The content of the financial promotions on this website has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on these promotions for the purpose of engaging in investment activity may expose an individual to a significant risk of losing all of the property or assets invested.

November 01, 2022 | 4 min read

A guide to investing in property

Looking to invest in property? Our investing in property guide will show different ways to invest in property and help you decide if an investment is for you.

By Jacob Baxter
Share on:

If you're looking for a decent return on your investment (ROI), investing in property can deliver a strong performance over the long term, and provide a way to diversify your investment portfolio. Whether you're looking for a source of regular income or a possible long-term return on your capital, property investment may be worth investigating.

Property has always been an attractive sector for investors, but with interest rates on the rise and house price growth forecast to slow, you may be questioning whether property investing is a wise decision in today's market.

Following a surging property market in 2022, high-interest rates could help stabilise house prices, which in turn is likely to encourage more buyers to enter the market. Property investment yields continue to remain strong due to the ongoing demand for properties from both renters and buyers.

Investing in property isn't limited to purchasing a property such as a Buy-To-Let. Innovative property investment schemes, such as those offered by Acorn Property Invest, allow investors to fund new, modern developments alongside banks and other institutional investors.

Why invest in property?

Remember that investing in property, such as those promoted by Acorn Property Invest, involves risks including loss of capital as property prices can fall as well as rise. However, property investment has historically been a strong performer over the long term, and there are plenty of reasons to consider investing in property.

Regular income

Investing in property has historically been a way to generate rental income over time, traditionally through buy-to-let. It's important to remember that with Buy-To-Let as a sole landlord, you will be in charge of the maintenance of the property for Buy-To-Let tenants, as well as running the risk of vacant periods. Alternatives such as Acorn Property Invest's Regular Income products offer the opportunity to invest in a fixed-income portfolio over 1-5 years with a minimum investment of £5,000.

Investing for retirement

investing in a property can be a way of saving for retirement whether it's a property you live in, one you rent out or investing in property developments. Investing capital in a property can see growth over the long term, which can be realised through selling the asset and accessing the increased capital growth.

Tax efficiencies

There may be some tax benefits available, depending on the type of property investment you make, an example being platforms that offer tax-free investing by classifying property loans as “peer-to-peer” investments. This means that the interest you earn on the loan is not subject to income tax. Some schemes that pay dividends based on property investment may allow the investor to claim tax relief on some income.

Access to funds

Some routes to investing in property allow you access to your funds over the short term. While traditional property investment can mean that you may need to hold onto a property for many years and can be time-consuming to sell through estate agents, some investments offer an alternative. Opportunities such as Acorn's Capital Growth return allow you to invest in property development over a 1-4 year period, providing quicker access to funds compared to the average homeownership of 21 years.

Demand for new builds

Demand for new homes in particular in the UK is still outstripping supply, according to industry reports, even despite a backdrop of increased inflation, making investing in new property developments attractive. New builds are still in high demand, with regions such as the South West seeing a surge in buyers of new properties according to industry data, which found an 11% increase in the number of people searching for new-build properties in July 2022 compared to June 2022.

Investing in property guide - body image showing people looking at paperwork, model house, calculator, key

Ways of investing in property

Investing in new build developments

Investing in new build developments offers an alternative route to property investment and a way to diversify your portfolio into property without the hassle of becoming a Buy-To-Let landlord.

Acorn Property Group specialises in stunning, sustainable new build schemes that result in bespoke, design-led building projects designed to meet community needs and seek potential returns for investors.

Investing in property developments through mezzanine investing means your money is invested alongside loans from major financial institutions to fund new homes.

Pros of investing in new build developments:

  • Less hassle - investing in a property development through Acorn Property Invest is simple. Simply create an account, determine the type of investor you are, choose from our range of investment products and schemes, and invest your funds. The process takes minutes, and you can keep up-to-date with your investment through our innovative platform.
  • Fixed investment term - a typical fixed term of investment of 1-5 years allows you to invest with confidence that you can access your funds after a set period.
  • No property chain - investing in a property development means you avoid the hassle, time and cost of having to sell a property to release your capital. You avoid having to pay mortgage redemption fees, deal with the land registry, find a buyer, and pay estate agent and legal fees.

Want to know more about investing in new builds? Discover investment opportunities with Acorn Property Invest.

Traditional buying (Buy-To-Let)

A Buy-To-Let property investment is where you buy a property intending to rent it out to tenants, and is a popular route into property investment.

Unlike investing in new build schemes, Buy-To-Let does have some potential downsides.

  • Stamp duty - you might have to pay extra Stamp Duty Land Tax (SDLT) if the total value of your properties is over a certain threshold. Visit the government website to learn about the SDLT thresholds.
  • Potential unoccupancy costs - if your property is unoccupied, you will still have to cover the costs of any bills, such as council tax, and maintenance costs. If you have a Buy-To-Let mortgage, you will still need to make payments even if the property is empty.
  • Finding tenants - finding potential tenants can be challenging. You will have to advertise the property, check references and arrange deposits. You could get an agency to manage your property, but this will come at a cost, and problem tenants can result in damage to your property and the need to pay legal costs to evict a bad tenant.

However, Buy-To-Let does have some benefits, including:

  • Possible house price growth - if house prices increase while you own the property, you may be able to make a profit on your purchase overtime. Check, however, if you would be liable for Capital Gains Tax when selling your Buy-To-Let, which can be 15% for lower rate taxpayers and 28% for higher rate tax payers.
  • Rental income - you may be able to generate regular income over time from rental payments. If you have a Buy-To-Let mortgage, rental income often covers your mortgage payments, sometimes with money left over.
  • Offset expenses against tax - you can offset some of your associated costs against the tax you pay. These costs include fees such as letting agent costs, rental advertising costs, and maintenance and repair expenses.

Real Estate Investment Trusts (REITs)

REITs are property investment companies that either run, own or finance income-generating real estate such as apartment buildings, office blocks, hospitals and shopping centres.

Many REIT companies are on the stock market, and you typically invest by buying shares.

Money invested into REITs is pooled and invested in expanding and managing the company's property assets. Shareholders may receive dividends from the income generated from rent and growth.

You can also profit from your investment by selling your shares if they rise. But like any investment, REIT investments come with risks, including fees charged by the REIT and other operating expenses, which can eat into your returns. When investing in REITs, you have no control over where your money is invested, and you have to rely on the company that owns, runs or finances properties to perform well.

However, investing in REITs may have higher liquidity than other property investments. With REIT investments, you can often buy and sell shares at any time with a click of a button. And, as REITs must distribute 90% of their tax-exempt profits to shareholders, stocks may have high dividend yield potential.

Tips for investing in property

Before investing in property, you should follow a few essential tips to help guide your investment journey.

1. Research the market

Get to know the area you plan to invest in. Find out about local house prices and area history to help determine if the area meets your investment needs. Consider which neighbourhoods to invest in. Areas such as the South West are attractive to home buyers, lured by its stunning countryside, historic attractions and landmarks, as well as high-speed connections to London and the rest of the UK.

2. Work out your investment strategy

Assess your funds and see what you can invest. Consider the potential costs like Stamp Duty Land Tax and Capital Gains Tax if investing yourself, and aim to diversify your portfolio across different investments in line with your risk profile. If in doubt, always seek independent financial advice.

3. Pick the right investment vehicle

A diverse investment approach can help you mitigate risks associated with investment, with a mix of stocks, shares, property, bonds, and other investments reducing the risk of putting all your money into a single investment, such as a Buy To Let.

4. Review performance

Stay on top of any property investment through online portfolio tools such as those offered by Acorn Property Invest so you can track your investment over time.

Your capital is at risk if you invest

Investment opportunities available via Acorn Property Invest are exclusively targeted at exempt investors who are experienced, knowledgeable and sophisticated enough to sufficiently understand the risks involved, and who are able to make their own decisions about the suitability of those investment opportunities.

All investors should seek an independent professional investment and tax advice before deciding to invest. Any historic performance of investment opportunities is NOT a guide or guarantee for future performance and any projections of future performance are not guaranteed.

All investment opportunities available via Acorn Property Invest are NOT regulated by the Financial Conduct Authority (FCA) and you will NOT have access to Financial Services Compensation Scheme (FSCS) and may not have access to the Financial Ombudsman Service (FOS).

Contact Us

Fill out the form below and we will contact you soon.