers can keep a property purchase chain-free, with investors making up 14% of buyers–an increase from 12% in 2021. The market is fast-paced with supply issues affecting the market too.

Now is a great time for investors to consider getting into the property market. Investors are using top strategies to get involved and developers are creating new opportunities.