The best types of property in the UK to invest in
This article is for general information purposes only. It does not constitute financial, tax, or investment advice. Property investment carries risks and may not be suitable for everyone. You should seek independent advice from a qualified financial adviser, accountant, or mortgage broker before making any investment decisions.
If you’re considering investing in the UK residential property industry, you’re in good company. UK investors quickly took to becoming landlords following the introduction of the buy-to-let mortgage in 1996. After several decades of expansion, almost a tenth (9%) of UK houses are now buy-to-let, according to the Bank of England.
Following the end of the era of cheap mortgages in the early 2020s, property investors have become more selective about the type of property they invest in. When investing, you may want to think carefully about how to achieve the best long-term returns.
Become a member
Get expert guidance, trusted tools, and a community that understands what it takes to be a landlord.
This content is available to NRLA members. Join today for full access to advice, resources, and support built around your needs.
Property is one of the oldest forms of investment for good reason. It offers you an income in the form of rents that are generally paid on a regular basis. Rental yields have at various points compared favourably with returns on cash savings, though both fluctuate over time and property investment involves costs and risks that savings accounts may not.
Additionally, your property can increase in value, either with broad rises in the housing market or if you make improvements. It’s important to be mindful, though, that there have been periods when the UK housing market has fallen in value.
Unlike fixed-income investments, rental income isn't locked to a set rate and can be reviewed over time - something many landlords see as a potential buffer against rising costs, provided any increases remain within legal limits and reflect what tenants can reasonably afford.
Below you’ll find some examples of what the best type of property can be to invest in.
It’s a fact that buy-to-let properties in some regions of the country offer higher rental yields than others. If you’re new to the concept of yield, it’s a common yardstick for judging an investment’s level of income as a proportion of capital value. For instance, if a house is worth £100,000 and its rent adds up to £6,000 a year, then the rental yield is 6%.
Various property portals and estate agents monitor buy-to-let yields. They generally find that areas such as the North East and Scotland have the highest gross yields on average, while London and the South East pay the lowest yields. (Gross yield means the yield before expenses are taken into account.)
The Zoopla property portal found the average gross rental yield was 7.9% in the North East and 7.6% in Scotland (as at September 2025). Meanwhile, gross yields were 5.5% and 5.1%, respectively, in the South East and London. Yields can be a good starting point for your research, but the gross vs net figures need to be considered as well as the change over time.
Houses in multiple occupation (HMOs) have become popular in recent years, and are defined as having three or more tenants not from the same family. Published data has suggested higher average gross yields compared with standard buy-to-let properties, though this comes with greater management demands and regulatory complexity.
According to recent data from Property Reporter, the average gross yield on HMOs is 8%, compared with 6% for traditional buy-to-let properties. However, these are average yields and should not be treated as a recommendation to invest.
Bear in mind that investing in HMOs is more complicated than in normal buy-to-let properties. You need to get your HMO licensed by the local council, which will have strict standards governing factors like room sizes and fire safety. What’s more, managing an HMO can be labour intensive as you may have a higher tenant turnover.
Short-term letting through the sharing economy has boomed over the last 15 years. Some landlords report higher income from short-term lets such as Airbnb and Booking.com compared with standard tenancies, though this varies considerably by location, season, and the level of management involved.
Showing the rising demand, in the 12 months from July 2023 to June 2024, the number of nights let in the UK rose by 10.2%, according to the Office for National Statistics. Guests rented 93,823,780 nights. Westminster, Cornwall, Edinburgh and the Scottish Highlands were most popular. Reflecting tourism’s seasonal nature, Cornwall had few bookings in the winter while Westminster was more stable year-round.
Short-term letting is a hands-on business. A high turnover of guests can lead to significant cleaning and maintenance requirements. Additionally, the returns available from short-term letting have attracted a lot of landlords and some areas have become highly competitive.
Some landlords are drawn to student accommodation by demand in university towns and cities, as well as the potential for higher rental yields - though these can come with management considerations and other market risks. Before investing you should research the sector thoroughly as some UK students are choosing to live at home rather than pay rent.
For the 2025/26 academic year, rents for student accommodation increased by an average of 2%, according to Knight Frank’s Student Property Rental Index. This is far less than a peak annual increase of 8.3%, suggesting that rents may now just be moving higher with inflation.
At the time of writing, the Renters’ Rights Act has limited the potential for one and two-bed properties to be let for students, as landlords won’t be able to ask them to leave at the end of an academic year. By contrast, landlords of HMO student housing with three or more tenants can take possession under the Act’s Ground 4A.
It’s possible to buy properties at below market value, either because the seller wants a quick sale or because a property is in disrepair. In both cases, you can secure a property for less than it would typically fetch on the open market.
But finding a property on sale for below market value takes research. What’s more, if you plan a renovation you should make sure you know what’s needed and how much it will cost. Often there’s more involved than you think.
If you have a keen eye for value, and are prepared to take on a building project, there can be opportunities.
Some landlords have started to buy mixed-use properties that typically have a shop on the ground floor and flats on the upper floors.
Shops often pay higher rents than residential property. Additionally, your rents are diversified across two property types.
It's worth noting that mixed-use properties fall into a different stamp duty category than residential properties, and the additional 5% residential surcharge may not apply. A tax adviser can explain what this means for your specific situation.
Before you start investing in buy-to-let property, you need a plan. As a first step, you must decide what type of property to invest in. Where in the country would you like to invest? Are you prepared to take on complex investments that need more management? Do you want to manage building work or even do it yourself? These are the kind of questions you need to answer.
Additionally, you should decide whether to buy through a limited company or in your own name as a sole trader. Buying through a limited company allows you to offset mortgage interest against tax, though the rules can be complex, depend on your individual circumstances and involves extra accountancy costs.
Our First Time Landlord Guide has everything you need to start your investment journey, from how to start a property business to building your portfolio.
Join the NRLA
Get expert guidance, trusted tools, and a community that understands what it takes to be a landlord.
This content is available to NRLA members. Join today for full access to advice, resources, and support built around your needs.
Property investment frequently asked questions
What type of property is best for an investment?
There’s no single answer to this question. It depends on you and how actively you’re prepared to manage your property. Generally, the more work you’re prepared to put in the higher your income yield or capital gain.
Where are the best places to invest in property?
Recent published data from property portals suggests gross rental yields have tended to be higher in some regions, such as the North East and Scotland, than others. However, you should consider that past yield data is not a guarantee of future returns.
Should I invest in a modern house rather than an older house?
Modern houses tend to have lower maintenance costs and higher energy performance certificate (EPC) ratings. As EPC requirements increase, you may have to spend money to improve the performance of old houses, although this is subject to a ceiling.
Is the best type of property to invest in changing?
Property investment is becoming more challenging due to a combination of higher mortgage costs, higher taxes and changing regulations. As a result, many landlords are focusing on more complex types of property where you can make higher returns.