Top 10 Property Investment Strategies You Should Consider in the UK (With Pros and Cons for 2024) (2024)

When it comes to investing in the UK property market, property investors have three main choices.

1. They can invest in a rental property and rent to tenants for a profit.
2. Property investors can buy an investment property and sell for a profit.
3. A property investor can own a share of a company that owns property on their behalf.

However, it can get a bit more complicated than that, with different property strategies falling into each of these categories, all coming with their own pros and cons and varying suitability for different people.

This is exactly what we’re going to discuss in this guide as we break down the pros and cons of the best property investment strategies UK real estate has to offer.

As far as rental properties go, single let is likely the most traditional and easy-to-understand example of property strategies UK.

A single-let residential property is real estate that is rented to a single ‘tenant’, which can be an individual person or an entire family.

Single-let residential property has been long considered the best property investment strategy in the UK for two main reasons.

• Rental Income – Those property investing can earn monthly rent each month, which recently reached an all-time high of £1,199 PCM in the residential UK market.
• Long-Term Growth – Despite the economic pressures seen at the end of 2022, UK property prices have increased by 5.52% in the last 12 months, according to the Land Registry, which is set to increase by a further 6.2% by 2027 according to predictions from Savills.

For these reasons, you can expect a lucrative strategy when buying property. Be sure to check out our full guide to single-let buy-to-let property to learn more information about this top house investment strategy.

Top Tip: To make the most out of your buy-to-let property investment and become a successful investor, be sure to focus on areas with a high young professional population as they are the age group most likely to rent for the foreseeable future. This is because younger people are more drawn to renting, whether through choice or lack of financial ability to purchase a home of their own.

Pros

• With residential property in huge demand, looking at tenanted properties for sale in the UK can offer a less risky buy-to-let strategy.
• Easy to get started without expert knowledge.
• Allows investors to make consistent rental income, with high rental yields available in certain UK areas.
• Generates two types of returns through a combination of rental returns and capital growth returns when the investor sells the property.
• Less time-consuming than some other rental property investment strategies, with the option to hire a rental management company for a hands-off investment.

Cons

• Residential buy-to-let is a long-term investment strategy, so not the best choice for those looking to quickly make significant short-term returns.
• Potential void periods if investing in an area without high rental demand.

A top contender for the best property investment strategy, purpose-built student accommodation has shot up in popularity since 2019.

Purpose-built student accommodation is another type of buy-to-let property investing strategy. The only real difference is that with PBSA, you will rent exclusively to student tenants.

A report from Savills in early 2021 found that over £5.77 billion was spent on student accommodation in 2020 – the highest-ever amount in one year.

This goes alongside a thriving UK student market, which has seen the number of 18-year-olds applying to an undergraduate course in 2023 ranking as the second highest on record – with 314,660 applying, down slightly from 320,420 in 2022 but significantly higher than the pre-pandemic figure of 275,300.

With many students seeking stylish and well-located accommodation to live in during their time at university, there’s likely never been a better time to invest in a student buy-to-let strategy.

You can learn more about student property investment in our detailed ultimate guide for 2024.

Top tip: Focus on student cities with a high student population and graduate retention rate to ensure tenant demand. Examples of top student cities include Liverpool, Manchester, Birmingham, Leeds, London and Newcastle.

Pros

• A good option for first-time investors due to low property prices and high yields.
• Offers a combination of rental income and capital appreciation for maximum returns.
• High and consistent rental demand due to a booming UK student property market.
• Hands-off investment options make student buy-to-let easy and hassle-free.

Cons

• May not see as high capital growth returns as you do with residential buy-to-let.
• Limited to one tenant group.

A top choice for any property portfolio, an HMO is another excellent example of top property strategies UK.

An HMO, otherwise known as a house of multiple occupancy, is real estate that is rented out to multiple tenants who each pay rent and have shared facilities like a bathroom and kitchen.

Certain types of student accommodation fall under the category of an HMO, with shared student houses being an alternative to purpose-built student accommodation.

HMOs have fallen in popularity amongst students in recent years, who are opting to live in higher-quality accommodation that can’t be provided by HMOs that tend to be older buildings.

So, while a property investor can earn some huge returns on the HMO property market, it’s likely no longer the best property investment strategy to target students.

You can learn more about HMOs and other student investments by reading our guide to how to invest in student property.

Pros

• Offers the chance to generate income from multiple different tenants at once, resulting in high yields.
• If one tenant stops paying their rent, you’ll still have rental income from the other tenants to fall back on.

Cons

• This type of investment strategy comes with more complex tax rules, planning requirements, and legislation requirements.
• Difficult to obtain a buy-to-let mortgage for HMO properties.
• More management is involved, which makes this property investment strategy more time-consuming.
• As the demand for more luxury private accommodation increases, people may be less inclined to rent shared properties.

The first non-buy-to-let strategy on this list, buy-to-sell, is one of the most popular property investment strategies in the UK.

Buy to sell, otherwise known as house flipping, is when an investor purchases a property that needs refurbishment and sells it for a profit.

Buy to sell is usually grouped up with property development, as investors will typically need to complete renovation work to boost the value and appeal to potential buyers.

Unlike a buy-to-let strategy, this kind of property investment strategy doesn’t involve renting the property out to tenants and doesn’t rely on a regular income.

Instead, it relies on a strong property market and positive market conditions with high demand. This seems to be the case in 2023/24, with a report from Rightmove finding buyer demand to be 6% higher than that in 2019.

Of course, you can also completely become a property developer and build one property from the ground up.

If this is something of interest, check out our full guide to how to become a property developer to learn more about securing planning permission and making a good investment.

Pros

• Potential to make large rental returns if you can add value to the property with renovations and capital growth.
• Don’t need to deal with tenants and rental property management duties.

Cons

• Buy-to-sell is a very hands-on method of property investing, requiring time and expertise to succeed.
• Could lose money if not done right.
• It can be costly depending on the level of renovation needed to increase property value.

When it comes to property strategies UK and property investment ideas, an effective choice in 2022 is commercial buy-to-let.

Here, an investor will purchase a commercial building, which can include an office block or retail space, and rent it out exclusively to companies and business owners.

While investors may struggle to find sellers for commercial property, commercial buildings tend to have longer lease periods than traditional buy-to-let, making it easier to secure a long-term tenant and get a consistent cash flow.

However, commercial property can be hit heavily in times of economic struggle like the financial crisis, something that a potential property investor should keep in mind before they decide to choose this alternative property investment to traditional buy-to-let.

Pros

• Lease lengths for commercial buy-to-let tend to be longer than residential buy-to-let property investment strategies.
• There are certain tax advantages involved.

Cons

• Finding the right tenant can take a long time, meaning more extended void periods in between tenants.
• Buy-to-let mortgages can be more costly compared to residential buy-to-let.
• In times of recession or economic uncertainty, the commercial property market tends to be hit hard.

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Increasingly popular amongst those searching for property investment ideas, holiday lets are another type of buy-to-let property investment strategy that many UK investors opt for.

Like residential or student buy-to-let, investing in a holiday let involves purchasing a property – whether a house or apartment – and then renting it out for income.

These types of properties are let out on a short-term basis as they’re rented by those seeking somewhere to stay while on holiday.   For those unsure of the difference between long-term vs short-term rent, holiday lets are a perfect example of short-term rent investments.

Also known as serviced accommodations, these properties will typically be listed on websites like Airbnb and other platforms to showcase holiday rentals.

Pros

• Buying property for Airbnb or holiday let allows investors to make attractive rental income, depending on the overall quality and popularity of the property.
• Better tax benefits compared to traditional buy-to-let.

Cons

• Finding a buy-to-let mortgage can be tricky.
• A lot of work is involved in maintaining and marketing the property.
• The property could go empty for long periods, especially if it’s based in an area that sees more seasonal demand, such as a seaside town.