The United Kingdom is an attractive market for residential real estate investors.
With a current value of USD 120.2 billion and a CAGR of over 3.4%, the size of the UK residential real estate market makes it an attractive option for property investing.
However, one common market entry barrier is the need for substantial capital.
Fortunately, this article will provide 9 different ways to make money from property in the UK without needing any cash!
What is the property market situation in the UK?
The UK property market is currently experiencing a slowdown.
Despite the latest official data from the Land Registry showing a 9.8% year-on-year house price rise in December 2022, figures are now falling month-on-month.
Most observers believe that the current cycle of house price rises has come to an end3.
However, first-time buyers are still able to purchase a property.
What is the reason for the slowdown?
The UK property market is slowing down due to a lack of housing stock and an ageing population which will drive demand during that time.
The UK’s housing market shows signs of slowing down as inflation and rising interest rates rein in buyers.
The slowdown is expected to intensify, with all housing indicators flashing red as rates are poised to increase, and the UK enters a long recession.
What is the average house price in London?
According to data from the Office for National Statistics (ONS), as of January 2022, the average house price in London is £510,0001.
However, when looked at borough-by-borough, property prices fared differently.
Can you make money from property in UK without money?
Yes, making money from property in the UK is possible without money.
Some of the ways include buying to let, deal packaging, government’s Rent a Room scheme, and REIT.
Let’s explain some of them.
Rent out part of your house as a long-term or short-term rental
Renting out part of your house as a long-term or short-term rental is one of the easiest ways to make money from your property without investing any money.
If you have an extra room in your house that you’re not using, then renting it out can be a great way to earn some extra cash.
You can rent out the room long-term to someone who needs a place to stay, or you can rent it out on a short-term basis through platforms like Airbnb.
When renting out part of your house as a long-term rental, it’s essential to find reliable tenants who will pay their rent on time and take care of the space.
You’ll need to create an agreement that outlines the terms of the rental, including how much rent will be paid and when it’s due, what utilities are included in the rent (if any), and what responsibilities each party has.
There are additional considerations if you decide to list your space on Airbnb or another short-term rental platform.
You’ll need to provide amenities like clean linens and towels for each guest, ensure that the space is cleaned thoroughly between guests, and make sure that your guests understand any rules or restrictions associated with staying in your home.
However, with proper management and attention to detail, renting out part of your home can be an effective way to generate passive income without making major investments into real estate properties.
Another one of the easiest ways to make money from property in the UK without investing any money is by deal packaging.
Deal packaging involves finding and securing a good property deal, and then selling it on to another investor for a profit.
It requires minimal investment or experience, making it an ideal starting point for those wanting to enter the property industry.
To succeed in deal packaging, you need to be able to identify good deals that offer potential profits.
You can do this by approaching estate agents, attending auctions, and searching online portals like Rightmove and Zoopla.
Once you have found a good deal, you need to negotiate with the seller and secure it as quickly as possible before presenting it to your buyer.
To sell your packaged deal, you need to find buyers who are interested in purchasing properties for investment purposes.
Attend networking events, join online forums and social media groups where other investors gather or create your own database of leads that could be interested in buying deals from you.
By offering them profitable opportunities without having them search for themselves, they will save time while ensuring that you earn a commission on their purchase.
Government’s Rent a Room scheme
Another way to make money from property in the UK without spending any money is through the Rent-a-Room scheme.
This scheme allows homeowners to rent out a room in their house and earn up to £7,500 per year tax-free.
The scheme is available for both furnished and unfurnished rooms, as long as they are part of the homeowner’s main residence.
To qualify for the Rent a Room scheme, homeowners must live in the property themselves and not exceed the annual rental income limit of £7,500.
They also need to ensure that their mortgage company or landlord approves of renting out a room.
Homeowners can choose whether they want to rent out their room on a short-term or long-term basis; however, it’s worth noting that renting out on platforms like Airbnb may require additional permissions and insurance.
This government scheme is an excellent way for homeowners to earn some extra income without having to invest any money upfront.
It provides more affordable housing options for renters while allowing homeowners to make use of their spare space.
One way to make money from property without actually owning it is through Real Estate Investment Trusts (REITs).
A REIT is a company that owns and manages income-generating real estate properties.
Essentially, investors can buy shares of the REIT just like they would buy stocks, and in return receive a portion of the rental income generated by the properties.
REITs offer several benefits for investors looking to make money from property without actually owning it.
First, they provide diversification as investors can invest in multiple properties across different sectors such as commercial, residential, or industrial.
Second, they offer liquidity as shares can be bought and sold easily on the stock market.
Finally, they often have high dividend yields as they are required by law to distribute at least 90% of their taxable income to shareholders.
However, there are also some risks associated with investing in REITs.
They are subject to market fluctuations just like any other stock and may not always provide consistent returns.
Additionally, fees charged by REIT managers can eat into profits earned by shareholders.
Either way, REITs offer an attractive option for those looking to invest in property without having to worry about managing physical assets themselves.
Here are examples of best REITs in the UK
Crowdfunding has become an increasingly popular way to fund property investments in the UK.
This method involves pooling money from multiple investors and using it to purchase a property. In return, investors receive a share of the rental income or profits from the sale of the property.
One advantage of crowdfunding is that it allows individuals to invest in property without having to put up large amounts of capital on their own.
Additionally, crowdfunding platforms often provide access to properties that may not be available through traditional channels.
However, potential investors must research any crowdfunding opportunities before investing thoroughly.
They should consider factors such as the track record of the platform and its management team, as well as any fees involved in participating in a crowdfunded investment.
By doing so, they can decide whether this method is right for them.
Here are some of the best crowdfunding platforms in the UK:
One of the ways to make money from property in the UK without having any money is through peer-to-peer lending.
Also known as P2P lending, is a type of crowdfunding platform that connects borrowers with lenders.
This means individuals can lend their money directly to others or businesses without going through traditional financial institutions like banks.
In the context of property investing, P2P lending platforms offer investors the opportunity to earn interest by providing loans to property developers or landlords.
These loans are typically secured against the borrower’s property and offer higher returns than savings accounts or bonds.
Investors can choose which projects they want to fund and decide how much they want to lend, making it a flexible investment option.
However, investors need to understand that P2P lending comes with risks such as borrower default and platform failure.
Therefore, investors must do their due diligence before investing and diversify their portfolio across multiple platforms and loans.
Peer-to-peer lending can be a profitable way for individuals without any upfront capital to invest in property while supporting small businesses and entrepreneurs in the process.
One of the most profitable ways to make money from property in the UK is through property management.
This involves overseeing and maintaining properties on behalf of their owners.
And can be a lucrative business if done correctly, as there is always a demand for professional property managers.
One way to make money from property management is by offering your services to landlords who are too busy or inexperienced to manage their own properties.
You can help manage rental agreements, collect rent payments, and take care of maintenance issues on behalf of the landlord.
You can charge a percentage of the monthly rent or a flat fee in exchange for your services.
Another way to make money from property management is by starting your own short-term rental business using platforms like Airbnb or VRBO.
You can lease properties from landlords and then rent them out on a short-term basis for higher rates than traditional long-term rentals.
To succeed in this venture, you must market your properties effectively and provide excellent customer service to guests.
Property flipping is a popular method for making money in the UK property market without requiring significant upfront investment.
To flip a property, an investor purchases a property to renovate it and then sell it quickly for a profit.
The key to success in property flipping is finding undervalued properties and needing renovation or improvement.
One way to find properties suitable for flipping is to look for distressed or run-down properties that have been on the market for a long time.
Often, these properties can be purchased at below-market prices, leaving room for renovation costs and still allowing investors to sell at a profit.
Another important factor in successful property flipping is access to reliable contractors who can complete renovations on time and within budget.
Let’s say you find a property that needs some work, but has good potential to increase in value with some renovations.
You buy the property for $200,000 and spend $50,000 on renovations, bringing your total investment to $250,000.
After the renovations, you list the property for sale at $350,000.
Because of the improvements you’ve made, the property now appeals to a wider range of buyers and is worth more than what you paid for it.
Once you sell the property, you make a profit of $100,000 ($350,000 sale price – $250,000 total investment), minus any fees and expenses associated with the sale.
Of course, this is just an example, and there are risks involved with this strategy.
Thoroughly research the market and property before investing, and have a solid plan in place for the renovations and sale.
Joint venture with someone who has money
One of the most effective ways to make money from property in the UK without having your own funds is joint venturing with someone who has money.
This can be a profitable partnership where you bring your skills, knowledge and expertise to the table, while the other party contributes financially.
The key here is to find someone who shares your vision and goals, and whose investment strategy aligns with yours.
You should also have a clear agreement on how profits will be split and responsibilities for managing the property.
A joint venture partner can provide funding for acquiring properties, financing renovations or refurbishments, and even taking care of ongoing maintenance costs.
However, it is crucial that you do your due diligence before committing to a joint venture agreement with anyone.
This includes understanding their financial background and status, assessing their track record in property investment, and clarifying any legal issues or potential conflicts that may arise during the partnership.
With careful planning and execution, joint ventures can be an excellent way to build wealth in property investing without having any capital upfront.
In conclusion, the world of property investment can be lucrative for those willing to put in the time and effort.
Even when starting with little or no money, there are still plenty of options available for enterprising investors looking to make their mark on the market.
By leveraging creative financing techniques such as rent-to-rent and lease options, investors can generate significant cash flow without having to front large sums of capital.
Moreover, savvy investors can build wealth through equity appreciation over time by keeping an eye out for distressed properties that can be acquired at a discount.
Ultimately, success in property investment requires a willingness to learn and adapt as market conditions inevitably shift.
By staying up-to-date on industry trends and being open-minded about new strategies and approaches, investors can position themselves for long-term profitability in this exciting field.