Business Advice

May 16, 2023

Starting a small business in property in the UK can be a lucrative and rewarding venture, but it requires careful planning and preparation.

But if you’ve never run a property business before it can be a daunting challenge, so we’ve created this guide to help you know where to start, including:

  • How to start a property business
  • Starting a property rental business in the UK

So here’s your guide to everything you need to know about how to start a property business.

Why start a property business in the UK

There are many reasons why starting a property business has the potential to be hugely successful, including:

  • High demand for housing - The UK has a growing population and a shortage of affordable housing, which means there is a high demand for properties. This makes it an attractive market for property investors and developers, especially after the pandemic, as shown by our report taking into account property prices and property sales.
  • Diverse investment opportunities - The UK property market offers a range of investment opportunities, from buying and flipping properties to renting out apartments, student accommodation, and commercial spaces. This diversity allows investors to choose the type of property that aligns with their investment goals and risk tolerance.
  • Potential for high returns - Property investments in the UK have the potential to generate high returns, especially if the property is located in a high-growth area, has been renovated or refurbished, or is rented out at a competitive price.
  • Tax benefits - Property investments in the UK offer tax benefits such as deductions for mortgage interest payments, repairs and maintenance, and capital gains tax exemptions for primary residences.
  • Resilient property market - Despite economic and political uncertainties over the last year, the UK property market has generally shown historical resilience and growth. This is partly due to consistent high demand for housing and a legal system that protects property rights.

How to start a property business

You like the idea of starting a property business, but don’t know what your first steps should be? Here are some tips to get you started:

Define Your Business Model

The first step is to decide on your business model. You can choose to buy properties and rent them out, flip properties for a profit, or develop properties for sale. Each model has its own set of advantages and disadvantages, so it's important to consider what type of property business you want to build.

There is a wide range of property investment strategies and types available to choose from when starting a property business in the UK. Corporate buy-to-let, serviced accommodation, and houses in multiple occupancy are just a few examples of property types to consider.

Additionally, buy-to-let, rent-to-rent, and buy-refurbish-sell (flipping) are popular investment strategies. However, owning property isn't the only way to run a successful property business. You can also set up a business property sourcing, where you find below-market-value property deals for investors.

Becoming an expert in repossessions or property auctions is another option to consider. Additionally, property joint ventures are an option where you bring expertise and a partner brings the money, and profits are split based on mutually agreed terms.

Create a business plan for your property business

Once you've decided on your business model, you need to create a business plan. This should include your objectives, financial projections, marketing strategies, and other key details about your business. A business plan will help you stay focused and ensure that you're on track to achieve your goals.

Secure financing

We don’t all have mountains of equity to help us buy up property, so you might wonder how to start a property business with no money in the UK. Property businesses often require significant investment, so you'll need to secure financing to get started. You can finance your business through traditional bank loans, crowdfunding, or private investment.

Where finances are concerned it’s always worth seeking independent financial advice to help you consider your options carefully and choose the best option for your business.

Peer to peer lending

Peer to peer lending is a way to invest directly with another person or company, without involving a bank. Platforms like Zopa facilitate the transaction process for you, which means you can enjoy higher returns on your investment. One of the benefits of peer to peer property investment is that it allows you to have a liquid asset, which is rare in property investment, and the interest rates are usually higher than traditional bank accounts.

It's important to note that if you invest in peer to peer lending with an individual, the loans are usually unsecured, meaning you may not get your money back if the borrower defaults. However, when investing in peer to peer business lending, your investment is secured against business assets and property. It's crucial to conduct thorough research on the company you're investing in to ensure that it's stable and reliable.

Property peer to peer lending

Property peer to peer lending, which typically funds short-term refurbishments or quick projects, is secured against the property. While there are risks involved, such as project delays, being secured against the property provides a layer of security for your investment. If the project doesn't go as planned, you can recover your investments against the sale of the property.

Sometimes, aspiring property investors confuse property crowdfunding with peer-to-peer loans. However, they are actually two different methods of investment.

Property crowdfunding

Property crowdfunding involves pooling money from groups of investors to own a small share of a property's equity. On the other hand, peer-to-peer lending makes you a mortgage provider, and you provide short-term loans instead of owning equity.

To see actual returns, property crowdfunding requires a long-term investment, while peer-to-peer lending provides short-term loans. There are two main options for property investment: property development and buy-to-let property crowdfunding.

Property development involves investing in the development of a property, and every investor receives a share of the gains from the sale. This option can provide higher returns quickly, but it is considered to be a riskier investment.

Buy-to-let property crowdfunding works like any other buy-to-let strategy, acquiring rental yields over time and sharing them between investors.

Business funding

From expanding your enterprise to building up your inventory, Dojo business funding has the potential to help you get to the next level.

We’ve partnered with YouLend to offer you flexible funding that’s repaid as a fixed percentage of your daily card takings. So if you’ve had a bumper month, you’ll pay a little more. And if it’s quiet, you’ll pay a little less. See if you’re eligible by visiting our business funding page today.

Register Your Business

You'll need to register your business with Companies House and HM Revenue & Customs. This will involve choosing a name for your business, deciding on a legal structure (such as a sole trader, partnership, or limited company), and registering for tax.

Build Your Team

Building a successful property business requires a team of professionals to help you along the way. This includes real estate agents, solicitors, accountants, and contractors. Choose your team carefully and ensure that you have the right people in place to help you achieve your goals.

Once you’ve got these in place you need to consider how to build a property portfolio, which we’ll cover next.

Starting a Property Rental Business UK

So, when you’re up and running as a business, with the finance sorted, you need to find the best way to start a rental property business, which is usually to find some rental properties. Here are some tips:

Determine your investment goals

Before you start looking for properties to invest in, it's important to determine your investment goals. This will help you narrow down your search and find properties that are a good fit for your business. Are you looking for high rental yields or long-term capital appreciation? Do you want to invest in a specific area or type of property? Answering these questions will help you create a clear investment strategy and focus your search.

Do your research

Once you've established your investment goals, start doing research on the property market in the areas you're interested in. Look at recent property sales and rental prices, and try to identify any trends or patterns. This will give you a better understanding of the market and help you identify properties that are likely to offer good returns.

Build a network

Building a network of contacts in the property industry can be incredibly helpful when it comes to finding good investment opportunities. This could include estate agents, property developers, property managers, and other rental business owners. Attend networking events and conferences, join online forums and groups, and don't be afraid to reach out to people in the industry.

Use online resources

There are a number of online resources that can help you find properties to invest in, including property listing websites, property auctions, and social media. Many estate agents and property developers also have websites where they list available properties. Be sure to set up alerts so that you're notified when new properties become available.

Consider off-market opportunities

Some of the best investment opportunities may not be publicly listed. Off-market opportunities are properties that are for sale but aren't being advertised publicly. This could include properties that are being sold by word of mouth, or properties that are being sold through private networks. Building relationships with property owners and developers can help you gain access to these types of opportunities.

Consider auctions

Property auctions can be a great way to find investment opportunities, particularly if you're looking for a property that needs renovation or refurbishment. Be sure to research the properties on offer beforehand and set a budget so that you don't get carried away in the excitement of the auction.

Finding properties as a rental business in the UK requires careful research, a clear investment strategy, and a willingness to build relationships and explore different opportunities. By following these tips and strategies, you'll be well on your way to building a successful rental business.