How Much Money Do You Need to Invest in UK Property? [2023]

Invest in UK Property

Looking to fulfil a new year’s resolution? 

Perhaps, you’re looking to get started with investment? 

First, you couldn’t have picked a better moment to get started – investment (across the board) has recently become increasingly popular amongst many. 

Whilst there is an abundance of options available – from crypto to stocks – only one is typically renowned for its relative stability and reliability: property investment. 

And for those wanting to get the most out of investing in property, the UK market, in particular, is a prime example of the venture’s resilience. 

Last year, UK property investment faced a worthy opponent when the country saw a dramatic economic dip, which resulted in the £GBP falling to a record low against the dollar (dropping close to $1.03 at its peak decline).

This undoubtedly created some shockwaves in various local markets but also led to some investors flourishing.

Those investing in UK property from abroad found themselves in a unique position. 

As the GBP rate dropped, foreign currencies suddenly could bring foreign investors more value for their money. In comparison, currencies like EUR or USD were worth much more, making property in the UK a much cheaper asset to acquire. 

With property being a physical asset and the fact that its value grows over time, turbulent periods like these are also generally particularly profitable. 

So, you know that property is a typically reliable asset to put your money into – but how much money should you actually invest? 

Well, to help you along your way, here’s a guide covering some of the basics!

Buy-to-Let Property: What is It?

Before you even consider throwing any money into property investment, you must decide which strategy you want to go with. 

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Residential Buy-to-Let is one of the most common ways investors get involved with property investment. 

Residential buy-to-let properties are purchased with the intent of renting out to a single tenant (including families).

This method often sees many investors due to its ability to bring in impressive returns through both rental income and capital growth. 

In the past, investors would predominantly purchase houses, usually to rent to families.

In 2023, however, one of the popular ways of buy-to-let investment is through purchasing luxury city-centre apartments. These kinds of apartments attract interest from young professionals, who are now more likely to rent and continue renting for many years – potentially securing long-term yields and growth for investors. 

City apartments are also far cheaper than semi-detached/detached houses, making for a more manageable investment.

Of course, this sounds great: but what are the costs involved with buy-to-let investment?

The Upfront Costs of Buy-to-Let

As of October 2022, the average property price stands at £296,422.

Prices can vary heavily, though, depending on various factors – such as what kind of property you want, as well as its location. 

Some of these prices may be out of your budget, but one of the significant benefits of this strategy is the option to utilise a buy-to-let mortgage to finance the investment.

Buy-to-Let Mortgages

Now, you’re more than likely aware of how mortgages function. 

Buy-to-Let mortgages are a slightly different affair. 

They require higher deposits, usually 23%, and are typically interest-only. 

What this means is that you will only pay the interest every month without touching your overall debt. At the end of the mortgage period, you will then need to pay off the entire debt by either selling off your property or re-mortgaging it.

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Your other main cost will be Stamp Duty Land Tax.

 Stamp Duty Land Tax

Stamp Duty Land Tax operates under a progressive tax system.

This means you will have different tax rates depending on certain portions of the property price. 

There are several payment bands for SDLT, and the tax is calculated depending upon which band that property’s purchase price falls into. 

Anyone looking to invest from overseas might need to pay an additional 2% in SDLT if they buy a property in England or Northern Ireland. 

Government guidelines define, for SDLT purposes, a non-UK resident as someone who has spent less than 183 days in the UK over a 12-month period leading up to the purchase of a property. 

Say, for example, you’re an overseas investor looking a purchasing an additional property in the UK for £295,000 with the intention of renting it out as a buy-to-let.

You’re not a first-time buyer but will now own two properties.

What this means is you’ll now pay an additional £17,000 in SDLT, an effective rate of 5.76%.

For more on the SDLT threshold, make sure to consult the up-to-date Stamp Duty Land Tax guidelines

Legal Fees and Land Registry Fees

Alongside mortgage and stamp duty costs, there are other expenses that you can expect to come across in UK property investment. 

  • Legal Fees – You will have to hire a solicitor to handle all the legal paperwork that comes with purchasing a property (This can cost anywhere between £1,000 and £2,000.)
  • Land Registry Fees – Houses sold between £100,000 to £200,000 will come with a £200 land registry fee – whilst houses between £200,001 to £500,000 will cost around £300.
  • Spare Cash – It’s a good idea to have some cash put aside– typically around £2,000 – to deal with any surprise costs
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Ongoing Costs and Exit Costs for Buy-to-Let Property

There are, of course, other costs involved with property investment besides the upfront expenses. 

These include:

  • Mortgage interest rates
  • Property management fees (if you’re looking for a hands-off investment).
  • Maintenance costs
  • Corporation tax if you form a limited company
  • Landlord insurance/ buy to let insurance
  • Rental income tax

Like all investments, it’s also vital that you consider your exit strategy. 

When selling your property, you will also need to pay some fees before you can finally net your profit. 

This includes:

  • Estate Agent Fees
  • Capital Gains Tax
  • Legal Fees


UK property investment is undoubtedly a solid way to secure a reliable and steady stream of passive income, however – if you take anything from this article – it is only truly successful when those involved take the time (and effort) to fully grasp the ins and outs of the process before leaping straight into it. 

Remember: this guide covers an overview of the basics of UK property investments. 

There’s an entire spectrum of strategies, property types and entry points not mentioned: all of which could be ideally suited to your budget and needs. 

So, take your time, absorb all the necessary knowledge and get involved with UK property investment today!


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