When it comes to investing, the options available can often overwhelm potential investors. The UK property market has proven to be increasingly resilient, particularly when compared to other investment options such as stocks, savings accounts, and government bonds. With the Bank of England beginning to gradually reduce interest rates, property has emerged as an optimal investment destination. In this article, we’ll explore why property is a smart choice for investing £100K and how to maximise your returns effectively through property investment.
Why Invest in Property?
Andrew Carnegie, a prominent steel magnate from the 19th century, once said that 90% of all millionaires made their fortune through real estate. This statement highlights the long-term wealth-building potential of property and its enduring success as an investment strategy.
Compared to more volatile investment options like the stock market, property is a relatively stable investment. Historically, property values tend to appreciate over time, demonstrating a lower degree of volatility than equities or other markets.
Moreover, property provides steady, reliable returns. By renting out a property, investors can secure monthly rental income, which offers a consistent cash flow. In contrast, stock market investments don’t offer such guarantees, and the market can be unpredictable.
Property also provides significant tax advantages. By channelling investments through a private limited company, investors can benefit from lower corporate tax rates as opposed to progressive income tax rates, which can be higher. This can lead to substantial tax savings when compared to other investment vehicles like stocks or savings accounts, where capital gains tax or income tax will apply more frequently.
Ultimately, property investment offers a level of stability, long-term growth, and tax efficiency that other forms of investment cannot match.
Click here to learn more about why property is a better investment option than stock market trading.
What Options Do You Have With £100K?
While the average property price in the UK is £268,000, as of February 2025, £100K is still an ideal amount of money to enter into the UK property market. Let’s explore the ways you can invest with £100K.
Buy-to-Let Mortgages
Buy-to-let (BTL) mortgages are an excellent option for those looking to invest in higher-value properties with less initial capital. Lenders typically require a minimum deposit of 20%, with the remaining 80% financed via a mortgage. For example, if you wish to purchase a £200,000 property, a £40,000 deposit would be required, with the remaining £160,000 covered by the lender.
BTL mortgages also allow for portfolio diversification. With a £100K investment at your disposal, you could potentially purchase multiple properties with BTL mortgages. For instance, by putting down £50,000 deposits on two properties worth £250,000 each, you could increase the number of properties in your portfolio and, subsequently, your rental income.
Additionally, refinancing allows you to release equity from your properties, enabling you to access more capital for future investments. Mortgage payments can be structured as interest-only or repayment plans. Interest-only mortgages have lower monthly payments, but the full capital is due at the end of the mortgage term. Repayment mortgages, on the other hand, gradually reduce the loan balance, resulting in full ownership of the property at the end of the term.
Lower Priced Property
If you prefer to avoid monthly mortgage payments, purchasing property outright may be a better option. While finding property priced under £100K can be challenging in some areas, it’s easier in markets with more affordable options. The student property sector, for example, often offers individual units below £100,000.
Studio apartments and smaller units, such as Manhattan-style flats, are becoming increasingly popular, particularly with younger generations. These properties often offer more affordable alternatives to larger apartments and can attract high demand from renters, particularly from Gen Z and millennials. For those who are looking to invest with a £100K budget, they represent an excellent opportunity to tap into strong rental demand while keeping initial costs relatively low.
Shared Investment Options
A less conventional route involves shared ownership schemes. By pooling funds with other investors, you can purchase a buy-to-let property together. This option is ideal if you want to invest in more expensive properties that would otherwise be out of your financial reach.
While shared ownership means your share of the profits will be smaller, it allows you to access the property market without needing to commit the full amount of capital upfront. This is a suitable option for investors who are willing to accept smaller returns in exchange for the opportunity to invest in higher-value properties.
Where Should You Invest?
Liverpool
Liverpool has rapidly become one of the top locations for property investors in the UK, with a thriving student population, large-scale regeneration projects, and a strong local economy. The city’s affordability and high rental yields make it particularly attractive for buy-to-let investors who are looking to invest £100K. Postcodes such as L1, L2, and L3 have shown impressive growth over recent years due to the ongoing regeneration in the city, with high demand for rental properties.
Manchester
Manchester is another promising market, with a thriving economy and one of the highest levels of job creation in the UK. The city’s property market has seen consistent growth in the last decade, particularly in areas close to the city centre. Known for its popular student and independent scene, students and young people are increasingly moving to the capital of the north. The increasing demand from tenants for accommodation in Manchester makes it a solid investment choice for those looking to secure long-term returns.
Birmingham
Birmingham, referred to as the UK’s second city, is an excellent location for property investment. With ongoing regeneration and development, including the HS2 rail project and the Smithfield redevelopment, the city is seeing a major boost in investment. Birmingham offers strong capital growth potential and high rental yields, particularly in areas such as Digbeth and the Gun Quarter, which are attracting a young, professional demographic.
How Does Investing in Property Align With Your Strategy?
Capital Growth
Investing in areas with the potential for significant capital growth is key for investors looking to increase the value of their property over time. Targeting emerging areas or regeneration zones will often result in greater appreciation of property prices. As the property accrues value, investors will be able to demand higher rents and will have the option to sell the property for a significant profit.
Rental Income
For those seeking immediate returns, rental income is an important consideration. Look for properties in high-demand areas where rental yields are strong, especially near universities, hospitals, or business districts.
High demand locations
Investing in high demand locations, such as cities with growing populations, solid infrastructure, good transport links, and ongoing regeneration, helps ensure consistent demand from tenants for your property, both for sale and rent.
Payment plan
Before investing, consider how you will finance your purchase. Whether you go for a buy-to-let mortgage, a full cash purchase, or shared ownership, it’s crucial to have a clear payment plan that aligns with your financial goals.
Taxes
Be aware of the tax implications of property investment. You may be liable for stamp duty, ground rent, or income tax on the rental income from your property. Structuring your investment correctly, such as through a limited company, can help reduce your tax burden.
Property Management
If you opt for a buy-to-let investment, consider the costs and logistics of property management. You can manage the property yourself or hire a property management company. By hiring a property management company, you will have to pay a portion of your income toward the company. While this is an additional cost, this will also save you time and effort, allowing you to passively receive income from your property.
Property Investment Checklist
- Conduct market research: Always start by analysing the market conditions in the area you’re considering investing in. Understand the demand, local economy, and growth prospects.
- Speak to a property investment consultant: A professional can offer tailored advice and insights into the best strategies for your investment goals.
- Secure financing: Whether it’s a buy-to-let mortgage or full cash purchase, securing the right financing is essential to make sure your investment is viable.
- Legal and compliance: Ensure you adhere to local regulations and that all legal documents are in place, including contracts, tenant agreements, and ownership transfers.
- Due diligence: Always perform thorough due diligence on the property. This includes checking the property’s condition, title, and any planning or zoning issues.
- Property management: Decide whether you want to manage the property yourself or outsource to a property management company. Each option has its advantages and disadvantages depending on your investment strategy.
Why Should You Invest £100K in Property?
Investing £100K in property offers a stable, long-term investment opportunity that is both financially rewarding and relatively secure. Compared to other asset classes, property tends to provide both capital growth and rental income, and it is less prone to the volatility of the stock market. Furthermore, by making strategic decisions on location, property type, and financing options, you can maximise your returns while minimising risks. Ultimately, property investment offers tangible, long-term benefits for those looking to build wealth and secure financial independence.
Interested in investing £100k in a property with Advantage Investment? Contact us today and we will connect you with one of our award winning property investment consultants with a tailored and personalised approach.
