How to Start a Property Business
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.
Starting a property business is exciting. You can build a sizeable business over time and have the pleasure of providing homes for nice people at a fair price.
Quite how you start your business depends on you. If you’re young with little capital but lots of energy, you may seek out below-market-value properties to improve, rent out and then remortgage to reinvest in a second property. Alternatively, if you’re older and have surplus capital you probably want a property that does not need refurbishment.
Anyone starting a property business today should be aware of the Renters’ Rights Act as it is introducing new regulations.
The following offers you a basic guide to starting a property business.
You can find further information about becoming a landlord here.
What is a property business?
A property business invests in either residential or commercial property, aiming to profit from a combination of rents and uplifts in value. If you’re looking to start a property business and are viewing the NRLA website, you’re most likely to be looking at residential buy-to-let investing.
What types of property business are there?
While property businesses vary in size and type, they share the same basic principles – investing in property to rent out, develop or a combination of the two. Individuals looking to start a property business tend to do so by investing in one of the many types of buy-to-let properties, or in small commercial properties.
By contrast, large commercial property businesses focus on offices, retail and warehouse property. However, they’re generally professional businesses with multi-million-pound property portfolios owned by institutional investors such as pension funds, wealthy individuals or stock market-listed companies.
What are the different types of buy-to-let property strategies?
When you’re starting a property business there are a range of types of buy-to-let strategies to consider. You can kick off with a standard buy-to-let or choose something more specialist to suit your goals. For instance, many young entrepreneurs with limited capital start by buying below-market value properties and then make improvements. Alternatively, some people start out by letting a property they’ve been left in a will or an annexe attached to their house for short-term lets.
Then again, other investors may have substantial amounts of capital to invest and prepare professional business plans. They might have identified niches such as areas of cities that they expect to become more popular, possibly due to new transport links.
The main types of buy-to-let strategies are listed below.
Traditional buy-to-let
Traditional buy-to-let properties are most frequently houses and sometimes flats. The concept is straightforward: you buy a property and rent it out. The aim is to let the house for more than your ongoing costs – typically, your mortgage, maintenance, administration and marketing expenses.
When evaluating a buy-to-let, your starting point is the gross rental yield. This is a common yardstick for judging a property’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 gross rental yield is 6%.
You’ll find yields vary depending on the area of the country, size of the property and whether there are any special circumstances like urban regeneration.
Houses in multiple occupation
Houses in multiple occupation (HMOs) are properties shared by tenants. The Housing Act 2004 defines them as having three or more occupants not from the same family, using shared facilities such as a toilet, bathroom or kitchen..
In other words, HMOs are shared houses. They’ve become more popular in recent years as an inexpensive form of renting for tenants without committing to a whole property. Landlords also benefit as HMOs typically achieve a higher yield than traditional buy-to-let properties.
But HMOs come with complications. They often have higher fire safety requirements, reflecting the additional risk in shared properties. Meeting these standards can be expensive as, among other things, fire doors may need to be fitted.
Large HMOs with five or more people must be licensed by the local authority based on standards governing things like room sizes, waste disposal and fire safety. Councils can also introduce additional licensing for smaller HMOs. As well as needing to meet the standards the council sets out, there will be a fee for the five-year licence which can be a significant cost.
What’s more, for all HMOs you must comply with the HMO management regulations, or potentially face prosecution or a civil penalty of up to £40,000. An HMO also often sees higher tenant turnover than in traditional buy-to-let.
Short-term lets and holiday lets
In the last 15 years, an entirely new form of buy-to-let – the short-term let – has flourished with the growth of sharing economy letting platforms such as Airbnb and Booking.com. This involves letting your property, or even just part of it, for as little as a few days at a time.
Income yields from short-term lets vary considerably depending on location, occupancy rates and operating costs. They tend to do well in areas that people travel to for tourism or business, such as London, Edinburgh, Cornwall or the Scottish Highlands. But tourism is usually seasonal, so a short-term let in Cornwall might have lower occupancy than one in London.
Short-term lets can be hard work as they require cleaning between guests. What’s more, the market is competitive in hot spots, meaning that there tends to be a high standard of fixtures and fittings. Some areas also put limits in, with a maximum of 90 days a year for short-term lets in London without planning permission.
Not all holiday lets earn a high yield. Some landlords have stuck with the traditional model of renting by the week. This model is for landlords who want a second home they can let for part of the time to help cover costs.
Student accommodation
In university towns there’s an ongoing need for student accommodation. Students tend to rent for the academic year, with rents often backed by parental guarantors.
Student lets, like HMOs, can in some cases generate higher income yields than traditional buy-to-let though this varies by location, property type and local demand.
But landlords should also factor in wear and tear costs as well as potentially needing to claim some of the security deposit to cover damages at the end of the tenancy.
It’s important to be aware of how the Renters’ Rights Act affects student landlords in England. It introduces rolling contracts, with HMO student landlords able to utilise ‘Ground 4A’ to regain possession between June and September. This ground is only available where all occupants meet the ‘student test’ (ie were full-time students at the start of the tenancy or expected to become so during the tenancy), and the landlord informed the tenants that they intended to use the ground before the tenancy was entered into.
Below-market-value properties
If you’re looking to start a property business with little capital, you might want to consider properties selling below market value. If you’re prepared to put in the time searching, it’s possible to buy properties inexpensively either because a seller wants a quick sale or because a property is in poor condition.
Buy, refurbish, rent, refinance (BRRR) is a related strategy. As the name suggests, this refers to buying a property in poor condition, refurbishing it, renting it out and then refinancing it to buy another property. Sometimes people buy, refurbish and then sell – known as flipping – making a profit as they do so.
Some landlords use this approach as a starting point, though it carries additional complexity and risk compared to a straightforward purchase.
Mixed-use properties
Mixed-use properties typically have a shop on the ground floor with flats above. They can provide a relatively high gross income yield, as shops often pay higher rents than residential property, but you will need some experience or understanding of commercial property.
Mixed-use properties are also subject to different tax treatment from residential property. A qualified tax adviser can explain the implications for your specific situation.
How to start a property business – a step-by-step guide
When starting a property business, you should decide on your goals. After that you can plan a strategy.
What suits you? For instance, if you want to invest for a straightforward return, traditional buy-to-let is one option worth considering. If, on the other hand, you have little capital and are willing to undertake a refurbishment, you might opt for a BRRR approach. Some young landlords do so as their first step.
You should know whether you’re planning to buy a single property or eventually buy several. In other words, are you going to build a property portfolio? Your ambition affects how you start your property business, for instance when deciding whether to set up a limited company.
1. Do your research
Your first step is research. You can start with desk research to find out the likely profitability of your property business. It’s amazing how much you can find out from your desktop.
Look at the key figures. What rent can you charge? What gross yield might that produce and what’s the likely net yield after maintenance costs? You can quickly perform initial research using AI chatbots. But they may hallucinate, or give superficial answers, so they’re no more than a first step. You should double check everything through online sources such as Rightmove and other property portals.
After that, call estate agents where you’re thinking of buying. Check everything you’ve discovered online. Ask about the sale prices of the type of property you’re interested in, the current rental demand and the types of local tenants.
If you’re interested in buying a below-market-value property, ask the agent how often they come up and what kind of discount is possible.
2. Make a plan
When you’re figuring out how to start a property business, you should map out a plan detailing your forecast income and costs. Having everything clearly documented gives you reassurance that you’re embarking on a viable business. It can also help to secure funding from banks or investors.
If you’re buying a single buy-to-let, your plan will be relatively simple. If you’re buying several, though, or an HMO, BRRR or short-term let, you will need a more complex plan.
Ideally, you should include detail such as monthly cashflows. It’s also wise to factor in contingencies like building work taking longer than expected and costing more, as well as unexpected tenant vacancies. Doing so prepares you for unforeseen problems.
3. Find your property
Choosing the right property is key. You need something that’s suitable for your goals at the right price, with no hidden problems. The work you put in at this stage will pay dividends later.
When looking for a property you can use online property portals, however it’s well worth meeting local estate agents. They give you insights into the local market and advance notice of any suitable properties coming to market.
You should always view properties in person and do your due diligence. You may want to get extra surveys or take a builder’s advice if renovating. There’s no such thing as being too thorough.
4. Arrange the finance
When financing a property purchase, you’ll need to make an initial equity investment yourself, combined with a loan secured on the property such as a mortgage. For instance, you might need to put up a minimum of 25% of the property value with the balance funded by a mortgage.
There are a variety of specialist types of mortgages, depending on the type of property you’re buying, and whether you’re investing as an individual or through a limited company. You must also decide between an interest-only and a repayment mortgage. If you opt for the latter, you need to decide on the repayment term.
Lastly, do you want a fixed rate, variable rate or discount mortgage? There’s a lot to think about and it’s worth using a good mortgage broker for advice, especially if you have complex requirements. NRLA has a long standing relationship with family run business 3MC in Altringham, and discounts on fees are available to members.
5. Find tenants
Selecting good tenants is critical. When letting your house, you may use a local agent to advertise and show the property. Alternatively, you can advertise yourself, especially if it’s an HMO or short-let property that you can market on specialist websites.
For longer term lettings, including standard buy-to-lets, taking references helps you to assess whether a tenant will reliably pay the rent and look after your property. There are a range of checks to carry out and our partnership with Goodlord will see you get the best rates for your due diligence.
6. Manage the property
As a landlord, your job is to manage the property and keep it in good condition. It’s in your interests to maintain the property well, as a nice house attracts good tenants. What’s more, under the Renters’ Rights Act 2025, all private rental properties must meet certain minimum standards: hazards such as damp and mould need to be fixed within a specified time scale.
If you’re investing in older property, you should also make yourself aware of the energy performance certificate (EPC) rules. Currently, you usually need to have a minimum EPC rating of E, spending up to £3,500 per property, to let in England and Wales – or register a valid exemption. The Government has set out plans to require privately rented properties to have a minimum EPC rating of C by 2030. You’d be expected to spend up to £10,000 on meeting this standard. See here for the NRLA’s information on this topic.
On an ongoing basis, you should also need to get an annual Gas Safety Certificate and keep gas appliances such as boilers in good working condition,, check the electrical wiring at least every five years, and test any electrical equipment you provide. You’re required to carry out the following checks and certifications:
- Gas Safety Certificate
- Electrical Installation Condition Report
- Legionella risk assessment
- Fitness for Human Habitation
- Energy Performance Certificate
- Smoke and carbon monoxide alarms
- Fire safety assessments
- PAT test
You can arrange all of these certificates via Safe2, with discounts available for NRLA members of 5%.
What are the requirements when starting a property business?
There are few requirements when starting a property business. You need enough investment capital to buy your first property, with a mortgage added. You should also allow for additional purchase costs such as stamp duty land tax and conveyancing fees, as well as working capital to cover any improvements and a period when the property might be empty whilst looking for a tenant.
Legally, the Renters’ Rights Act will require all landlords to register themselves and their properties on a private landlords database. This is expected to rollout from late 2026.
How much money do you need to start a property business?
The amount of money you need depends on how much property you intend to buy and how much financial risk you’re comfortable with.
For instance, in some parts of the country you might be able to buy a small flat to let out for as little as £60,000 plus professional fees. If you can obtain a buy-to-let mortgage to cover 75% of the purchase price, you could put up as little as £15,000. These figures are for illustrative purposes only. The actual costs, deposits and mortgage requirements will vary. Speak to a mortgage broker for figures relevant to your circumstances.
You should be aware, though, that the more you borrow as a proportion of the purchase price the more your monthly repayments could rise if interest rates go up. Speak to a mortgage broker to understand your borrowing options and the financial implications.
Should I start a limited company?
New landlords can choose between owning property through a limited company or directly as sole traders. Some landlords choose to hold property through a limited company, with record numbers of landlords having set up companies in recent years. Tax treatment differs between corporate and individual ownership; a qualified accountant can advise on what may be appropriate for your circumstances.
What are the benefits of setting up a limited company?
Limited companies can offset all mortgage interest costs against rental income for tax purposes. Until 2017, when new tax rules for landlords called Section 24 were introduced, sole traders could also do so. However, the changes have now restricted mortgage interest relief to a basic 20% tax deduction.
Click here for more information about limited companies.
What to consider when starting a limited company
A limited company typically involves extra administration costs though, such as higher accountancy fees.
You should speak to an accountant before deciding whether to take the limited company route.
How the NRLA can help you when starting a property business
The NRLA is here to support you with any questions you might have about how to start a property business.
With resources, training and advice at your fingertips, and expert staff members at the end of the phone, no question is too big or small.
Property business FAQs
Can you start a rental property business with no money?
While starting a property business with little or no money is very difficult, it’s not impossible. There are ways to get started that don’t require as much personal capital.
You can start out by buying a modest property with the maximum mortgage available. This involves investing a modest amount of capital – perhaps as little as £15,000 on a £60,000 property purchase.
Alternatively, the ‘rent-to-rent’ model involves no capital. You reach an agreement to rent a property from a landlord in order to rent it out yourself at a higher rent perhaps as an HMO or a short-term Airbnb let. However, this model is becoming harder, partly because the Renters’ Rights Act increases the risks for landlords.
A further way of starting a rental property business with no money is partnering with an investor who will provide capital.
Can a UK limited company buy property?
Yes, a UK limited company can buy property.
If you decide to register your property business as a limited company, the company will own the properties and you will own the company. Buying property as a limited company will require you to have a specialist mortgage and to pay tax through the limited company.
NRLA works with specialist partners who can help you with this.
A further way of starting a rental property business with no money is partnering with an investor who will provide capital.
How much does it cost to set up a limited company?
You can register a company online with Companies House for as little as £100. However, you’ll have to pay more if setting up a company through your accountant. What’s more, you should investigate the ongoing cost of administering your limited company, especially accountancy fees, weighing them up against any tax benefits.
Is it worth setting up a limited company?
Many landlords have set up limited companies to own their properties in the last 10 years, chiefly for tax reasons. Whether a limited company structure makes sense depends on your individual tax position. You should seek advice from a qualified accountant.
The relative advantages of a limited company structure vary depending on portfolio size, tax position and individual circumstances. Seeking professional advice is essential when making this decision.
Can a UK limited company own property abroad?
Yes, your UK limited company can buy and own property abroad. But it can be a complex process and comes with its own legal and tax implications. You’ll likely be taxed both here in the UK and wherever you buy the property abroad, although you may be entitled to double taxation relief. You’ll also need to consider foreign legal processes and administrative requirements, which could be costly depending on the complexity.