5 reasons to invest in residential property in the UK


New build residential rental properties. Why you should invest.

There has never been a better time to invest in residential property. According to Statista, around 4.4 million households were privately rented in England in 2021.

The rental market is booming, with people struggling to get their foot on the property ladder or preferring to rent rather than purchase. This means it’s a profitable industry which means excellent investment opportunities for you.

If you’re looking for a reason to invest in residential properties, here are five.

#1 The market is thriving

Many landlords have decided to sell up to take advantage of soaring house prices, which means fewer rental properties are on the market. As a result, rental rates are now at an all-time high due to this scarcity — according to the ONS, over the last 12 months alone, rental rates, excluding London, have risen across the UK by a whopping 3.3%.

So if you’re in a position to become a residential landlord, you’ll have your pick of tenants from an ever-increasing tenancy pool, willing to consider less and for a higher price.

#2 Boost your income

Investing in the thriving rental market is a fantastic way to boost your income.

For each property you bring on board, your return will be two-fold. First, you’ll immediately benefit from capital appreciation, the property’s ever-increasing value, followed by the profit you’ll yield from rent as soon as you find your first reliable tenant.

The rental yield you’ll make from your property depends on several factors, including where your property’s based, your initial investment, and your tenant’s reliability. However, with the average UK rental yield sitting at 3.63%, you’re almost guaranteed to make a profit and increase your income.

#3 It’s relatively easy to get started

Don’t get us wrong; we wouldn’t say becoming a landlord is “easy”, as you need to consider plenty of things when taking your first steps.

However, if you’ve ever wanted to be your own boss and can gather the necessary funds to buy your first property, this could be the move you’ve been waiting for.

Like many other forms of self-employment, you’re only answerable to yourself, which means there is no need for qualifications and interviews. So it really is a low barrier to entry.

Then, once you’re up and running, you can join online communities and forums, like the National Residential Landlord Association, to get support and advice from your peers.

#4 Finding finance is simple

When looking to finance your property purchase, there are many different ways of getting your hands on the money. Here are just a few to get you started:


A mortgage is the most common way to secure finance for a UK property purchase, whether through a bank or specialist provider. The advantage of this method would be the ability to pay off the loan over a long period, with the average in the UK being 25 years.

Disadvantages would be the lengthy application process. Also, due to the payments being spread over a long period, the total interest paid will ultimately be higher when the mortgage is paid off.

Private Investor

With rental properties being so lucrative currently, you may find it easier to come across a private investor. Someone willing to invest their own cash in the property you’re buying in exchange for future equity.

The funding is usually immediate, allowing you to move quickly, and you don’t just dip into the investor’s bank account; you also access any potential knowledge, connections and resources they have. However, be aware that this is a type of personal loan, so you’ll need to be very careful when choosing the right investor.

Bridging Loan

Alternatively, you can opt for a bridging loan. Bridging loans help you access the finance you need quickly. The money can be in your account within 72 hours of application, which is perfect when time is of the essence in a property sale.

However, bridging finance might not be your best option over the long term, as the interest rates can be very high. The best use of a bridging loan is to secure finance to obtain the property, paying back the loan amount in full once you gain access to your assets.

Compare bridging loan specialists.

#5 You can help make renting more affordable

We’ve already mentioned the desperate need for rental accommodation in the UK, and with house prices rising, the number of rentals decreasing, and the cost of living being at an all-time high, families are always in need of affordable housing.

By focusing on making your rental energy-efficient, you can help save your tenants money each month. To do this, ensure windows are properly sealed, consider investing in solar panels, and use only energy-efficient light bulbs, to name a few.

Risks to consider when investing in residential properties

As with any investment, your money is at risk — there’s never a guaranteed way to make money. But you can mitigate risks associated with property investment by doing your research.

Spend time understanding the nuances of being a landlord and research your financing options thoroughly.

Other things to be mindful of before investing in residential property:

  • You might not find a tenant straight away
  • You might have gaps between tenancies, which means lost money
  • Unforeseen repairs can crop up
  • Maintenance costs are ongoing
  • Tenants might not take care of your property, causing damage

Hopefully, this guide has given you some reasons to invest in residential property — just make sure you do your research!

If you’re looking for other investment opportunities, have you considered investing in bridging finance?

Find out if investing in bridging finance would be a good move for you in this guide: Is investing in bridging finance a good idea?