How To Start a Property Business UK (7 High-ROI Steps)

The UK real estate market employs over 12 million people and contributes  £1.7 billion annually to the GDP, according to The Department for Business and Trade.

The UK’s property market has historically been a solid investment, offering opportunities for both capital growth and rental income. If you’re looking to diversify your investments or build a long-term wealth-generating asset, the property market could be your answer.

Today, we will discuss how you can start your property business in the UK in just seven steps. We will discuss each step in detail, so read till the end. 

What exactly is a property business?

A property business involves dealing in real estate (land, buildings, or housing) and earning money from it through various methods. 

For example, you could buy and sell a property and earn from the property appreciation in between. Or You could buy a property and put it out on rent and generate a stable income source from it. 

Apart from these two popular methods, property businesses use some other methods. 

• Property development 
• Property management 
• Property investment (buying shares in property companies)

What are the types of property businesses available in the UK?

The UK property market caters to a variety of needs. So here are some major types of property businesses available in the UK. For a better understanding, we will divide them into categories and discuss them one by one.  

1. Retail and Commercial 

Residential: These businesses deal with properties used for living purposes, including:

• Estate agents (or letting agents): They help buyers find their dream homes or sellers offload their properties for the best price.
• Letting agents: They specialise in finding tenants for landlords and managing rental properties.5  
• Property developers (residential): They focus on building new homes or renovating existing ones for the residential market.

Commercial: These businesses cater to properties used for business purposes, such as:

• Commercial property agents: They help businesses find suitable office spaces, retail outlets, warehouses, or industrial units.
• Property developers (commercial): They focus on developing office buildings, shopping centres, or industrial estates.
• Property investment companies: They invest in commercial properties and generate income through rent or capital appreciation.

2. Niche Sectors 

Beyond the residential and commercial property types, there are businesses specialising in specific properties, like-

• Student accommodation: These businesses manage flats or purpose-built housing for students.
• Holiday lets: They manage properties rented out for short-term stays.
• Build to Rent: This is a growing market where companies develop and manage rental properties as an alternative to traditional homeownership.

3. Specialist Services 

Some property businesses are also service-based and provide various services related to properties. For example-

• Property management companies: They handle all aspects of property management, from tenant screening to maintenance.
• Property surveyors: They provide professional advice on property valuations and surveys.
• Property solicitors/conveyancers: They handle the legal aspects of property transactions.

7 Steps to start a property business in the UK

Step 1: Strategy Building

1. Start by defining your goals. You need to decide if you want to earn through rental income or by property flipping (buying, renovating, and reselling.) or a mix of both (BRRR). 
2. After that, decide who you are catering to. Students, young professionals, or families? Different demographics have varying needs.
3. The last step of strategising would be considering your budget. Starting small with a house in multiple occupations (HMO) or going big with apartment buildings requires different approaches. 

Go through different types of properties and select the one that aligns with your investment capabilities. 

Step 2: Property Hunting & Research 

Based on your strategy, start researching property prices, rental yields, and market stability in your target areas. You can use resources like Rightmove or Zoopla, or attend local property seminars. 

Look for areas with regeneration projects or growing businesses that might attract tenants or buyers. 

While conducting your research, you also must understand the regulations attached. If you are planning to rent your property, understand landlord and tenant laws, including mandatory safety certificates and tax implications.

Step 3: Finalise Your Business Structure & Licensing 

As a property business owner, you can choose between sole tradership or building a limited company. 

The sole trader model is ideal for small-scale landlords with a few properties. The simplicity and full control can be advantageous for those starting out or with a hands-on approach.

On the other hand, a limited company is best suited for larger property portfolios, property development, or those seeking to protect personal assets. The limited liability and tax benefits can be significant advantages as the business grows.

Let’s compare their pros and cons for better understanding. 

1. Sole Trader

What it is: Individual running a business as self-employed

Pros of starting a sole trader property business

• Easy to set up and manage
• Complete autonomy over business decisions
• Potential tax advantages for lower-income individuals
• Access to all profits after paying taxes

Cons of starting a sole trader property business

• Personal assets at risk if business fails
• Challenging to attract investors
• Potentially higher tax rates than limited companies
• May be seen as less credible than a limited company

Sole trader property business setup process:

1. Decide on a business name
2. Register for self-assessment with HMRC
3. Maintain accurate financial records
4. Register for VAT if annual taxable turnover exceeds £85,000

2. Limited Company

What it is: Separate legal entity from its owners

Pros of starting a limited company (LC) in property business:

• Personal assets protected from business debts
• Potential tax savings through corporation tax, dividends, and expenses
• Easier to attract investors and expand
• Seen as more established and reputable

Cons of starting a limited company (LC) in property business:

• More paperwork and regulations
• Additional costs for incorporation, accounting, and company tax
• Profits taxed at company level before distribution
• Shareholders have a say in company decisions

Setup process of starting a limited company property business:

1. Choose and check availability of company name
2. Appoint directors and shareholders
3. Register with Companies House
4. Register for Corporation Tax, VAT (if applicable), and PAYE (if employing staff)
5. Open a separate business bank account
6. Maintain detailed financial and company records

Step 4: Secure Funding 

After finalising your business model, you need to secure funding to start investing in properties and build your portfolio. 

Here are some options you can explore-

• Mortgage
• Bridging Loans
• Utilising your own savings 
• Joint venture
• Crowdfunding
• Private investors 

But if you plan to start small, our top three suggestions would be taking mortgages, bridging loans, or investing your own savings. Here’s a deeper look into each of the funding methods. 

Mortgage

These are specifically designed for investment properties. They typically require a larger deposit than residential mortgages and often have higher interest rates.

1. Start by researching lenders. Compare the interest rates, terms, and eligibility criteria of different lenders. 
2. If you’re a first-time landlord, consider renting out a property personally before applying for a buy-to-let mortgage. This will help you build a strong rental history, making it easier for you to get a mortgage. 
3. Make sure the property you choose has a good rental yield, as this is something lenders often look for. 

Bridging loans

These loans are typically used for quick property purchases or renovations. This loan is for cases when you want to buy some property immediately but waiting for funds to become available from the sales of something else. 

Be aware that bridging loans usually come with higher interest rates due to their short-term nature.

When considering bridging loans, have a clear exit strategy, as the lenders will want to understand how you plan to repay the loan, such as through a sale or a traditional mortgage.

Investing your own capital

Using your own funds can provide flexibility and avoid interest payments. But before you do that, ensure that using your savings for property investment is the best use of your money compared to other investment options.

It is always better to diversify your portfolio and not put all your eggs in one basket. So, you should only buy a property entirely with your own money if you are still left with some amount to invest in other places. 

• Important tips for funding:

• A good credit score is essential for securing favourable loan terms.
•  A well-structured business plan can strengthen your application for funding.
• Consult with a mortgage broker or financial advisor to explore the best options for your specific circumstances.

For a larger business idea, Private investors are a good option. But the question is: How to find investors for property sourcing?

Here are some ways you can do that.

1. Use your existing network. Reach out to your friends, relatives, and professional network to get in touch with potential investors. 
2. Use online platforms like Crowdcube or Seedrs to find investors to fund your startup. 
3. Joining property investment forums or communities on platforms like LinkedIn. 

4. Connect with property development finance providers. 

Here is the list of top property finance providers (data source: Businessfinancing.co.uk):

COMPANY	MAX LTV	MAX TERM (DURATION)	MAX TOTAL AMOUNT
ABC Finance	Not stated	Not stated	Not stated
Aldermore	Not stated	30 months	£25 million
Assetz Capital	75%	2 year	£10 million
Cambridge & Counties Bank	65%	9 months	£2 million
Close Brothers	Not stated	18 months	£20 million+
CrowdProperty	70%	Not stated	Not stated
Cynergy Bank	Not stated	2 years	Not stated
Eastern Credit	50%	36 months	Not stated
Hampshire Trust Bank	65%	36 months	Not stated
Hope Capital	75%	18 months	£5 million
Hunter Finance	60%	15 months	£2.5 million
LendInvest	70%	24 months	£10 million
NatWest	Not stated	36 months	Not stated
Oblix Capital	85%	24 months	£10 million
Octopus Real Estate	Not stated	36 months	£100 million
Paragon Bank	Not stated	Not stated	£35 million
Rangewell	Not stated	24 months	No maximum
Redwood Bank	70%	12 months	£3 million/ property (£5 million/ business)
Royal Bank of Scotland	Not stated	36 months	Not stated
Saffron Building Society	Not stated	Not stated	£5 million
Sancus	75%	24 months	£10 million
United Trust Bank	Not stated	Not stated	£30 million
West One Loans	70%	Not stated	£15 million

Step 5: Build Your Property Portfolio

After getting funding sorted, you should start buying properties and building your portfolio. For that, you can either handle everything on your own or get help from real estate agents and property companies. 

The latter would be easier for a beginner, so let’s discuss that first. 

Hiring estate agent/ company:

You can partner with reputable real estate investment companies/ individuals who specialise in the type of property you’re interested in (residential, commercial, etc.).

They will help you with their knowledge of the local market, property values, and potential tenants. Some companies might also help you with renovation and tenant management tasks. 

Hiring a professional will also give you a competitive edge, as they often know about properties that will soon be on the market. They can also assist in negotiating prices and terms, making your portfolio expansion a lot easier. 

Discover comprehensive insights into the best practices for investing in residential properties in the UK and how to maximize your investment portfolio.

DYIng 

If you want to find and buy properties on your own, you can do that, too. Apart from online property listing websites, you can visit property auctions, which offer opportunities to purchase properties below market value, especially in distressed situations (great for BRRR or property flipping).

You can also attend industry events, property investment conferences, and local networking groups to learn about good deals. The more you network with investors, developers, and industry professionals, the more you will learn about off-market deals. 

You can use websites like Pin Meetings or Eventbrite to start your networking with property investors. 

Additional property business starting tips for growing portfolio:

• Consider investing in different property types (residential, commercial, industrial) and locations to spread risk.
• Property investment is often a long-term strategy. Focus on building a portfolio that generates consistent rental income and capital appreciation over time.

Step 6: Sort The Property Management 

The more properties you acquire, the more management work you need to handle. If you have a smaller portfolio of one or two properties, you may be able to handle them on your own. 

However, for a larger portfolio, consider outsourcing the management tasks. 

Step 7: Do Marketing To Find Buyer/ Tenants 

Without buyers or tenants, you can’t run a property business. So, we are counting this as a part of starting your businesses, too. 

Here’s how you can approach online marketing for your business. 

1. Start by understanding your target audience (their demographics, preferences, and needs)
2. List your property on major portals like Zoopla or OnTheMarket. You can also use social media platforms like Facebook, Instagram, and Linked In to build your brand and reach a wider audience. 
3. Create a professional website to showcase your properties and provide information about your services.

Make sure you always use professional photography to highlight the property’s best features.  You can also offer virtual tours to provide potential buyers/tenants with an immersive experience.

To boost the visibility of your website and social media, you can opt for search engine optimisation. 

For offline marketing-

• Partner with local estate agents to reach potential buyers/tenants.
• Advertise in relevant publications.
• Create high-quality brochures to distribute to potential buyers/tenants.

For both online and offline advertisements, write informative and engaging descriptions that highlight the property’s benefits.

Know that marketing is a whole other ball game that requires time, knowledge, and attention. And if you want to focus on your business, it is better to have a separate marketing budget and hire professionals. 

What skills do you need to start a property business? 

To start a property business, you need four sets of skills. 

1. Core Business Skills

• Market Analysis: Understanding property trends, pricing, and demand.
• Financial Acumen: Managing budgets, cash flow, and investment returns.
• Negotiation: Securing deals and managing client expectations.

2. People Skills

• Communication: Building relationships with clients, partners, and contractors.
• Networking: Expanding your professional circle for potential deals.

3. Technical Skills

• Property Valuation: Assessing property worth accurately.
• Legal Knowledge: Understanding contracts, regulations, and property law.

4. Additional Soft Skills

• Risk Management: Identifying and mitigating potential challenges.
• Time Management: Balancing multiple projects and deadlines.
• Marketing: Promoting your properties and business effectively.

How to become a property deal sourcer in the UK?

To become a property deal sourcer in the UK, you need to fulfil these legal requirements.

• Register with HM Revenue and Customs (HMRC)
• Register with the Information Commissioner’s Office (ICO)
• Register with a professional body, such as the National Residential Landlords Association (NRLA)
• Register with the Financial Conduct Authority for Anti-Money Laundering
• Register under the Data Protection Act
• Get Insured. 

👉Explore our complete guide on becoming a property deal sourcer in the UK

How to start a property rental business in the UK?

Here’s a brief step-by-step instruction on how to start a property business in the UK. 

1. Do market research: To identify the target market and analyse demand, competition, and average rental yields. 
2. Acquire property: Determine your budget and property type and explore financing options. 
3. Fulfil the legal and regulatory duties: Understand the landlord and tenant rights, obtain necessary permits and licences (landlord registration, EPC, gas safety certificate) and comply with housing regulations (deposit protection, energy efficiency standards).
4. Prepare the property: Inspect and repair things, and decide whether to go with furnished or unfurnished options. In both cases, you have to arrange the utilities, such as gas, electricity, and water.
5. Tenant screening and selection: List your tenant criteria (credit checks, references) and select tenants based on them. To attract tenants, use rental platforms like RightMove.
6. Create tenant agreement: Clearly outline rental terms, responsibilities, and deposit details.
7. Property management: Decide on self-management or hiring a professional. In case of self management create a rent collection and maintenance procedure. 
8. Manage Finance: Set up rental income and expense tracking. Do consider tax implications for landlords. Also, a financial plan for property maintenance and improvements must be created. 

Explore our comprehensive guide that outlines ten crucial steps to effectively establish and grow your Rent to Rent business in the competitive UK market.

Why Start a Property Business in 2024?

Property investments have historically been one of the best and most stable investment classes in the long term. The value also rises with inflation, which protects your wealth. 

The rental market in the UK has been showing some exciting statistics. According to wealth experts, investors are eyeing the UK property market in 2024, especially in the Midlands and the North West of England. It is because the regions are undergoing substantial regeneration for educational and technological developments which is a promising growth prospect.

Plus there is currently a shortfall of residential properties in the UK, which is good news for landlords and the rental yield might get higher because of it. 

So whether it is for the long run or to grab the current opportunities, investing in real estate and starting a property business in 2024 is still a good idea. 

⭐ How can partnering with Pluxa Property benefit you in property investment in the UK

Property investment is not a piece of cake. It requires you to go through multiple steps before and even after investing in a property. 

However, Pluxa Property can make this journey a little less tiring by helping you with certain stages. Here are some ways Pluxa Property makes your investment journey easier. 

1. Property Finding: Pluxa can help you find suitable investment properties based on your criteria.
2. Tenant Sourcing and managing: Pluxa not only finds and manages tenants but also gives you a guarantee of stable rental income. 
3. Property Listing and Management: Pluxa’s team takes care of property maintenance, tenant relations, and legal compliance.
4. Value Adding: Pluxa can help increase property value through refurbishment or renovation. 

If you have any questions, reach out to Team Pluxa, and we will be happy to help. 

What type of property business is more profitable?

Right now, one of the most profitable types of property businesses would be HMOs (Houses in Multiple Occupation) in the buy-to-let segment. But a lot of the profit depends on the location and targeted demographic. 

What’s the minimum capital needed to start with Pluxa Property’s investment options?

Pluxa Property offers flexible investment options to suit different budgets. It’s best to contact them directly for specific figures based on your desired investment and property type.

How do property investors make money?

Property investors primarily generate income through rental income, capital appreciation over time, and reselling property after development or refurbishing (house flipping).